BUTTERFIELD MORTGAGES LIMITED

Company Registration Number:
00338594 (England and Wales)

Unaudited statutory accounts for the year ended 31 December 2024

Period of accounts

Start date: 1 January 2024

End date: 31 December 2024

BUTTERFIELD MORTGAGES LIMITED

Contents of the Financial Statements

for the Period Ended 31 December 2024

Directors report
Profit and loss
Balance sheet
Additional notes
Balance sheet notes

BUTTERFIELD MORTGAGES LIMITED

Directors' report period ended 31 December 2024

The directors present their report with the financial statements of the company for the period ended 31 December 2024

Principal activities of the company

Review of the business BML has operated as a niche mortgage provider, focusing primarily on High Net Worth (“HNW”) and Ultra High Net Worth (“UHNW”) clients seeking various mortgage products within the prime residential market segment, since January 2017. BML’s product offering includes regulated residential and consumer buy-to-let (“BTL”) mortgages, non-regulated residential mortgages including some bridging finance facilities and development finance. All loans are sub-participated with Butterfield Bank (Guernsey) Limited (“BBGL”), or until 31 May 2025 Butterfield Bank (Jersey) Limited (“BBJL”) and with Butterfield Bank Jersey, a branch of BBGL (the “Branch”) from 1 June 2024, thereby transferring all the risks and rewards related to its residential loan book.

Additional information

Performance of BML in 2024 In 2024, BML focused on continuing the implementation of its strategy. BML achieved operating income of £5.6m in 2024 (2023: £6.3m) and had an operating profit before taxation of £1.7m (2023: £2.2m). Given BML’s profitability over the last four years it is probable that BML will be able to make use of its historic tax losses in the near future. A deferred tax asset of £1.75m (2023: £2m) has therefore been recognised. This has been calculated based upon the profits predicted in a five-year plan that has been drawn up and will be reviewed each year. Despite the challenging market environment, the BML loan sub part balances have increased moderately in the year. This is due to new and retained business exceeding maturities. Strategic Plan The Group have confirmed their support for maintaining a residential mortgage business in the UK, a market in which BML has a proven track record. The business model for BML is founded on the assessment that despite the headwinds arising from the current economic environment, there remains a significant demand for London prime residential property loans in the long term. The current loan portfolio is fully sub-participated with BBGL and BBGL, Jersey Branch. The risks and economic benefits of the sub-participated loans are with BBGL and BBGL, Jersey Branch and, as such, are not recognised on BML’s Balance Sheet. The portfolio is assessed as high quality, with low credit risk, in well collateralised market segments. The strategy of the continued operations is based on prudent credit risk management, with the key business model changes centring primarily on the funding of the book by sub-participation. BML is a wholly owned subsidiary of The Bank of N. T. Butterfield & Son Limited (“BNTB”) and will continue to receive the full financial and operational support of the wider Group. The Board of Directors for BML (details on page 3) are actively involved in the supervision and oversight of BML business to matters involving (but not limited to) strategy, risk appetite, financial performance and growth. At the date of approval of the Financial Statements, BML operates at a staff level of 26 employees (of which no part-time (2023: 25 employees of which 1 were part-time). The parent bank, BNTB, had a Basel III total capital ratio of 25.8% (2023: 25.4%) and a Tier 1 capital ratio of 23.5% (2023: 23%) at 31 December 2024. These ratios remain significantly above regulatory requirements. BNTB’s tangible total equity ratio of 6.59% (2023: 6.81%) reflects the continued strength of their balance sheet. BNTB’s liquidity also remains strong, with 65.32% (2023:61.1%) or US$9.3 billion (2023:US$8.2 billion) of total assets held in cash, cash equivalents, short-term and long-term investments. The Group business model does not rely on inter-bank borrowing or other wholesale borrowing to fund its balance sheet. Key performance indicators BML’s management monitors the business using a range of financial data and operational review measures. Performance indicators are prepared and presented to senior management on a monthly basis. Legacy Pension Scheme BML operates a Legacy Pension Scheme (the “Scheme”) which is closed to new members. Full details of the Scheme’s valuation as at the end of 2024 are given in Note 9. BML and the Group have agreed with the Scheme Trustees to provide ongoing support to the Scheme going forward ensuring liabilities can be met when they fall due. UK T-Bills worth £2m held on BML Balance Sheet have been ring-fenced for the Scheme. These are maturing in 4 months and will be re-invested. The Scheme’s liabilities have been calculated by a qualified independent actuary by carrying out a valuation of the members insured with Canada Life and Aviva as at 31 December 2024 using the actuarial assumptions adopted for FRS 102 purposes, and membership data as at 31 March 2022. Financial Risk Management The management and oversight of risk is an integral function within BML, and is coordinated with the financial risk management activities of BNTB. BML’s Risk, Audit and Compliance Committee receives regular reports from the BML Risk Management Committee, under the chairmanship of the CEO, and to which it delegates management of the risk function. Through BML’s Risk Appetite Statement, overall financial risk is coordinated into the following main areas of risk: (1) Liquidity Risk – The risk that BML is unable to meet its liabilities as they fall due. (2) Capital Risk – The risk that there is insufficient capital to maintain the business as a going concern. (3) Interest Rate Risk – The exposure of a BML's current or future earnings and capital to adverse changes in market rates. Further details of the BML’s financial and operational risk management activities are set out in Note 20. Dividends The Directors have recommended the payment of a dividend of £2m for the year (2023: £3m). This has been paid within the year. Going concern The Directors, having made due enquiries, continue to adopt the going concern basis in preparing the Financial Statements which assumes that the Company will continue in operation for a period of at least 12 months from approval of these Financial Statements. The Financial Statements have, therefore, been prepared on a going concern basis, and this accounting policy has been disclosed within the notes to the Financial Statements, item 3(b). Financial risk management An explanation of the manner in which BML manages risk is set out in the Strategic Report and in Note 20. Post Statement of Financial Position events No significant events to report since the Statement of Financial Position date. Pillar 2 BML is out of scope of the UK Pillar Two Rules for the year ended 31 December 2024. Capital and Liquidity Capital – BML’s capital requirement is determined by MIPRU 4.2.23 and BML is fully compliant. BML’s balance sheet size is £24.7m with £7.2m as shareholder’s equity (£2m ring-fenced for pension requirements and the remaining for BML’s core operational requirements). Management is of the view that BML is well capitalised and is able to meet all its obligations for the foreseeable future especially considering credit risk for the loan book has been completely transferred to our jurisdictional partners in Guernsey and Jersey (the entire loan book has been sub-participated to BBGL and BBGL, Jersey Branch at the date of approving these financial statements). Liquidity – BML has adequate liquid resources to meet its requirements for the foreseeable future. This position is further strengthened by the Group’s ongoing commitment to support the UK business and pension requirements. Available liquid resources are well in excess of budgeted cash requirements for 2025 and beyond.



Directors

The directors shown below have held office during the whole of the period from
1 January 2024 to 31 December 2024

Tim Brooke
Richard Saunders
Alpa Bhakta


The director shown below has held office during the period of
7 October 2024 to 31 December 2024

Anthony Neville


The above report has been prepared in accordance with the special provisions in part 15 of the Companies Act 2006

This report was approved by the board of directors on
17 February 2025

And signed on behalf of the board by:
Name: Alpa Bhakta
Status: Director

BUTTERFIELD MORTGAGES LIMITED

Profit And Loss Account

for the Period Ended 31 December 2024

2024 2023


£

£
Turnover: 5,604,000 6,323,000
Gross profit(or loss): 5,604,000 6,323,000
Administrative expenses: ( 3,935,000 ) ( 4,173,000 )
Operating profit(or loss): 1,669,000 2,150,000
Profit(or loss) before tax: 1,669,000 2,150,000
Tax: ( 256,000 ) 228,000
Profit(or loss) for the financial year: 1,413,000 2,378,000

BUTTERFIELD MORTGAGES LIMITED

Balance sheet

As at 31 December 2024

Notes 2024 2023


£

£
Fixed assets
Intangible assets: 3 1,439,001 1,678,001
Tangible assets: 4 36,000 95,000
Total fixed assets: 1,475,001 1,773,001
Current assets
Debtors: 5 387,000 411,000
Cash at bank and in hand: 20,707,000 17,173,000
Investments: 6 1,971,000 1,964,000
Total current assets: 23,065,000 19,548,000
Prepayments and accrued income: 241,000 97,000
Creditors: amounts falling due within one year: 7 ( 16,501,000 ) ( 12,511,000 )
Net current assets (liabilities): 6,805,000 7,134,000
Total assets less current liabilities: 8,280,001 8,907,001
Accruals and deferred income: ( 1,084,000 ) ( 1,120,000 )
Total net assets (liabilities): 7,196,001 7,787,001
Capital and reserves
Called up share capital: 1 1
Other reserves: 5,783,000 5,409,000
Profit and loss account: 1,413,000 2,378,000
Total Shareholders' funds: 7,196,001 7,787,001

The notes form part of these financial statements

BUTTERFIELD MORTGAGES LIMITED

Balance sheet statements

For the year ending 31 December 2024 the company was entitled to exemption under section 477 of the Companies Act 2006 relating to small companies.

The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006.

The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

These accounts have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

This report was approved by the board of directors on 17 February 2025
and signed on behalf of the board by:

Name: Alpa Bhakta
Status: Director

The notes form part of these financial statements

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

  • 1. Accounting policies

    Basis of measurement and preparation

    These financial statements have been prepared in accordance with the provisions of Section 1A (Small Entities) of Financial Reporting Standard 102

    Turnover policy

    Income recognition Interest income and interest expense are recognised in the Income Statement using the effective interest rate method. Fee income and other direct costs relating to loan origination or commitments are recognised in the Income Statement using the effective interest rate method. Other fee income are recognised in the Income Statement in the period to which they relate.

    Tangible fixed assets depreciation policy

    Tangible fixed assets and depreciation Tangible fixed assets are stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, and costs directly attributable to bringing the asset to its working condition for its intended use. (i) Depreciation and residual values Depreciation is calculated, using the straight-line method, to allocate the cost to their residual values over their estimated useful lives, as follows: Short leasehold property – over the period of the lease Furniture and other equipment – 4 to 5 years Computer equipment – 3 to 5 years The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively. (ii) Derecognition Tangible fixed assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in the Income Statement and included in ‘Other operating (losses)/gains’.

    Other accounting policies

    Foreign currency (i) Functional and presentation currency The financial statements are presented in pound sterling (£) which is BML’s functional and presentation currency, and rounded to the nearest £’000. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the date of the transactions. At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. Foreign exchange gains and losses arising on monetary assets and liabilities are recognised in the Income statement. Pension costs BML operates a Group Personal Pension (“GPP”), comprising a Defined Contribution section, and a Legacy Pension Scheme (the “Scheme”) comprising a Defined Benefit and a Defined Contribution section up until 28 September 2020 when the Defined Contribution section was wound up. The DB section closed to new members with effect from 1 April 2002 and subsequently closed to further accrual of new benefits with effect from 1 October 2012. A full actuarial valuation of the Scheme Defined Benefit section is undertaken every three years and updated to 31 December each year by a qualified actuary on behalf of BML. For the purposes of these annual updates, assets are included at market value and liabilities are measured on an actuarial basis using the projected unit method; these liabilities are discounted at the current rate of return on a Corporate AA Bond Index of equivalent term and currency of the related liabilities at the relevant date. Any post-retirement benefit deficit is included in BML’s Statement of Financial Position, gross of the related amount of deferred tax. The current service cost and any past service cost is included in the Income Statement within operating expenses. The net interest element is calculated as the difference between interest income on plan assets and interest costs on the defined benefit obligation. The net interest is determined by multiplying the net defined benefit liability by the discount rate at the start of the period taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in the Income Statement as other finance revenue or cost, except where there is a defined benefit surplus that is not recoverable. Any movements in a non-recoverable net pension surplus are not recognised. Re-measurements, comprising actuarial gains and losses, and the return on the net defined benefit liability (excluding amounts included in net interest) are recognised immediately in other comprehensive income in the period in which they occur. Re-measurements are not reclassified in the Income Statement in subsequent periods. Contributions to the GPP are charged to the Income Statement in the period in which they fall due. BML recognises pension surpluses to the extent that these surpluses can be realised in the form of future repayments or reductions in future contributions to the scheme. Taxation Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively. Current or deferred taxation assets and liabilities are not discounted. (i) Current tax Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. (ii) Deferred tax Deferred tax arises from timing differences that are differences between taxable profits and accounting profits as stated in the Financial Statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the Financial Statements. Deferred tax is recognised on all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is not a commitment to sell the asset. Leased assets At inception BML assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement. Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classified as finance leases. Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. (i) Operating leased assets Rentals payable and receivable under operating leases are accounted for through the Income Statement in equal amounts over the lease term, unless the rental payments are structured to increase in line with expected general inflation, in which case BML recognises an annual rental expense equal to amounts owed to the lessor. (ii) Lease incentives The aggregate benefit of lease incentives received to enter into an operating lease is recognised as a reduction to the expense recognised over the lease term on a straight-line basis. Onerous lease provisions Onerous lease provisions are made for any contracts in which the unavoidable costs of meeting the obligations under it exceed the economic benefits expected to be received from the continued use of the underlying asset. Impairment of non-financial assets At each reporting date non-financial assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the Income Statement. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the Income Statement. Provisions and contingencies (i) Provisions Provisions are recognised when BML has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. In particular, restructuring provisions are recognised when BML has a detailed, formal plan for the restructuring and has raised a valid expectation in those affected by either starting to implement the plan or announcing its main features to those affected and therefore has a legal or constructive obligation to carry out the restructuring. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost. (ii) Contingencies Contingent liabilities are not recognised. Contingent liabilities arise as a result of past events when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (ii) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within BML’s control. Contingent liabilities are disclosed in the Financial Statements unless the probability of an outflow of resources is remote. Contingent assets are not recognised. Contingent assets are disclosed in the Financial Statements when an inflow of economic benefits is probable. Financial instruments BML has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. (i) Basic financial assets Basic financial assets, including cash and balances and debt securities, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest rate (EIR) method. (ii) Impairment of financial assets BML regularly reviews all classes of financial assets to identify whether there are any indications of impairment. Assets held at amortised cost are considered to be impaired where the recoverable amount of the asset i.e. the discounted expected future cash flows from the asset, using the original EIR, is less than the carrying value of the asset. Evidence of impairment includes non-payment of interest or other evidence that the borrower is experiencing financial difficulties. All impairment losses are recognised in profit or loss. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss. (iii) Basic financial liabilities Basic financial liabilities, including liabilities to customers and subordinated liabilities, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future payments discounted at a market rate of interest. Such liabilities are subsequently carried at amortised cost using the effective interest rate method. (iv) Derecognition of financial assets Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. BML has transferred the risks and economic benefits associated with its loan portfolio to BBGL and BBGL, Jersey Branch under sub-participation arrangements and so the loan portfolio is not recognised in the Statement of Financial Position.

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

  • 2. Employees

    2024 2023
    Average number of employees during the period 26 25

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

3. Intangible assets

Goodwill Other Total
Cost £ £ £
At 1 January 2024 1,707,001 1,707,001
Additions
Disposals ( 231,000 ) ( 231,000 )
Revaluations
Transfers
At 31 December 2024 1,476,001 1,476,001
Amortisation
At 1 January 2024 29,000 29,000
Charge for year 8,000 8,000
On disposals
Other adjustments
At 31 December 2024 37,000 37,000
Net book value
At 31 December 2024 1,439,001 1,439,001
At 31 December 2023 1,678,001 1,678,001

Deferred tax asset of £1,436k (2023: £1,667k) is included into Intangible assets in this form, as there is no other way to input it into Non-current Assets.

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

4. Tangible assets

Land & buildings Plant & machinery Fixtures & fittings Office equipment Motor vehicles Total
Cost £ £ £ £ £ £
At 1 January 2024 379,000 9,000 55,000 443,000
Additions
Disposals
Revaluations
Transfers
At 31 December 2024 379,000 9,000 55,000 443,000
Depreciation
At 1 January 2024 302,000 1,000 45,000 348,000
Charge for year 53,000 1,000 5,000 59,000
On disposals
Other adjustments
At 31 December 2024 355,000 2,000 50,000 407,000
Net book value
At 31 December 2024 24,000 7,000 5,000 36,000
At 31 December 2023 77,000 8,000 10,000 95,000

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

5. Debtors

2024 2023
£ £
Trade debtors 41,000 52,000
Other debtors 346,000 359,000
Total 387,000 411,000

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

6. Current assets investments note

Government Debt: £1,971k (2023: £1,964k). These are restricted for the pension scheme.

BUTTERFIELD MORTGAGES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2024

7. Creditors: amounts falling due within one year note

2024 2023
£ £
Trade creditors 444,000 711,000
Taxation and social security 35,000 37,000
Accruals and deferred income 1,245,000 1,198,000
Other creditors 14,777,000 10,565,000
Total 16,501,000 12,511,000