for the Period Ended 31 December 2024
| Directors report | |
| Profit and loss | |
| Balance sheet | |
| Additional notes | |
| Balance sheet notes |
Directors' report period ended
The directors present their report with the financial statements of the company for the period ended 31 December 2024
Principal activities of the company
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
The director shown below has held office during the period of
7 October 2024
to
31 December 2024
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
And signed on behalf of the board by:
Name:
Status: Director
for the Period Ended
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The notes form part of these financial statements
This report was approved by the board of directors on
and signed on behalf of the board by:
Name:
Status: Director
The notes form part of these financial statements
for the Period Ended 31 December 2024
Basis of measurement and preparation
Turnover policy
Tangible fixed assets depreciation policy
Other accounting policies
for the Period Ended 31 December 2024
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for the Period Ended 31 December 2024
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for the Period Ended 31 December 2024
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for the Period Ended 31 December 2024
Government Debt: £1,971k (2023: £1,964k). These are restricted for the pension scheme.
for the Period Ended 31 December 2024
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