Business in Brief: Dollar Slips Below 3.60 Shekels

Discount Bank profits surge while Mizrahi Tefahot's rise nicely; online gambling company 888 stung by regulatory warning; union chief threatens SodaStream; Stocks end flat

A man walking past a currency exchange bureau advertisement showing images of the U.S dollar and other currencies in Cairo, August 3, 2016.
Mohamed Abd El Ghany/Reuters

The dollar eased below 3.60 shekels Monday for the first time in nearly two and a half years. The greenback clawed back some of its losses in late trading to 3.6013, but the Bank of Israel rate was set at 3.5980, a loss of 0.3% for the day. The dollar’s losses so far this year amount to 6.1% despite the Bank of Israel’s best efforts to support it by buying foreign currency to the tune of $4 billion this year and prevent a strong shekel from damaging Israeli exporters. Despite Monday’s weakening, the central bank did not intervene. The bank’s foreign currency reserves now stand at $105 billion and its policy of intervening has come under fire. David Reznik of Leumi Capital Markets told the Calcalist financial daily that the Bank of Israel had effectively run out of tools and was now counting on U.S. interest rate hikes to strengthen the greenback. (Uri Tomer)

Discount Bank turns in 70% profit rise
Israel Discount Bank reported an almost 70% rise in first-quarter net profit Monday, boosted by growth in credit to households and small businesses. Discount, Israel’s fourth-largest bank in terms of assets, said its net profit rose to 303 million shekels ($84 million) from 179 million a year earlier and was above the average forecast of 298 million shekels in a Reuters poll of analysts. Credit loss expenses jumped to 145 million shekels from 46 million a year ago while net interest income rose 11% to 1.17 billion shekels. Discount’s core Tier 1 capital adequacy ratio, which measures equity capital as a percentage of total risk-weighted assets, slipped to 9.7% from 9.8% at the end of 2016. Discount shares finished 1.3% lower at 8.79 shekels. (Reuters)

Mizrahi Tefahot profit up 11.5% in first quarter
Mizrahi Tefahot, Israel’s third-largest lender and its biggest mortgage bank, reported an 11.5% rise in first-quarter net profit Monday, boosted by higher financing income. The bank also said it was doubling its dividend to 30% of net profit starting this year. For the first quarter, the bank said it would pay a 96.3-million-shekel ($26.7 million) dividend. Net profit in the three months was 321 million shekels, up from 288 million a year earlier, boosting the bank’s return on equity to 10.4% from 10% a year earlier. Analysts on average forecast that the bank would earn 324 million shekels, according to a Reuters poll. Financing income in the quarter rose 24% to 1.03 billion shekels, but Mizrahi’s credit loss provision jumped to 49 million shekels from 3 million. The bank’s Tier I capital ratio, a key measure of its financial strength, rose to 10.1% at the end of March from 9.65% a year earlier. Mizrahi shares ended up 1.7% at 61.83 shekels. (Michael Rochvarger)

888 shares tumble as regulatory warning stings
Shares of the London-traded Israeli-owned online gambling company 888 Holdings fell sharply Monday after it said Britain's Gambling Commission was conducting a review of an unnamed subsidiary. “The review has been initiated to assess certain measures that the licensee employs to ensure social responsibility to its customers including, amongst other items, effective self-exclusion tools across different operating platforms,” 888 said in a statement to the London Stock Exchange. It was referring to tools used to deter gambling by addicts who want to stop; for example, by allowing customers to easily close accounts for a limited period of time. British authorities have been cracking down on the online industry and have the power to shut down 888 but would most likely settle for a fine, analysts told Bloomberg News. Shares of 888, which operates online poker, sports betting and other gaming, ended down 5.9% at 2.81 pounds ($3.63). (Guy Erez)

Union chief threatens to undermine SodaStream share price
SodaStream, the maker of home carbonated-drink devices, abruptly broke off talks Monday on a collective labor agreement, citing remarks by a Histadrut labor federation official it said were an incitement to violence. “SodaStream management stopped the talks because the Histadrut continues to incite violence, something that in the past has caused physical harm to workers who rejected its path,” the company said in a statement. Meir Babioff, the head of the labor federation’s Negev regional council, didn’t deny he told workers at a meeting over the weekend that he had referred to SodaStream management as “shitty” and one that “deserves violence.” He also threatened to bring down the price of SodaStream shares, and said the company’s reaction was just an excuse to back out of negotiations. “All they want to do is go back to the good old days in which they controlled everything and did to the workers what they wanted,” Babioff said. SodaStream shares ended unchanged at 194.50 shekels ($53.92). (Tali Heruti-Sover)

Tel Aviv stocks end little changed
Tel Aviv shares ended flat Monday despite gains in the technology sector. The TA-25 and TA-125 indexes both posted gains of about 0.05% to 1,432.44 and 1,303.99 points, respectively, on turnover of 1.4 billion shekels ($390 million). Tech shares were boosted by a 4.9% advance by Nova to 91.90, extending gains it made the day before on strong earnings. Sapiens rose 4.8% to 48.46 after it reported a 14% rise in quarterly revenue. Foresight jumped 20% to 8.52 on news a day earlier that it was planning to list its shares on Wall Street. Two other stocks rode to glory on the global hacking scare: Safe-T soared 24.6% to 9.07 on expectations it would benefit from heightened interest in its cybersecurity offerings, while Cyren surged 17.1% to 8.69 after said its cloud-security products protected against the WannaCry malware behind the attacks. But analysts said there was nothing unusual about that, and many products can do the same. (Uri Tomer)