Bank Leumi Boosts Q3 Profit by 16%

But still misses estimates; Leumi also adds NIS 190 million to provision related to U.S. tax investigation.

Leumi, Israel's second-largest bank, reported a 16 percent rise in quarterly profit, boosted by higher financing and credit loss income.

Leumi posted third-quarter net profit of NIS 555 million ($157.6 million), up from NIS 479 million a year earlier but just shy of the average Reuters forecast of 564 million.

Net interest income rose 4 percent to NIS 1.95 billion and non-interest income gained 14.4 percent. But Leumi recorded income in respect to credit losses of NIS 44 million, versus credit loss expenses of 292 million a year earlier and a forecast of 172 million.

Its bottom line was helped by a capital gain from the sale of a 4.35 percent stake in Migdal Insurance and Financial Holdings.

Leumi had planned to publish its results last Wednesday but was forced to push this back to late on Saturday due to a delay in reporting by conglomerate Israel Corp, in which it holds an 18 percent stake. Israel Corp swung to a quarterly loss of $84 million.

By law, Israeli companies must report third-quarter earnings by the end of November.

Leumi's core Tier 1 capital to risk-weighted assets rose to 9.28 percent at the end of September from 8.55 percent at the end of 2012.

Israel's banking regulator has required banks to hold core Tier 1 ratio of at least 9 percent by the start of 2015 as part of a global campaign to strengthen the industry and prevent a repeat of the 2008 financial crisis.

Leumi said it increased a provision related to a U.S. tax investigation by NIS 190 million so far in 2013. It took a charge of NIS 340 million in 2012 to cover expenses that might be incurred amid a U.S. investigation into alleged tax dodging by Leumi customers who are U.S. taxpayers.

The total provision of 530 million includes expenses for advisers and external service providers connected with the investigation, Leumi said.

Last week, chief rival Hapoalim reported a rise in quarterly profit to NIS 653 million from 625 million a year earlier.

Bloomberg