Business in Brief: Tel Aviv Shares End Higher Despite Edginess Over Gaza Fighting

Bank Leumi profits climb 14% as U.S. business shines ■ Mizrahi Tefahot's profits soar but it refrains from paying dividend again ■ Brookland bonds tumble ■ Franklin Templeton launches Israel operations

FILE Photo: A stock market ticker displays financial information in the lobby of the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel.
Rina Castelnuovo/Bloomberg

Bank Leumi profits climb 14% as U.S. business shines

Bank Leumi, Israel’s second-largest lender, lifted third-quarter net profit 14% on higher interest income and lower expenses, Israel’s second-largest lender said Tuesday. The bank earned 936 million shekels ($253 million), up from 820 million a year earlier and handily beating forecasts for 853 million shekels, according to a Reuters poll of analysts. Earnings were boosted by gains from asset sales by its Leumi Partners unit and higher profits in the United States, the bank said. Lower provisions for bad debts and a favorable inflation environment helped, too. The bank declared a quarterly dividend of 375 million shekels, representing 40% of quarterly net income. Leumi’s Tier 1 ratio, which measures equity capital as a proportion of risk-weighted assets, was 11.25% at the end of September, down from 11.43% at the end of 2017. Return on equity rose to 121.2% from 10.3% a year earlier. Leumi shares finished down 0.9% at 24.10 shekels. (Michael Rochvarger)

Mizrahi Tefahot's profits soar but it refrains from paying dividend again

Mizrahi Tefahot, Israel’s third-largest bank, saw its third-quarter net profit soar 74% from a year ago but said it would refrain for a second time from paying a quarterly dividend. The bank earned 454 million shekels ($123 million); a year ago profits were weighed down by a one-time charge linked to a new labor agreement. Profit exceeded forecasts for 390 million shekels, according to a Reuters poll of analysts. Mizrahi said that due to the U.S. investigation into the bank’s alleged role in helping American clients evade U.S. taxes, it would not pay a dividend for the quarter. Mizrahi didn’t set aside any further money for future penalties in the case, but it has already allocated 587 million shekels. The bank’s Tier I capital ratio slipped to 10.11% at the end of September from 10.16% a year earlier. Mizrahi shares ended up 0.6% at 66.40 shekels. (Michael Rochvarger)

Brookland bonds tumble after property developer says it will have to reschedule debt

The Tel Aviv-traded bonds of Brookland Upreal plunged Tuesday after the U.S. property company said the night before that it sought to reschedule debt. “The company’s board has concluded there is uncertainty regarding the company’s ability to meet its current liabilities, including ambiguity regarding its ability to meet payments to the company’s bondholders as of December 2019,” Brookland told the Tel Aviv Stock Exchange.

“Responsibility and caution requires us to open preliminary negotiations with holders of the company’s debt (series Aleph and Bet)," the company said, adding that it was crafting a plan to restructure its liabilities. Moshe Cohen, Brookland’s internal auditor, said he was stepping down, saying he could not get the financial data he needed to do his job. Brookland’s problems surfaced this week after TheMarker reported that the company had suffered cash flow problems after failing to sell assets. The price of Brookland’s bonds dropped 46%, leaving them with a yield topping 60%. (Eran Azran)

Franklin Templeton launches Israel operations

Franklin Templeton Investments entered the $67 billion Israeli retail market Tuesday after the government allowed foreign firms to offer offshore products directly to investors. Previously, such investments had to be distributed through an Israeli manager or bank, which increased fees. “Over the years, we have been witnessing Israeli investors’ increasing preference for foreign investments,” Jenny Johnson, president and chief operating officer of Franklin Templeton, said at the opening of the group’s new office in Tel Aviv. Although assets under management of domestic funds investing in foreign securities have more than doubled in the past three years to $7.7 billion, a lack of choice means they still account for only 12% of total assets, she said. Franklin Templeton, which has $724 billion in assets under management, appointed Uzi Yitzhak to head its business in Israel, where the firm also registered two mutual funds. (Reuters)

Tel Aviv shares end higher despite edginess over Gaza fighting

After a shaky start, Tel Aviv shares entered positive territory early in the afternoon Tuesday. But trading remained volatile throughout the day during this week of fighting between Israel and Gaza militants. The TA-35 and TA-125 indexes both ended up exactly 0.24% to close at 1,648.24 and 1,484.21 points, respectively, on turnover of 1.1 billion shekels ($300 million). Drug stocks did well, with Perrigo adding 1.4% to end at 241.90 shekels and Opko Health extending gains with a 1.7% increase to 13.46. Teva, however, rose only 0.5% to 87.20. Oil Refineries Ltd. advanced 2.1% to 1.89 despite a sharp drop in quarterly net profit to $16 million from $92 million a year earlier. Matrix fell 2.2% to 43.10 after it said profits declined 9% to 30.9 million shekels. Brainsway fell 2.2% to 24.47 after it reported a quarterly loss despite higher revenues. The stock had risen 12.5% in the three previous sessions. (Guy Erez)