Israeli Banks' Profits Grow in Q4 but Less Than Expected

Bank Hapoalim posted $150 million in profits, Bank Leumi $120 million, and Discount Bank $15 million in profits.

Tomer Appelbaum

REUTERS – Israeli banks Bank Hapoalim, Bank Leumi and Discount Bank all reported profits in their fourth quarter reports issued Monday, though these fell short of expectations.

Bank Hapoalim, Israel's largest lender, said it posted fourth-quarter net profit of 586 million shekels ($150 million), compared with 487 million a year earlier and below expectations of 731.5 million shekels in a Reuters poll of analysts. Net financing income fell to 2.11 billion shekels from 2.15 billion, while its provision for credit losses was 147 million shekels versus 363 million a year earlier.

Hapoalim's core Tier 1 capital ratio to risk-weighted assets in Basel III terms rose to 9.63 percent at the end of 2015 from 9.29 percent at the end of 2014. The bank's board approved a dividend of 117 million shekels for the fourth quarter, a distribution of 20 percent of 2015 annual net profit to bring the total for 2015 to 616 million shekels. Credit to the public last year rose 5.5 percent to 278.5 billion shekels.

Bank Leumi, Israel's second-largest lender, earned quarterly net profit of 431 million shekels ($110 million), compared with a loss of 43 million a year ago that stemmed from higher expenses for credit losses and one-time items. The bank was forecast to post fourth-quarter profit of 667 million shekels in a Reuters poll of analysts.
 
Net interest income fell to 1.73 billion shekels from 1.8 billion while it had expenses in respect of credit losses of 33 million shekels versus 483 million a year ago. Its Tier 1 ratio, which measures equity capital as a proportion of total risk-weighted assets, rose to 9.58 percent at the end of 2015 from 9.09 percent at the end of 2014.

Israel Discount Bank, Israel's third-largest bank, said it earned 60 million shekels ($15 million) in the fourth quarter, up from 4 million a year earlier but below a forecast of 152 million shekels in a Reuters poll of analysts.

Excluding one time items, such as selling stakes in its Swiss and Latin American units as well as for a retirement plan, Discount recorded a quarterly profit of 93 million shekels.

Credit loss expenses rose 16.7 percent to 98 million shekels while net interest income edged up 0.4 percent to 1.04 billion shekels. Its core Tier 1 capital adequacy ratio, which measures equity capital as a percentage of total risk-weighted assets, rose to 9.5 percent in Basel III terms from 9.4 percent at the end of 2014.