The country's three top banks announced higher third-quarter profits yesterday, with Leumi shining as noninterest income jumped.
Net profits at Hapoalim, the country's largest bank, rose to NIS 625 million in the quarter from NIS 471 million a year earlier.
Bank Leumi, the second largest bank, posted sharply higher profits as credit-loss charges fell and noninterest income jumped. It also made a provision for the early retirement of 250 workers. Net profits rose to NIS 479 million from NIS 155 million a year earlier.
The third largest bank, Israel Discount Bank earned NIS 221 million in the quarter, up from 121 million a year earlier.
At Hapoalim, third-quarter net financing income rose to NIS 2.12 billion from NIS 1.66 billion, while provisions for credit losses fell to NIS 286 million from NIS 498 million. The bank expects to meet a target to strengthen its capital position ahead of a deadline after beating third-quarter profit forecasts thanks to a drop in provisions for bad loans.
Finance chief Ran Oz said the bank hoped to return to paying dividends soon, though he cautioned that a slowing economy and low interest rates made for a challenging backdrop.
Leumi made a provision of NIS 150 million in the third quarter for the early retirement of 250 employees as part of a streamlining program announced in February. Net interest income in the quarter rose to NIS 1.87 billion from NIS 1.84 billion in 2010 while credit-loss charges fell to NIS 292 million from NIS 378 million.
Leumi was forecast by analysts to post net interest income of NIS 1.94 billion and credit-loss charges of NIS 313 million. Noninterest income jumped 79% in the quarter to NIS 1.21 billion.
Discount Bank cited a 35.9% jump in noninterest income to NIS 855 million, which includes credit-card and other fees as well as capital-market commissions. Its bottom-line gain was offset by a 0.8% dip in net interest income to NIS 1.14 billion and a 3.1% rise in expenses for credit losses to NIS 233 million.
Discount's core Tier 1 ratio of capital to risk assets rose to 8.4% from 8.1% at the end of 2011.
The Bank of Israel has called on banks to hold core capital equivalent to at least 9% of risk-weighted assets by the end of 2014 as part of a global drive to strengthen the industry and prevent a repeat of the 2008 financial crisis.
Hapoalim has increased its core Tier I ratio by 0.2 percentage points in each of the past three quarters, reaching 8.5% in the third quarter from 7.9% at the end of 2011. Oz says he expects the bank to reach the 9% target ahead of time.
At Leumi, the bank's core Tier 1 capital ratio was 8.6%, up from 8.07% at the end of 2011. The Bank of Israel wants Hapoalim and Leumi to reach a core Tier I capital ratio of 10% by the end of 2016.