The credit loss item continues to be the most significant feature of the banks’ financials. Like Mizrahi Tefahot Bank (TASE:MZTF) and Bank Hapoalim (TASE: POLI), Israel Discount Bank (TASE: DSCT) made a large recovery in the first quarter of this year. The bank’s first quarter financials released this morning show net income of NIS 147 million on this item, which compares with a net expense of NIS 656 million in the corresponding quarter of 2020. The reversal arises mainly from the cancellation of a general credit loss provision in the light of the improvement in the economy.
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Discount Bank posted a net profit of NIS 662 million in the first quarter of 2021, which compares with NIS 279 million in the first quarter of 2020, representing a 137% increase. Excluding one-time items mainly relating to the bank’s voluntary early retirement program, net profit in the first quarter of this year was NIS 738 million, 161% higher than in the corresponding quarter. 754 employees left the Discount Bank group by the end of March this year (including regular retirement).
The net return on capital in the first quarter of 2021 was 14.5%, which compares with 6% in the corresponding quarter.
Another factor that led to the growth in profit was growth in credit to the public., which totaled NIS 193.3 billion at the end of the first quarter of 2021, 2.4% more than the NIS 188.7 billion at the end of the first quarter of 2020. The bank says that the growth arises from it focus on the segments set out in its updated strategic plan.
The growth in the credit portfolio led to a rise in net interest income to NIS 1.5 billion from NIS 1.45 billion in the corresponding quarter.
Discount Bank passed a milestone when its shareholders’ equity exceeded NIS 20 billion for the first time, reaching NIS 20.4 billion at the end of the first quarter of 2021, up 3.4% in comparison with the end of the first quarter of 2020. Total assets surpassed NIS 300 billion for the first time, reaching NIS 306.14 billion.
During the coronavirus period, up to the end of March, Discount Bank and its Mercantile Discount subsidiary allowed deferment of repayments on loans totaling NIS 16.6 billion, representing 8.4% of the group’s credit portfolio. Discount Bank says that 83% of these loans are again performing.
Published by Globes, Israel business news – en.globes.co.il – on May 25, 2021
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