Israel Discount Bank (TASE: DSCT) published a warning yesterday evening (Saturday) about its fourth quarter results, due to be released in two weeks. The bank, headed by CEO Lilach Asher-Topilsky, sees zero profit for the fourth quarter, because of a number of one-time events.
First of all, the bank will make a provision of NIS 47 million because of the fall in value of its holding in First International Bank of Israel (TASE: FTIN). On Thursday last week, Discount Bank sold 7% of First International. Together with previous sales in the past few months, this brought Discount Bank's stake in First International below 10%, as the regulator had demanded. The latest sale was at a price per share of NIS 49.51, 2.5% below Thursday's market price, for a total consideration of NIS 349 million. Since Discount Bank's stake is now lower than 10%, it is making a NIS 47 million provision against a permanent fall in value.
Discount Bank is also making a NIS 34 million provision against household credit, in line with the requirement of the Bank of Israel for all the banks in the current quarter, because of the sharp rise in this form of credit that, in the eyes of the Bank of Israel Banking Supervision Department, has not been accompanied by an appropriate rise in provisions for credit losses.
As if this were not enough, Discount Bank will also make a provision in the tens of millions of shekels against the sale of its Uruguayan unit, and for its streamlining program, which calls for early retirement by 130 employees. Altogether, these provisions will wipe out the bank's profit for the fourth quarter of 2014, and negatively affect its profit for the year as a whole.
Discount Bank's share price is currently down 1.78% on the Tel Aviv Stock Exchange.
Published by Globes [online], Israel business news - www.globes-online.com - on February 22, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015