Leumi posts NIS 1.6b Q1 profit; declares reduced dividend

Bank Leumi branch credit: Eyal Izhar
Bank Leumi branch credit: Eyal Izhar

Unlike Bank Hapoalim, Bank Leumi will pay a divided on its first quarter profit, but only 20%, to meet capital adequacy requirements.

Bank Leumi (TASE: LUMI) posted a net profit of NIS 1.6 billion for the first quarter of 2022, up 23% from NIS 1.3 billion in the corresponding quarter of 2021. Annualized return on equity in the first quarter of 2022 was 15.6%, which compares with 14.2% in the corresponding quarter.

Unlike its major competitor Bank Hapoalim, and also unlike what is expected of Mizrahi Tefahot Bank, which is due to release its first quarter financials later today, Bank Leumi has declared a dividend. It totals NIS 322 million, representing 20% of the first quarter net profit. Bank Leumi's dividend policy is to distribute 40% of profits, but it has reduced the first quarter dividend in order to meet Bank of Israel capital adequacy requirements. Israel Discount Bank, which released its results yesterday, declared a dividend of 20% of its first quarter profit, amounting to NIS 197 million.

During the first quarter started to record profits on the completion of the merger of Leumi US with Valley National Bancorp, which took place on April 1. Bank Leumi will make a post-tax gain of NIS 645 million on the deal, of which NIS 194 million was recognized in the first quarter financials, while the balance will be recorded in the second quarter.

Like all the banks in Israel, Bank Leumi benefitted in the first quarter from continued growth in its credit portfolio. The portfolio grew by 7.6% in comparison with the end of 2021, and by 20.7% in comparison with the corresponding quarter of 2021 to NIS 349.8 billion.

Leumi has been cautious in releasing credit loss provisions made during the Covid-19 pandemic. It recorded income on the credit loss item of just NIS 40 million in the first quarter; Bank Hapoalim released NIS 600 million from credit loss provisions.

Net interest income in the first quarter totaled NIS 2.9 billion, 29% more than in the corresponding quarter. The rise in interest income is mainly a result of the growth in the credit portfolio, and is also a product of differences in the Consumer Price Index between the two periods. Non-interest finance income totaled NIS 14 million in the first quarter of 2022, which compares with NIS 441 million in the corresponding quarter, a drop of 96%, largely stemming from falls on the capital markets.

Deposits from the public totaled NIS 517 million at the end of the first quarter, 18.3% more than at the end of the first quarter of 2021.

Published by Globes, Israel business news - en.globes.co.il - on May 24, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Bank Leumi branch credit: Eyal Izhar
Bank Leumi branch credit: Eyal Izhar
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018