Bank Yahav for Government Employees Ltd. today published its financial report for the first half of 2008. Competition with Israel Discount Bank (TASE: DSCT) for the business of civil servants battered Bank Yahav's results; its net profit fell to NIS 4.2 million from NIS 25.1 million in the first half of 2007. The bank's net profit from regular operations fell 59% to NIS 15.2 million in the first half.
Bank Yahav achieved a return on equity of 5.1% in the first half, compared with 14.3% in 2007 as a whole. The main reason for the plunge in profit was a surge in operating expenses to keep the bank's customers and prevent them switching to Discount Bank after it won the tender to provide financial services to government employees. The bank claims that it is handling the challenge from Discount Bank well, and the financial report indicates that it has kept, and even increased, its customers by 7,000 since January.
Mizrahi Tefahot Bank (TASE:MZTF) completed its acquisition of 50% of Bank Yahav from Bank Hapoalim (TASE: POLI; LSE:80OA) in June. The other half of Bank Yahav is owned by Economic and Cultural Enterprises for Government Employees Company Ltd., which is owned in equal shares by the government and the National Union of Government Employees.
Bank Yahav is a designated bank, specializing, as its name implies, in government employees. It is due to obtain a license to expand its retail business beyond this customer base.
Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2008
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