Union Bank of Israel (TASE: UNON) today published its financial report for the fourth quarter and full year of 2008. After seeing its profit jump in 2007 Israel's sixth largest bank faced the full impact of the economic crisis this year. It posted a net loss of NIS 21 million in the fourth quarter of 2008, and its full-year net profit fell 57% to NIS 54 million from NIS 126 million in 2007.
The main damage was to Union Bank's results for the second half of 2008. Its provision for doubtful debts tripled to NIS 45 million for the fourth quarter. From a net profit of NIS 61 million in the first half of 2008, the bank posted a net loss of NIS 7 million in the second half.
Union Bank's return on equity was weak for the industry, at just 3.4% for 2008.
Union Bank says that the economic crisis affected it in several ways. International Financial Reporting Standards (IFRS) resulted in a sharp increase in mark-to-market write-downs on derivatives to NIS 47 million in 2008, including NIS 49 million in the fourth quarter alone. The bank's provision for the permanent reduction in value of securities in its corporate bonds available for sale portfolio jumped 26-fold to NIS 52 million for the year. The bank's provision for doubtful debts for 2008 rose 18% to NIS 94 million, and the provision's proportion of the credit portfolio rose to 0.51% in 2008 from 0.46% in 2007.
Union Bank's share nevertheless rose 0.9% today to NIS 7.12.
Published by Globes [online], Israel business news - www.globes-online.com - on February 26, 2009
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