Israel Discount Bank (TASE: DSCT), managed by Giora Offer, did not manage to reach the Bank of Israel's 12% capital adequacy target at the end of the second quarter, raising some NIS 1 billion in the third quarter so far has raised its capital adequacy ratio to a current 12.08%. Since the beginning of the year, Discount Bank has raised NIS 1.57 billion.
"The bank is examining various possibilities for improving its capital adequacy ratio," Discount Bank's second quarter report, released this morning, states. "In the past few months, the bank has been preparing for various possibilities, that include raising further hybrid tier-1 capital, raising upper tier-2 capital, and raising upper tier-2 capital under state guarantee. The timing and scope of each of these possibilities depends to a large extent on market conditions."
Discount Bank's second quarter net profit rose 52% in comparison with the corresponding quarter to NIS 337 million. This includes a NIS 130 million one-time profit from the cancellation of a tax provision on the sale of its holding in First International Bank of Israel (TASE: FTIN1;FTIN5). Return on equity rose to 15.8% in the second quarter, from 9.9% in the corresponding quarter of 2008, the highest among all the banks. Excluding one-time profits, net profit was NIS 223 million, and return on capital 10.2%.
Provisions for doubtful debts grew 66% to NIS 231 million, but profit on financing activities after provisions for doubtful debts still rose 4.2%, to NIS 1.03 billion. Expenses rose 7.6% to NIS 1.28 billion. Operating income grew 23% to NIS 753 million. Fee income rose 12.5% to NIS 647 million.
"At the end of August, the bank's board of directors approved an update to the strategic plan, which re-adopts the double digit growth targets in profit on ordinary activities and improvement in operating ratios, also updating the return on equity target range for 2010-2011 to 9-11%," Offer said.
The bank's shareholders'' equity rose 3% to NIS 9.53 billion, and credit to the public rose 9.2% in the second quarter to NIS 117.1 billion. The value of the bank's securities portfolio rose by some NIS 3 billion to NIS 37.7 billion, while deposits from the public rose 12.6% to NIS 143 billion.
Published by Globes [online], Israel business news - www.globes.co.il - on August 31, 2009
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