Bank Hapoalim (TASE: POLI) reported a sharp rise in provisions for doubtful debts, as Africa-Israel Investments Ltd.'s (TASE:AFIL; Pink Sheets:AFIVY.PK) troubles weigh on the bank's results.
Net profit for the third quarter was NIS 425 million, 3.6% below the NIS 441 million recorded in the corresponding quarter of 2008.
Provision for doubtful debts rose 33% to NIS 629 million, from the NIS 471 million in the corresponding quarter. The provision was NIS 538 million at the end of the second quarter. While specific customers were not named, Hapoalim hinted that the increase was due to Lev Leviev, the controlling shareholder in Africa-Israel. The bank described the increase as "due to a borrowers' group whose main activity is in the construction and real estate sector."
Leviev owes the bank about NIS 2.5 billion, mostly through his private company Memorand.
The ratio of doubtful debts to overall credit to the public was 1.21%, higher than the 0.8% in the second quarter, and considerably higher than the 0.4-0.5% usually recorded in regular periods.
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009