Bank Leumi (TASE: LUMI) and First International Bank of Israel (TASE: FTIN) today issued profit warnings for the third quarter of 2011.
In a notice to the Tel Aviv Stock Exchange (TASE), Bank Leumi states that it estimates that its net profit for the third quarter will be NIS 50-100 million, substantially lower than in the two preceding quarters. This means that the bank will post a net profit of NIS 1.17-1.22 billion for January-September.
Bank Leumi attributes the drop in net profit to falling prices of securities traded on the TASE, in particular the cumulative effect of the reduction in value of its investment in Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR).
Bank Leumi posted a net profit from regular operations of NIS 561 million for the second quarter, givng a return on equity of 10.3%. The bank's total profit was NIS 563 million.
First International Bank, controlled by Zadik Bino, reports that, "Due to sharp falls in capital markets in Israel and overseas, the third quarter results might show negligible profitability, or close to it. On the basis of this estimate, the bank expects to report a net profit for January-September, given that it posted a net profit of NIS 286 million in the first half of 2011."
First International Bank added, "The fall in prices of securities on financial markets and the events in capital markets in Israel and overseas, and their effect on the bank's reports will be reflected in the following areas, among others, mainly as accounting records: the value of the bank's nostro investments; the fair value of derivative financial instruments; and losses designated for compensation.
Bank Leumi's share price fell 0.1% to NIS 11.80, before trading in the share was suspended, giving a market cap of NIS 17.4 billion. Trading will resume at 10:06 am. First International Bank's share price fell 2.2% to NIS 36.87 in early trading today, giving a market cap of NIS 3.7 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2011
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