Profits of Israel Discount Bank (TASE: DSCT) subsidiary Israel Discount Bank of New York were flat in 2011. The bank posted a net profit of $50.1 million in 2011, down from $50.6 million in 2010, and the return on equity fell to 6.5% from 6.9%, respectively.
Discount New York's capital adequacy rate was high at 14.6%. The bank's CEO, Ehud Arnon, took up his post in early 2011.
"Our main problem is the low interest rate environment, which affects the financing spread, and also affects the return on the nostro portfolio," said Arnon. "The interest rate environment will be similar next year, but the other growth directions that we'll take should increase the profit, such as the companies' financial management system that we launched."
Discount New York plans to focus on local banking, and will open two more branches, one in Brooklyn and the other in New Jersey, this year. The branches will focus on private banking services for customers with up to $10 million in assets.
"These customers do not receive suitable services from other banks. We give them personal advice, which has disappeared from the map in the US, rather than call service via an investment center," says Arnon.
Discount New York's deposits totaled $6.7 billion at the end of 2011, 10% more than a year earlier. Historically, the bank relied on deposits from Latin American Jews, and in 2011, 60% of its deposits were offshore, i.e. deposits not owned by US citizens or residents, down from 65% of total deposits in 2010.
Discount New York's shareholders' equity of $683 million at the end of 2011 accounted for a quarter of Discount Bank's total equity. Discount New York's shareholders' equity declined by $74 million from the end of 2010, due to the distribution of a $100 million dividend to its direct parent company, Discount Bankcorp Inc. Discount New York's balance sheet total was $9.5 billion at the end of 2011, and its credit portfolio was $3.8 billion, 2.6% less than a year earlier.
Published by Globes [online], Israel business news - www.globes-online.com - on February 6, 2012
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