Galia Maor parts from Leumi on NIS 1.9b profit

The bank's 2011 net profit was actually down on 2010, mainly because of a fall in the value of investments.

Today, for the last time, Galia Maor presented the financial results of Bank Leumi (TASE: LUMI). On May 1, Maor will step down as CEO of the bank after 17 years in the post, and her replacement, Rakefet Russak-Aminoach, will take over. Maor’s last year as Leumi CEO actually ended with less good results than the bank is accustomed to. It reported a profit of NIS 1.891 billion, which compares with a profit of NIS 2.33 billion in 2010. Return on equity was 8.3%. Profit on ordinary activities was NIS 1.889 billion, 12.2% less than in the previous year.

The decline in profit was mainly due to a fall in the value of foreign securities, the fall in the share price of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), leading to a revaluation of the bank’s holding in the company, and a less profitable year for Israel Corporation (TASE: ILCO), of which Bank Leumi holds 18%, because of problems at subsidiary Zim Integrated Shipping Services Ltd.. The fall in profit on the bank’s activity in Israel, excluding its overseas units and branches, was 43%.

The numbers might have been worse had the bank not enjoyed a NIS 326 million tax benefit in the fourth quarter, resulting from the change in future company tax rates under the recommendations of the Trajtenberg Committee on Economic and Social Change.

Bank Leumi’s earnings per share were NIS 1.28 in 2011, so that the bank surpassed the analysts’ consensus estimate, compiled by “Globes” and Psagot, by NIS 0.01.

In the fourth quarter itself, it looks as though the bank was having a clear-out of its credit portfolio in advance of the change of CEO, with credit losses amounting NIS 385 million, more than half of the amount for the whole year. The rate of provisions as a proportion of the credit portfolio was 0.64% in the fourth quarter. The credit loss provision for the entire year was NIS 734 million, 26% more than in 2010, with the provision rate reaching 0.3%.

Bank Leumi’s shareholders’ equity at the end of 2011 was NIS 3.4 billion. Its core capital adequacy ratio was 8.07%, at the lower end of the bank’s target range. In order to reach the capital adequacy ratio target set by the bank of Israel, 10% by 2017, Bank Leumi will have to increase its capital by some NIS 6 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on March 29, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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