Bank Leumi (TASE: LUMI) posted a NIS 2.4 billion profit for the second quarter, a record for the bank, and the largest profit of any of Israel’s banks in the quarter. It compares with a profit of NIS 2 billion by Bank Leumi in the second quarter of 2022. The bank’s return on equity for the second quarter of this year was an annualized 19.4%, which compares with 18.5% for the corresponding quarter last year.
In the first half year, Bank Leumi’s profit was NIS 3.43 billion, slightly lower than in the first half of last year. The decline arises from a write down in the first quarter this year of the value of Bank Leumi’s 14.2% stake in US bank Valley National Bank following a steep fall in the latter’s share price. In the second quarter, the market value of Bank Leumi’s stake rose, and stood at NIS 2.6 billion at the end of the quarter, up from NIS 1.9 billion at the end of the first quarter.
The main boost to Bank Leumi’s second quarter profits came of course from the rise in the Bank of Israel’s interest rate. Net interest income totaled NIS 4.28 billion in the second quarter of this year, 31% higher than in the corresponding quarter. In the first half year, net interest income totaled NIS 8.2 billion, up 36% in comparison with the first half of 2022.
Bank Leumi says that it continues to focus its growth efforts on its corporate, commercial, and mortgage credit portfolio. Since the beginning of the year, the bank’s credit portfolio has grown by 6.4%, of which just 1.4% came in the second quarter.
Because of the uncertainty in the economy, and the fear that borrowers may be unable to repay loans because of the higher interest rates, Bank Leumi increased its credit loss provision by NIS 318 million.
The bank’s board of directors has approved a dividend of NIS 736 million, which, together with share buybacks totaling NIS 300 million, amounts to 40% of the second quarter net profit. The share buyback is part of a total program amounting to NIS 800 million declared by the bank.
The sale of Bank Leumi’s two headquarters buildings in Tel Aviv, to be completed after the move to Lod, is expected to yield a pre-tax gain of NIS 800 million later this year or in early 2024.
Published by Globes, Israel business news - en.globes.co.il - on August 15, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.