Mercantile Discount Bank reported a net profit of NIS 23.2 million for the first quarter of 2004, 62% higher than in the corresponding quarter of 2003. The bank's return on capital was an annualized 10.7% in the first quarter, compared with 7.5% in the corresponding quarter of last year.
The higher profit was due to a 5.1% increase in financing profit to NIS 126.4 million, mostly thanks to an increase in its overall financing spread. The bank's allowance for doubtful debts declined by 3.7% to NIS 20.9 million for the first quarter.
A 6.4% increase in operating revenue to NIS 70.1 million, mainly due to an increase in fees from securities transactions, also contributed to the rise in Mercantile Discount Bank's profit.
Mercantile Discount Bank is a wholly-owned subsidiary of Israel Discount Bank (TASE:DSCT). The government recently revoked a previous decision requiring Discount Bank to sell Mercantile Discount Bank.
The new decision enables the government to privatize Discount Bank in toto at a price that includes Mercantile Discount Bank. Mercantile Discount Bank's employees have been fighting against the joint privatization and in favor of the bank's independence.
In recent years, Mercantile Discount Bank, managed by Prof. Shalom Hochman, has been one of Discount Bank's main profit makers. Mercantile Discount Bank has 70 branches, which mostly cater to the Israeli-Arab community.
Published by Globes [online] - www.globes.co.il - on May 27, 2004