United Mizrahi Bank (TASE: MZRH) earned a NIS 386 million profit in 2004, 15.2% more than in 2003. The bank’s profit reflects a 9.7% return on equity.
Mizrahi Bank’s profit in the fourth quarter of 2004 was only NIS 20 million, 76% less than in the fourth quarter of 2003. After-tax expenses totaling NIS 106 million related to Mizrahi Bank’s absorption of Tefahot Israel Mortgage Bank accounted for the drop in profit in the fourth quarter.
Mizrahi Bank’s provision for doubtful debts in 2004 grew 20% to NIS 359 million, and by 80% to NIS 112 million in the fourth quarter of 2004. CEO Eliezer (Eli) Yones, who overhauled the bank’s credit portfolio upon taking up his position, is believed to be responsible for the increase.
Financing profit rose by 14.8% to NIS 1.65 billion, most as a result of commissions on options activity and an increase in regular business. An 8.5% rise to NIS 1 billion in operating revenue caused by higher capital market commissions also contributed. On the other hand, operating expenses were up 18.5% to NIS 1.7 billion, mostly as a result of expenses related to senior executives leaving the company.
Mizrahi Bank’s balance sheet items rose. Credit to the public jumped 6.2% to NIS 63.6%, and deposits by the public climbed 5.4% to NIS 70 billion. Problem debt dropped 6.2% to NIS 4.6 billion.
Mizrahi Bank’s capital adequacy ratio in 2004 was 9.38%, down from 9.81% in 2003, also due to the merger.
The Mizrahi Bank report shows that Supervisor of Banks Yoav Lehman demanded that Mizrahi Bank reach a 10% capital adequacy ratio, even though the Bank of Israel-mandated minimum is 9%. Mizrahi Bank explained the demand by saying that Lehman had unofficially made the same demand of all the banks.
Up until 2005, Tefahot Mortgage Bank was an independent bank, and Israel’s largest mortgage bank. The bank earned a NIS 170 million profit in 2004, 11.9% less than in 2003.
Tefahot Mortgage Bank’s market share for new mortgages rose to 30.5% in January 2005, compared with 22.2% in June 2004, when the merger with Mizrahi Bank was announced.
Published by Globes [online], Israel business news - www.globes.co.il - on March 31, 2005