Bank Leumi issues profit warning

Rakefet Russak-Aminoach
Rakefet Russak-Aminoach

The US tax evasion affair and other write-offs mean the bank will report zero profit for the fourth quarter.

Bank Leumi (TASE: LUMI) has published a profit warning this morning for the fourth quarter of 2014 when it expects to report no profits. This comes just a few days after Israel Discount Bank (TASE: DSCT) also issued a profit warning. Leumi said that profit in all of 2014 should amount to NIS 1.6 billion, down 17% from NIS 1.94 billion in 2013.

Bank Leumi notified the Tel Aviv Stock Exchange (TASE) that the zero profit was due to the NIS 1.4 billion settlement with the US authorities in the affair in which it allegedly helped US customers evade taxes. The bank says that without the amount set aside for that 2014 profits would have been NIS 2.6 billion.

Bank Leumi also cited a collective agreement signed with the workers committee, for which a reduction of NIS 600-700 million has been set aside, and which will influence pre-tax profits of NIS 400-500 million.

In addition, the Supervisor of Banks instructed the banks to present a reduction in their commitments to employees' rights from the start of 2015, and this reduction will be made at an estimated NIS 450 million gross before tax.

Bank Leumi also reports that the split of the Israel Corporation (TASE: ILCO) shares that the bank holds less the value of its Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI) will influence its financial results by NIS 220 million in the fourth quarter.

The bank also reported that following the instruction of the Supervisor of Banks in January to increase amounts set aside for credit losses on household loans, Leumi expects to set aside NIS 110 million in the quarter. NIS 50 million will also be set aside for credit losses in Romania.

Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Rakefet Russak-Aminoach
Rakefet Russak-Aminoach
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