Bank Leumi posts 30% rise in Q3 profit to NIS 2.3b

Bank Leumi CEO Hanan Friedman  credit: Oren Dai
Bank Leumi CEO Hanan Friedman credit: Oren Dai

The bank's mortgage portfolio grew 10% year-on-year, outstripping growth in lending to any other sector.

A week after "Globes" reported on the restrictions that Bank Leumi is placing on deals involving contractors’ loans to homebuyers, the bank’s third quarter financials released this morning contain indications of the reasons for the decision. The bank’s mortgage loan portfolio was 10% larger at the end of September this year than it was a year previously.

Leumi is currently the most aggressive of the banks in the real estate market, and the mortgage numbers reveal to what extent. The bank’s mortgage portfolio totaled NIS 143 billion at the end of September, making it larger than the commercial credit portfolio (NIS 136 billion). While the mortgage portfolio grew 10% year-on-year, credit to private customers fell 2.6%, credit to small businesses rose by 5.1%, and commercial credit rose 0.2%.

On the bottom line, Bank Leumi posted a 30% rise in net profit in comparison with the third quarter of 2023, to NIS 2.3 billion. Net interest income rose 15.5% in the quarter to NIS 4.54 billion.

Another factor that boosted profit in the quarter was a reduction in the credit loss expense, which was 68% lower than in the corresponding quarter, when the Bank of Israel instructed all the banks to make a general credit loss provision. The third quarter credit loss expense was however higher than in the second quarter of this year (when in fact the bank recorded net income on this item).

Bank Leumi’s return on equity in the third quarter this year was an annualized 15.5%, which compares with 13.6% in the corresponding quarter.

At the end of October, the Supervisor of Banks convened a meeting of the heads of the banks’ business divisions and instructed them to examine in depth the risk from housing contractors’ special offers to homebuyers, which typically consist of a 20% down payment and 80% payable on handover. In the coming months, the banks will probably raise their credit loss provisions, as a result of that examination and also in order to be prepared for negative scenarios as the war continues.

Bank Leumi states that its third quarter credit loss expense represents 0.28% of the average balance in credit to the public. It says that the entire expense is a general provision, "reflecting a continuation of the conservative and responsible approach as the war continues. The general expense was partially offset by income from individual loans that were collected."

Leumi’s board has declared a dividend of 40% of the third quarter profit, amounting to NIS 917 million. NIS 688 million will be paid in cash and the remainder in the form of a buyback of the bank’s shares. Share buybacks have become common among the major banks in the past year, after the regulator permitted them. Israel Discount Bank announced yesterday that it was joining the trend. So far this year, Bank Leumi’s cumulative dividend is NIS 2.9 billion, of which NIS 2.2 billion is cash and NIS 726 million is in the form of share buybacks.

Published by Globes, Israel business news - en.globes.co.il - on November 19, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Bank Leumi CEO Hanan Friedman  credit: Oren Dai
Bank Leumi CEO Hanan Friedman credit: Oren Dai
Orit Strook  credit: Marc Israel Sellem/The Jerusalem Post Finance C'ttee approves NIS 300m coalition funds distribution

The money will mainly go to Religious Zionist party minister Orit Strook's Ministry of Settlements and National Missions.

Dangoor Academy  credit: British Embassy in Tel Aviv British Embassy showcases Israeli healthcare startups

The nine startups participated in the Dangoor HealthTech Academy, a program that connects Israeli startups with the UK healthcare system.

NextVision Stabilized Systems  credit: Shlomi Yosef/Tali Bogdanovsky Next Vision shareholders make NIS 230m exit

A British hedge fund has bought a 2.5% stake in the stabilized cameras company.

Energean CEO Mathios Rigas at the Israel Business Conference   credit: Shlomi Yosef Energean's $1b gas fields sale at risk

The sale of the energy company's asset portfolio in Egypt, Italy and Croatia may fall through because of the buyer's difficulties with the Italian regulator.

Kela Technologies founders Jason Manne, Hamutal Meridor, Alon Dror and Omer Bar Ilan  credit:  Yosef Haim Alterman Defense tech co Kela raises $39m

In response to the events of October 7, Kela has developed a platform for rapid integration of commercial technologies into military systems.

Benjamin Netanyahu  credit: ‎Alex Kolomoisky, Yediot Aharonot Firing the Shin Bet chief: The hurdles

Prime Minister Benjamin Netanyahu says he has "lost trust" in Shin Bet head Ronen Bar. Will this be enough to overcome legal challenges to his dismissal?

Emiliano Calemzuk  credit: PR CEO and "investor group" buying out Reshet 13

CEO Emiliano Calemzuk and the other investors will hold 74% of the television channel, while Len Blavatnik’s Access Industries and WBD will remain with 26%.

Inflation  credit: Tali Bogdanovsky Unexpectedly low February CPI reading cuts inflation

While inflation in Israel in the 12 months to the end of February 2025 is lower than forecast, housing prices continue to rise.

Yitzhak Tshuva credit: Gidon Levy and Tali Bogdanovsky Competition Authority allows Delek takeover of Isracard

The Competition Authority is considered the easier of the two regulatory hurdles that the deal must overcome, the other being the Supervisor of Banks.

David Amsalem  credit  Noam Moskowitz, Knesset Spokesperson's Office Rafael to pay state NIS 444m dividend

The minister in charge of the Government Companies Authority, David Amsalem, has approved the payment by the defense company.

Barak MX air defense system  credit: IAI IAI profit jumps 55%

Israel Aerospace Industries posted a net profit of $493 million for 2024, and ended the year with an all-time high orders backlog of $25 billion.

A TSG system in tactical use  credit: PR TSG signs cooperation agreement with US defense co

The agreement includes the integration of TSG's advanced technologies into sensor-based defense systems, which will be integrated into the operational systems of US defense units.

Bria CEO Yair Adato credit: Kseniia Poliak Israeli visual generative AI co Bria raises $40m

Bria’s Visual Generative AI platform empowers businesses to create predictable, controllable, and on-brand content that aligns with their visual language.

Amnon Shashua and Aviram Ziv credit: Eyal Izhar OrCam stymied by investor dispute with Shashua

Demands by institutional investors are blocking the visual and hearing impairment device developer's recovery plan.

Work on the Green Line credit: Bar Lavi Egged wins tender to operate TA light rail Purple, Green Lines

NTA awarded the tender to Egged, which already operates the Red Line, despite government ministry opposition to one operator for the entire network.

Gabi Seroussi illustration: Gil Gibli Board chooses Seroussi as IAI chair as Erdan freezes candidacy

Israel Aerospace Industries board chose Gabi Seroussi as chair even though he did not to go through the preliminary process of the Government Companies Authority appointments review committee.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018