"The consequences of the coronavirus depend on its effect on the global and Israeli business environment, and are liable to increase the banking system's provisions for credit losses," First International Bank of Israel (TASE: FTIN) predicted today in releasing its financial statements for 2019. First International, Israel's fifth largest bank, is controlled by Zadik Bino and managed by CEO Smadar Barber-Tsadik.
It appears that First International, which is more cautious in granting credit and relies more than its competitors on providing capital market services, has entered the coronavirus crisis in sound condition. First International finished 2019 with a 10.5% return on equity, compared with 9.3% in 2018. Its tier-1 capital adequacy ratio is now 10.81%, and its liquidity coverage ratio is 128%.
First International posted a record NIS 865 million net profit in 2019, 18% more than its NIS 733 million net profit in 2018. Its NIS 222 million fourth quarter net profit was 34.5% more than its profit in the fourth quarter of 2018. Simultaneously with its reports, First International announced that it would distribute a NIS 125 million dividend.
The bank's interest income grew 4.7% to NIS 2.6 billion, while expenses in respect of credit losses were down 16.9% to NIS 138 million. Revenue from fees dropped 2.9% to NIS 1.29 billion, offset by a reduction in operating expenses and salary expenses as a result of streamlining (among other things in the group's real estate). Another factor in First International's costs was its NIS 53 million in expenses in 2018 resulting from its merger with Bank Otsar Hahayal. The bank's efficiency ratio, the ratio of operating expenses to revenue, improved from 68.4% in 2018 to 64.4% in 2019.
At the end of 2019, First International's credit portfolio totaled NIS 87.9 billion, 4.3% more than at the end of 2018. In line with its rather conservative policy, certainly in comparison with other medium-sized banks, the bank's ratio of credit to deposits was 73.2%.
First International's ratio of expenses in respect of credit losses declined by 0.16% in 2019.
Excluding one-time items, First International posted an NIS 849 million net profit in 2019, 25.8% more than in 2018, and a 10.3% return on equity for the year.
Published by Globes, Israel business news - en.globes.co.il - on March 15, 2020
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