First International Bank of Israel (TASE: FTIN) profit was down 17% to NIS 137 million in the first quarter. The decrease resulted from two one-time pre-tax expenses totaling NIS 69 million involving salary expenses and streamlining. First International Bank, controlled by Zadik Bino, will distribute a NIS 60 million dividend following the publication of its results.
The main provision is NIS 45 million for bonuses for the bank's employees, following a ruling in their favor by the Labor Tribunal. First International Bank's management, headed by CEO Smadar Barber-Tsadik, have announced its intention to appeal the ruling, but has meanwhile made the required provision. The Tribunal has ordered payment of the bonus to the authorized signatories and the managers, but the bank has made a provision for payment of the bonus to all the bank's employees (the clerks' union has meanwhile also filed a similar claim).
Also having a negative impact on First International Bank's results was a NIS 24 million provision for streamlining expenses at Bank Otsar Hahayal. First International Bank plans to institute major streamlining measures at its subsidiary that are likely to extend to a full merger of Bank Otsar Hahayal into First International Bank. The workers' committee at the subsidiary last week declared a labor dispute as a result of these measures.
These two events decreased First International Bank's return on equity by 2.3% to 7.2%. On the other hand, the bank posted a NIS 13 million profit, net of tax, on the sale of its building in Switzerland. The bank will also post a NIS 37 million second-quarter profit on the sale of Bank Otsar Hahayal's headquarters offices in Ramat Gan.
In its core activity, First International Bank's business is still growing. Its credit portfolio grew nearly 2% to NIS 81.9 billion in the first quarter, and profit from regular financing activity was up 9.6% to NIS 618 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018