This morning, with the release of its third quarter financials, Bank Leumi, headed by Hanan Friedman, presented one of the strongest quarters in its history. The bank posted a net profit for the quarter of NIS 1.55 billion, double the profit of NIS 750 million for the third quarter of 2020. For the first nine months of 2021, Bank Leumi's profit totaled NIS 4.55 billion, which compares with NIS 1.21 billion for the corresponding period last year.
The bank's board of directors has declared a dividend of NIS 1.367 billion, representing 30% of the net profit for the first nine months of 2021. This is addition to a NIS 630 million dividend distributed in September.
Return on equity up substantially
Bank Leumi's annualized return on equity in the third quarter of 2021 was 16%, which compares with 8.4% in the third quarter of 2020. For the first nine months of 2021, the bank's annualized return on equity was 15.7%. Bank Leumi explained that the substantial growth in return on equity stemmed from sharp growth in income along with moderate growth in expenses, and from a significant reduction in provisions for credit losses, which were raised in the corresponding period last year because of fears of the effect of the coronavirus pandemic on the credit portfolio.
In the first nine months of 2021, Bank Leumi recorded income on the credit losses item of NIS 792 million, which compares with a NIS 2.3 billion expense in the corresponding period of 2020. The income in the first nine months of 2021 arose mainly from collections of loans that had been written off, and a reduction in the general loss provision, against the background of an improving macro-economic situation and a decline in morbidity from Covid-19.
The bank also benefitted from the boom in the mortgage market. In the first nine months of 2021, its mortgage portfolio grew by 13%, while its overall credit portfolio grew by 13.7%. At the end of the third quarter of this year, net credit to the public totaled NIS 325.5 billion, which compares with NIS 286.4 billion at the end of September 2020.
Published by Globes, Israel business news - en.globes.co.il - on November 16, 2021.
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