Bank Leumi (TASE: LUMI), headed by Hanan Friedman, continues to outpace its competitors when it comes to profitability. For the second quarter of 2022, the bank posted a profit of NIS 2 billion, 17% more than the NIS 1.7 billion profit in the corresponding quarter of 2021. The bank’s net profit for the first half of 2022 totaled NIS 3.6 billion, up 20% in comparison with the NIS 3 billion profit in the first half of last year.
Annualized return on equity in the second quarter of 2022 was 18.5%, which compares with 16.8% in the corresponding quarter, and the bank will distribute a dividend of NIS 400 million, representing 20% of its quarterly profit. The low distribution is intended to enable the bank to continue to expand credit, which is proving a growth engine for all the banks. Annualized return on equity for the first half of 2022 was 17.1%, which compares with 15.5% in the first half of 2021.
A material contribution to Bank Leumi’s second quarter profit came from the merger of Bank Leumi USA with US bank Valley National Bancorp. The deal took place on April 1, and yielded a net gain to Bank Leumi of NIS 645 million, NIS 451 million of which was recognized in the second quarter and NIS 194 million in the first.
Bank Leumi also benefitted from rapid expansion of its credit portfolio, which grew by 12.3% in the second quarter to NIS 112.8 billion. Although the bank came close to the limit of the amount of credit it is allowed to award in the real estate and construction industries, it continued to grow in these sectors, and total credit to them increased by 14.2% in the first half of the year to NIS 92.4 billion.
Net interest income, excluding Leumi USA, totaled NIS 5.8 billion in the first half of 2022, 23% more than in the first half of 2021. The rise in interest income is partly thanks to rises in interest rates and changes in the Consumer Price Index between the two periods.
Like Israel’s other banks, Bank Leumi reverted to making provisions for credit losses in the second quarter. Net provisions in the first half year totaled NIS 86 million, which compares with net income on this item of NIS 370 million in the first half of last year, as loans against which provisions had been made during the Covid-19 pandemic were recovered.
Bank Leumi's share price is up by more than 3% on the Tel Aviv Stock Exchange this morning.
Published by Globes, Israel business news - en.globes.co.il - on August 16, 2022.
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