Leumi writes down Valley National stake by NIS 1b

Bank Leumi branch credit: Eyal Izhar
Bank Leumi branch credit: Eyal Izhar

Bank Leumi estimates that the reduction in value of its stake in the US bank will cut its first quarter profit by 50%.

Bank Leumi (TASE:LUMI) reported this morning that in its upcoming financial statements for the first quarter of 2023, it will write down the value of its 14.2% stake in US bank Valley National Bancorp by NIS 1 billion. Leumi estimates that this reduction in value will cut its first quarter profit by about 50%.

Leumi notified investors, "The investment in Valley National Bankcorp is a long-term strategic investment and is part of the bank's strategy to increase the credit portfolio in the US in cooperation with Valley, through credit participation transactions. Valley is a bank with a consistent history of careful risk management, and therefore considers it a strategic partner. Also, Leumi continues to express optimism about the US banking sector. The reduction is not expected to have a significant impact on regulatory capital adequacy."

Bank Leumi further explained that the current revaluation effectively erases all the NIS 645 million profit it recorded in the first half of 2022, after merging Leumi US shares into Valley National.

Valley National's share price fell sharply last week after Raymond James analyst Steve Moss cut his rating on the US bank from strong buy to market perform, due to potential revenue concern. Moss is concerned that rising deposit and funding costs at Valley National have accelerated. Moss's concerns set off investors who are already jittery about runs on US banks.

Published by Globes, Israel business news - en.globes.co.il - on May 7, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Bank Leumi branch credit: Eyal Izhar
Bank Leumi branch credit: Eyal Izhar
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