Mizrahi Tefahot Bank today announced its results for the third quarter of 2019. Profit was down 7% to NIS 422 million in the quarter, a decrease attributed by the bank of the fall in the Consumer Price Index, contrasting with a rise in the corresponding quarter last year.
Simultaneously with its report, Mizrahi Tefahot Bank announced the distribution of a NIS 169 million dividend to its shareholders, after announced a dividend of nearly NIS 400 million when its previous financial results were announced. Before that, the bank had gone four quarters without distributing a dividend.
Earlier this year, Mizrahi Tefahot Bank reached a settlement with the US tax authorities, putting an end to the case in which it was accused of abetting tax evasion by its US customers. The bank's final penalty in the case was $195 million.
Mizrahi Tefahot Bank's profit jumped 40% to NIS 1.4 billion in the first nine months of the year, owing to the effect of the US investigation on its 2018 results. Excluding the 2018 provisions for this item, the improvement in profit in the first nine months of 2019 was 10%. Mizrahi Tefahot Bank made no provision for the investigation in the third quarter of 2018.
The bank's share price responded positively to its results, gaining 2% by mid-day. The share price has risen 40% this year, reaching an all-time high and pushing the bank's market cap up to NIS 20.5 billion.
Mizrahi Tefahot Bank CEO Eldad Fresher said today, "The figures for the first nine months of 2019 show continued growth momentum in the bank's activity, with rises in most of the balance sheet items, revenue, and profits."
Mizrahi Tefahot Bank's return on equity in the third quarter was 11.1%, compared with 13.4% in the corresponding quarter last year, but its return on equity in January-September 2019 was 12.4%, compared with 9.7% in the corresponding period last year. The bank reported a 56.7% efficiency ratio (non-interest expenses divided by net revenue) in the third quarter, compared with 54.5% in the corresponding quarter last year. Its equity ratio (tier 1 capital divided by risk elements) was 10.1%.
As of the end of September, Mizrahi Tefahot Bank's portfolio of credit to the public totaled NIS 202.5 billion, nearly 7% more than at the end of the third quarter of 2018. The portfolio exceeded NIS 200 billion for the first time in the second quarter of this year.
Mizrahi Tefahot Bank's expense for credit losses amounted to NIS 70 million in the third quarter, compared with NIS 61 million in the third quarter of 2018, and NIS 245 million in the first three quarters of the year, 5% more than in the corresponding period last year.
Financing revenue was up 1.5% to NIS 1.36 billion in the third quarter, thanks to a positive trend in financing revenue other than from interest, offset by a drop in net interest revenue, which accounts for most of Mizrahi Tefahot Bank's financing revenue. Financing revenue grew by over 7% in January-September 2019, reaching nearly NIS 4.3 billion.
Mizrahi Tefahot Bank is Israel's largest mortgage bank, and this segment made the largest contribution to its third quarter net profit - NIS 154 million, 8% more than in the third quarter of 2018.
Published by Globes, Israel business news - en.globes.co.il - on November 18, 2019
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