Mizrahi Tefahot Bank has reported its financial results for the fourth quarter and full year 2023. The bank reported record net profit of NIS 4.91 billion, up 10% from 2022. Return on equity was 19.1% down from 20.1% in 2022.
In the fourth quarter of 2023, Mizrahi Tefahot reported net profit of NIS 1.05 billion, down 4.5% from the preceding quarter and down 3.5% from the corresponding quarter of 2023. The fall in profit in the fourth quarter expresses the effects of the war and the higher interest rate in environment, which resulted in lower demand for credit.
The bank will distribute a dividend of NIS 209.4 million for the fourth quarter of 2023, which is 20% of the net profit. This will bring the total dividend distributed for 2023 to NIS 1.27 billion. Mizrahi Tefahot Bank's policy is to pay a 40% of profit dividend but the percentage has been cut following a letter sent last week by the Supervisor of Banks calling on banks to be responsible in distributing dividends.
The major growth in the bank's profit resulted from a 17% higher income from interest in 2023 compared with 2022, amounting to NIS 12 billion.
Total loans to the public stood at NIS 325.3 billion at the end of 2023. Mizrahi Tefahot's mortgage portfolio, the largest in Israel, grew by 4.9% in 2023 to NIS 205.4 billion. The bank's credit portfolio for large customers and institutional entities also grew, but non-housing loans to households and loans to small and medium-sized businesses saw a decrease in 2023.
On the other hand, the bank recorded an increase in expenses for credit losses due to the war and the increased risk in the economy. The bank's expenses for credit losses amounted to NIS 1.46 billion in 2023, compared with expenses for credit losses totaling NIS 532 million in 2022.
The bank said, The increase in provisions in 2023, and in particular in the third quarter of this year, is mostly due to a group-based provision recognized in order to reflect the increased risk in the market, in view of the Iron Swords War which broke out early in the fourth quarter. It is worth noting that, to date, no material indications of this increased risk have been observed at the Bank. The increase in expenses with respect to credit losses in 2023 was also due to growth in Bank's loan portfolio and to higher risk in the market, primarily due to the higher interest rates."
Published by Globes, Israel business news - en.globes.co.il - on March 12, 2024.
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