After lagging behind its competitors for a very long time, Israel Discount Bank (TASE: DSCT) has been growing rapidly in recent years. This trend continued in 2019, a year in which Uri Levin replaced Lilach Asher-Topilsky as the bank's CEO. Levin will now lead the bank, with its bigger-than-ever credit portfolio and high profit margin, into the coronavirus crisis, which threatens to affect the banking system in general, due to the large number of people and businesses experiencing liquidity difficulties.
Levin would have liked to focus today on the bank's strong results and the across-the-board improvement in its activity. The emphasis, however, is on what is happening now, and what will happen in the coming months. Levin said that the coronavirus crisis "is causing upheaval in the global economy and the Israeli economy… It is still difficult to assess its impact on the Israeli banking system in general, and on the group, but it is clear that the crisis is already having an effect.
"Despite the anxiety and uncertainty, we emphasize that we are well prepared for a crisis of this type," Levin added. "Discount Bank today is stronger than ever, more efficient than ever, and has a sound balance sheet with substantial potential for continued growth. We will continue to stand with our customers, and to support their economic activity at this difficult time."
Discount Bank enters the crisis in a strong position, with record profits and a 9.4% return on equity, an improved efficiency ratio, and a 10.31% tier-1 capital adequacy ratio.
Discount Bank announced that it would distribute a NIS 48.8 million dividend, amounting to 15% of its profit in the fourth quarter of 2019.
Discount Bank posted a record NIS 1.7 billion net profit in 2019, 13% more than its NIS 1.5 billion net profit in 2018. The bank reported strong growth, with credit to the public up 9.5% to over NIS 180 billion. As expected, the expense for credit losses also rose, with the proportion of the average balance of credit to the public rising from 0.34% in 2018 to 0.4% in 2019.
There was growth in interest income, revenue from fees, and miscellaneous revenue, while salaries and related expenses dropped 1.2% in 2019. Discount Bank's efficiency ratio improved from 68.2% in 2018 to 65.2% in 2019.
Discount Bank has several important subsidiaries that play a major role in its activity, some of which are fully owned, while the rest are under its control. Mercantile Discount Bank posted a NIS 305 million profit in 2019, compared with NIS 239 million in 2018, a 28% increase. Credit card company ICC-Cal reported a NIS 201 million profit for 2019, compared with NIS 157 million in 2018, a 28% increase. Discount Bank New York posted a NIS 100 million profit in 2019, compared with NIS 96 million in 2018, a 4% increase. Discount Capital posted a NIS 78.2 million profit in 2019, compared with NIS 71.4% in 2018, a 9.5% increase.
Published by Globes, Israel business news - en.globes.co.il - on March 16, 2020
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