- Q1 Net Income was NIS 165 m,
ROE was 5.4%
- Disregarding the impact of FAS91 and the provision
for the impairment of the FIBI shares: Net Income would have
been NIS 205 m with an ROE of
6.7%
- Basel III Capital Adequacy Ratio reached 9.1%
TEL-AVIV, Israel, May 22, 2014 /PRNewswire/ -- Israel
Discount Bank (TASE: DSCT) today announces its financial
results for the first quarter of 2014.
Logo -
http://photos.prnewswire.com/prnh/20120820/554838
Main highlights of the Q1 results, compared to Q4-13:
- Met capital adequacy milestones ahead of plan.
Presenting a Basel III CT-1 ratio of 9.1%.
- Continued improvement in asset quality reflected in a
substantial decrease in Loan Loss Provisions out of Total
Credit (LLP ratio) to 0.25% (0.41% in Q4).
- Dynamic management of the investment portfolio led to
capital gains of NIS 105
m.
- Total Expenses decreased by 4%, mostly due to a decline
in Legal Costs and other expenses.
- Decrease of NIS 53 m in
Net Interest Income, mainly due to negative CPI & low
interest rate.
- A provision for Mark-To-Market of the holdings in FIBI
amounted to NIS 26 m in Q1-14.
- Implementation of FAS91 reduced Net Income by
NIS 14 m.
Lilach Asher Topilsky, CEO of Discount Group commented: "Against
the backdrop of several external factors which negatively affected
our results, such as the declining interest rate, the negative CPI,
the implementation of FAS91, and the change in the accounting
presentation of the investment in FIBI's shares, coupled with
restrained credit growth and labor sanctions, the Discount Group
succeeded in achieving several important objectives.
First, after a very long and challenging process, we present
today a Core Tier 1 ratio of 9.1% in terms of Basel III, ahead of
plan and above the regulatory demand.
Second, we continued to improve our asset quality and present a
ratio of Loan Loss Provisions to Total Credit of 0.25%, in line
with the Israeli banking sector's average.
Looking forward, we continue to prudently manage our capital and
intend to meet our Basel III Core Tier 1 ratio of 9.3%-9.4% by the
end of 2014. Meeting this year-end target, together with those
already achieved, will allow us to return to Risk Weighted Assets
growth in 2015.
At the same time, our main challenge was and remains improving
our Cost/Income ratio and restraining our costs. The cost program
will be the main focus of our strategic plan, which will be
presented at the end of August".
Main metrics from the financial statements:
- Net interest income for Q1 decreased by 5% during Q4-13
to NIS 1,018 m, mainly due to lower
interest rates and a negative CPI.
- Non-interest income for Q1 decreased by 6% to
NIS 807 m, mainly due to the negative
impact of FAS91 on commissions. Disregarding FAS91, non-interest
income would have amounted to NIS 863
m, similar to the non-interest income in Q4-13.
- Commissions declined substantially, by 8% to
NIS 631 m, due to the implementation
of FAS91. Disregarding FAS91, commissions would have amounted to
NIS 687 m, almost the same as
commissions in Q4-13, which amounted to NIS
684 m.
- Non-interest financing income increased by 5% to
NIS 124 m, mainly as a result of the
dynamic management of the Bank's portfolio which led to capital
gains, coupled with gains recognized from the Mark-To-Market of
available-for-sale bonds.
- Total operating expenses in Q1 were NIS 1,494 m, due to a decline of 4% during Q4-13.
The quarterly decrease was mainly due to a decrease in legal
expenses. Salary Expenses were 1.6% higher than Q4-13, as a
result of the wage agreement which was signed on March 2014, in which it was agreed to pay a 1%
inflation related increase in advance for 2014.
- Loan loss provisions (LLP) out of total credit declined
substantially to 0.25%, compared to 0.41% in the previous
quarter.
- Non-recurring items in Q4 were a tax benefit and a
non-recurring provision for the MTM of the holdings in FIBI, in the
amount of NIS 158
m.
Main metrics from the balance sheet:
- Total credit to the public stayed flat, in the amount of
NIS 115.9 bln.
- Total deposits from the public decreased by 0.8% to
NIS 147.8 bln.
- The Basel III capital adequacy ratio at the end of Q1
was 9.1%. The Bank's plan is to achieve a CT-1 target of
9.3%-9.4% by the end of 2014, in order to maintain a cushion for
unexpected events while at the same time allowing for growth in the
Bank's target business segments.
Conference call Information - The Bank will be hosting a
conference call today at 16:00 (Israel); 14:00 (UK); 09:00 (EDT), during which
management will review the results and be available to answer
questions:
Israel & Other
International Dial-in
Number +972
3 918
0650
United Kingdom Dial-in
Number +0
800 917
9141
United States Dial-in
Number +1
888 407 2553
Presentation material will be available on our IR website prior
to the call, accessible at www.discountbank.co.il/IR
DEVELOPMENTS IN CERTAIN INCOME STATEMENT ITEMS IN THE FIRST
QUARTER OF
2014
(Compared with Q4- 2013 and Q1-2013)
|
In NIS millions
|
2014
|
2013
|
Change in %
compared to
|
|
Q1
|
Q4
|
Q1
|
Q4-13
|
Q1-13
|
|
Interest income⁽⁴⁾
|
1,324
|
1,531
|
1,668
|
(13.5)
|
(20.6)
|
|
Interest expenses
|
306
|
460
|
624
|
(33.5)
|
(51.0)
|
|
Interest income, net
|
1,018
|
1,071
|
1,044
|
(4.9)
|
(2.5)
|
|
Credit loss expenses
|
75
|
123
|
145
|
(39.0)
|
(48.3)
|
|
Net interest income after credit loss
expenses
|
943
|
948
|
899
|
(0.5)
|
4.9
|
|
Non-interest Income
|
|
|
|
|
|
|
Non-interest financing income
|
124
|
116
|
190
|
6.9
|
(34.7)
|
|
Commissions⁽⁴⁾
|
631
|
684
|
668
|
(7.7)
|
(5.5)
|
|
Other income
|
52
|
61
|
37
|
(14.8)
|
40.5
|
|
Total non-interest income
|
807
|
861
|
895
|
(6.3)
|
(9.8)
|
|
Operating and other Expenses
|
|
|
|
|
|
|
Salaries and related expenses
|
936
|
921
|
876
|
1.6
|
6.8
|
|
Maintenance and depreciation of buildings and
equipment
|
298
|
316
|
307
|
(5.7)
|
(2.9)
|
|
Other expenses
|
260
|
320
|
289
|
(18.8)
|
(10.0)
|
|
Total operating and other
expenses
|
1,494
|
1,557
|
1,472
|
(4.0)
|
1.5
|
|
Income before taxes
|
256
|
252
|
322
|
1.6
|
(20.5)
|
|
Provision for taxes on income
|
97
|
51
|
118
|
90.2
|
(17.8)
|
|
Income after taxes
|
159
|
201
|
204
|
(20.9)
|
(22.1)
|
|
Bank's share in income (loss) of affiliated
companies,
net of tax effect
|
⁽¹⁾⁽²⁾15
|
⁽¹⁾(121)
|
68
|
-
|
(77.9)
|
|
Net income attributed to the non-controlling rights
holders
in consolidated companies
|
(9)
|
(8)
|
(9)
|
12.5
|
-
|
|
Net income attributed to Bank's
shareholders
|
165
|
72
|
263
|
129.2
|
(37.3)
|
|
Net return on equity attributed to the Bank's
shareholders
in %⁽³⁾
|
5.4
|
2.4
|
9.2
|
|
|
|
Net income attributed to Bank's shareholders
–
disregarding the provision for impairment in
value of the investment in the FIBI
|
⁽¹⁾191
|
⁽¹⁾230
|
263
|
(17.0)
|
(27.4)
|
|
Net return on equity attributed to the Bank's
shareholders
in % - disregarding the provision for
impairment in value of the investment in the
FIBI⁽³⁾
|
⁽¹⁾6.3
|
⁽¹⁾7.7
|
9.2
|
|
|
|
|
|
Footnotes:
|
|
(1)
|
For details regarding the provision for impairment in
value of the investment in FIBI, see Note 14 C and D to the
condensed financial statements.
|
|
(2)
|
For details as to the elimination of the Bank's share
in the reserves of FIBI, previously recognized in other
comprehensive income, see Note 14E to the condensed financial
statements.
|
|
(3)
|
On an annual basis.
|
|
(4)
|
For details regarding the effect of the
implementation of the instruction regarding the measurement of
interest income (classification of certain commission income), see
Note 1E(1) to the condensed financial statements.
|
COMPOSITION OF CREDIT TO THE PUBLIC BY SEGMENTS OF
OPERATION
|
March 31, 2014
|
December 31, 2013
|
|
|
In NIS millions
|
|
% of total
credit to the public
|
In NIS millions
|
% of total
credit to the public
|
Rate of
change in %
|
|
Retail - household segment
|
39,801
|
34.3
|
40,056
|
34.6
|
(0.6)
|
|
Of which - housing loans
|
20,190
|
17.4
|
19,753
|
17.0
|
2.2
|
|
Retail - small business segment
|
13,108
|
11.3
|
13,000
|
11.2
|
0.8
|
|
Corporate banking segment
|
40,035
|
34.6
|
40,807
|
35.2
|
(1.9)
|
|
Middle market banking segment
|
19,384
|
16.7
|
18,612
|
16.1
|
4.1
|
|
Private banking segment
|
3,543
|
3.1
|
3,384
|
2.9
|
4.7
|
|
Total
|
115,871
|
100.0
|
115,859
|
100.0
|
-
|
BALANCE SHEET
|
March 31, 2014
|
March 31, 2013
|
December 31, 2013
|
Change in %
compared to
|
|
In NIS millions
|
|
March 31, 2013
|
December
31, 2013
|
|
Total assets
|
197,996
|
200,135
|
200,507
|
(1.1)
|
(1.3)
|
|
Credit to the public, net
|
115,871
|
116,155
|
115,859
|
(0.2)
|
-
|
|
Securities
|
39,541
|
48,140
|
41,325
|
(17.9)
|
(4.3)
|
|
Deposits from the public
|
147,779
|
151,933
|
148,928
|
(2.7)
|
(0.8)
|
|
Equity attributed to the Bank's
shareholders
|
12,534
|
11,948
|
12,233
|
4.9
|
2.5
|
|
Total equity
|
12,842
|
12,253
|
12,538
|
4.8
|
2.4
|
Company
Contact
Tamar
Koblenz
Head of Investor
Relations
Tel: +972 3
5146593
Tamar.koblenz@discountbank.co.il