Discount Bank earned NIS 1.3 billion in 2020 (excluding one-time components) – a return of 6.7% on capital. In 2019, the profit amounted to NIS 1.7 billion, but the decrease in profit is not significant in relation to the concerns that were from the “corona year”. In fact, all the banks have skipped over the corona, and even come out stronger, mainly due to efficiencies.
Discount’s profit in the fourth quarter fell by 18.8%, mainly due to expenses for the largest retirement plan in the group’s history, in which 656 employees retired – 8% of the group’s manpower. By neutralizing certain components, especially the retirement plan, Profit for the quarter increased by 16.6% and return on equity amounted to 9.1%
Credit to large businesses grew by 15.6% in 2020 and housing credit by 14.8%. Total credit in Israel grew by 6.1%.
The Bank’s management is preparing to implement a new multi-year strategic plan for the years 2025-2021:
The program includes three focus areas: accelerated development of traditional banking, innovation and maximizing group value.
Credit growth in strategic focus areas: Total credit in Israel increased by 6.1% in 2020. Credit to large businesses increased by 15.6% and credit to housing by 14.8%.
Facebook box deal: The company’s management notes the agreement with Shufersal to establish a financial venture for customers of all banks, on the Facebook platform as one of the most important this year. The venture will offer an advanced digital wallet and a financial supermarket with services from fintechs and other manufacturers.
The numbers in the reports
Net income in the fourth quarter decreased by 18.8% compared to the fourth quarter of 2019 and amounted to NIS 264 million. Excluding one-time components, the net profit in the fourth quarter amounted to NIS 421 million, an increase of 16.6% compared to the fourth quarter of 2019, and the return on capital of 9.1%.
The one-time components in the fourth quarter (after tax) include an expense of NIS 243 million for the retirement of employees (85% of the expense for the retirement of employees throughout 2020). In this quarter, a one-time income of NIS 112 million was also recorded due to income from insurance. The total of one-time components in the fourth quarter amounts to NIS 157 million.
Net interest income amounted to NIS 5,898 million in 2020, an increase of 0.1% compared to 2019. Non-interest income amounted to NIS 4.007 million in 2020, an increase of 6.3% compared to 2019. Of this, commission income amounted to NIS 2,826 million , A decrease of 4.9% compared to 2019.
Expenses for credit losses amounted to NIS 1,718 million, compared with NIS 690 million in 2019. The increase is mainly due to the consequences of the corona crisis, and in particular to an increase in the group provision for credit losses. The expense ratio for credit losses this year was 0.91% compared to 0.40% in 2019.
The efficiency ratio in 2020 was 67.5% compared to 65.2% in 2019. Excluding the one-time components, the efficiency ratio in 2020 was 62.5% compared to a neutralized efficiency ratio of 64.0% in 2019.
Deposits from the public amounted to NIS 226.1 billion, an increase of 12.2% since the beginning of the year. Gross credit to the public in 2020 amounted to NIS 192.5 billion, an increase of 5.2% compared to the end of 2019.
Uri Levin, CEO of the Discount Group, said upon the publication of the results: “The financial results of the Discount Group testify to its financial strength and its commitment to increasing competitiveness in the financial system even during this challenging period. During 2020, we launched a new multi-year growth strategy and accelerated the technological and organizational innovation processes, which will ensure that we become the best bank for its customers and create maximum value for shareholders.
“In addition to dealing with the effects of the Corona crisis, we have succeeded in the past year in implementing the largest retirement plan in the group’s history, which will have a significant impact on corporate spending and culture. “Announcing the cooperation with Shufersal to establish a venture that will offer advanced financial services from a variety of suppliers in the future. Even in the years ahead, the Discount Group will continue to work vigorously to achieve maximum growth and promote competition in the banking system while focusing on the customer.”