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With good results. Profit in 2020 amounted to NIS 1.61 billion, despite the corona. Return on equity – 5%. Net profit in the last quarter was NIS 506 million, a return on equity of 11.4%.
The annual net profit, excluding the effect of Union Bank, amounted to NIS 1,543 million, compared with NIS 1,842 million in 2019 – a decrease of 16.2%. Net profit for the quarter, excluding Union Bank, was NIS 439 million, compared with NIS 440 million in the corresponding quarter – a decrease of 0.2%.
The bank’s management reports that since the beginning of the Corona crisis, actions have been taken to identify the customers, private and business, affected by the crisis, and to create personal solutions for them, which will help them get through the difficult period. In March 2020, the Bank offered the mortgage customers who needed it, the option to freeze the loan repayments for 4 months. Subsequently, the Bank acted in accordance with the outlines of the Bank of Israel and allowed additional deferrals, for anyone who had difficulty returning to repay the loan on a regular basis.
Thanks to the assistance programs and the certain improvement in economic activity in the economy – along with the progress of the vaccination campaign, there is a clear trend of returning customers to regular payments.
Out of NIS 45.6 billion in mortgage loans, which were deferred from March 2020, as of January 31, 2021, about NIS 42.6 billion were repaid, with NIS 5.5 billion being paid off in a reduced repayment route. Only loans of about NIS 3 billion, which constitute Less than 2.0% of the bank’s cumulative mortgage portfolio is still in full decline, Expected to be completed by June 2021.
In commercial credit, out of a total of deferrals approved during the year in the amount of NIS 7.7 billion, as of the end of January 2021, the amount of deferred credit decreased to NIS 1.3 billion, of which NIS 0.6 billion for a period exceeding six months.
Apart from the possibility of deferring loan payments, the Bank actively and prominently participated in the state-guaranteed corona funds, and as of December 31, 2020, the Bank provided credit to businesses in the amount of NIS 5.1 billion under the funds. “According to the data at the end of February 2021, our share in this matter amounts to about 23% of the total credit approved in these funds,” the bank’s management emphasizes.
Increasing the group’s market shares following the completion of a union transaction
Following the completion of the transaction for the acquisition of Union Bank and its transformation into a wholly owned subsidiary of Mizrahi-Tefahot, the balance sheet data of Union were consolidated into the group reports in the third quarter of this year, and in the last quarter profit and loss data were consolidated for the first time.
Already at this stage, and even before the benefits that the group will have from the conversion and synergy moves between the various activities, the joining of Union Bank contributes to increasing the Mizrahi-Tefahot Group’s share in the banking system. According to the banks’ data for the end of the third quarter, Mizrahi-Tefahot’s share of credit to the public increased to 22.0%, and in public deposits, the bank’s market share increased to 18.6%. The process of merging Union Bank has begun and will be carried out gradually, in order to ensure that the conversion of customers and business activities from Union into the Bank will be done in the best possible way.
Mizrahi Tefahot Bank CEO Moshe Larry said in light of the publication of the reports: “The Bank’s results for 2020 reflect the continued growth in a variety of areas of activity alongside the consequences of the corona crisis and the macroeconomic environment.
“The financial results for 2020 reflect the Bank’s continued growth momentum in a variety of areas, along with the consequences of the corona crisis, especially the significant increase in credit loss expenses, and the impact of the interest rate environment and zero inflation. Reflecting a return on equity of 9.5% and a quarterly profit of NIS 506 million, reflecting a return on equity of 11.4% is not self-evident, and was achieved thanks to the extraordinary effort and commitment of our thousands of dedicated employees and managers.
The growth momentum is reflected in most items of the balance sheet, even before the influence of Union Bank. Compared to about NIS 205 billion at the end of 2019, an increase of 7.9%, and the public deposit portfolio jumped by 17.0%, from a cumulative amount of about NIS 211 billion at the end of 2019 to about NIS 247 billion at the end of 2020.
“The expansion in current operations is reflected in a 1.9% increase in financing income, without the effect of Union Bank, against the background of interest rate cuts in Israel and the United States during the year. Commission income, without union effect, grew by 4.9% in 2020 compared to 2019. , The Bank maintained the level of operating expenses and as a result, Mizrahi-Tefahot, as of the end of 2020 and without the influence of Union Bank, presents a quality efficiency ratio of 52.7%.
“In accordance with the main goal in the strategic plan, the Bank continues to increase its business focus and grow rapidly in credit directed to various businesses. In 2020, the increase in the business credit portfolio, excluding Union Bank, amounted to 14.3% compared to the previous year. At the same time, Mizrahi-Tefahot maintained the leadership “Housing loans also in 2020, when a record 79 billion shekels was recorded in the mortgage performance in the economy. This, while ensuring a responsible and conservative underwriting process.”
“The growth and improvement trend in business activity that has characterized Bank Yahav in recent years is also reflected in 2020. Despite the corona crisis and the deterioration in economic activity in the economy, Bank Yahav recorded a net profit of NIS 183.1 million last year, compared to a net profit of NIS 167.1 million in 2019. Of about 9.6%. This profit reflects a particularly high return on capital of 11.2% ”