Although banks’ profitability rose in the last quarter of 2020, despite the corona crisis and the third closure, they will not distribute dividends. Despite the improvement in the last quarter, the whole of 2020 closes with a drop in profits due to the crisis. Bank Leumi’s profits fell by 40% to NIS 2.1 billion. The profit is a return of 5.7% on capital, which amounted to NIS 37.7 billion. The decrease is due to the expense of credit losses and the decrease in non-interest financing income.
The annual expense for credit losses amounted to a whopping NIS 2.6 billion. In the fourth quarter, there was a recovery due to the sharp decline in credit losses, and profit increased by 20% to NIS 890 million. The profit represents a return of 9.8% on equity. The efficiency ratio (current expenses divided by current income) continues to improve and amounted to 53.8%, compared to 58.1% last year. The improvement is due to a decrease in salary expenses and other operating expenses. The equity ratio is significantly higher than the regulatory requirement, but despite this, as stated, no dividend will be distributed.
The bank continued to focus its growth on the credit portfolio in the business and commercial sectors and mortgages. The business portfolio has grown by 10.7% in the past year, the commercial portfolio has grown by 9.8% and the mortgage portfolio by 6.9%. In the face of uncertainty, public deposits jumped 19.6% to NIS 447 billion. At the outbreak of the crisis, Leumi’s management approved business credit in the amount of NIS 6.4 billion (of which NIS 3.8 billion for small businesses). Leumi froze loan payments to small businesses in the amount of NIS 1.2 billion and mortgage repayments in the amount of NIS 900 million.
The bank’s chairman of the board is Dr. Summer Haj Yahya and CEO Hanan Friedman, who said: “We anticipate that the vaccination campaign will lead us during 2021 to a gradual exit from the health crisis, and consequently also to an exit from the economic crisis.” Bank Mizrahi Tefahot ended 2020 with a profit Of NIS 1.6 billion (including the effect of Union Bank), a decrease of 12.6%, which is a return of 9.5% on equity.The Bank ended the fourth quarter with a profit of NIS 506 million, compared to NIS 440 million in the last quarter of 2019.
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Profit without the effect of the merger with Union Bank decreased by 16.2% to NIS 1.54 billion. Of her NIS 45.6 billion in mortgage loans that were rejected, NIS 42.6 billion was repaid and only NIS 3 billion is still in deferral. Public deposits jumped 17% to NIS 247 billion. The bank’s CEO, Moshe Larry, said: “The results reflect continued growth, along with the consequences of the corona crisis and the macroeconomic environment.”