TEL-AVIV, Israel, May 22, 2014 /PRNewswire/ -- Israel
Discount Bank (TASE: DSCT) today announces its financial
results for the first quarter of 2014.
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
|
Logo -
http://photos.prnewswire.com/prnh/20120820/554838
Company
Contact
Tamar
Koblenz
Head of Investor
Relations
Tel: +972 3
5146593
Tamar.koblenz@discountbank.co.il
SOURCE Israel Discount Bank