Mizrahi Tefahot Bank (TASE: MZTF) released its third quarter financials this morning. The bank posted a net profit of NIS 1.1 billion for the quarter, 6.8% lower than in the corresponding quarter of 2022. The decline was mainly due to a much higher provision for credit losses because of the uncertainty arising from the war on the Gaza Strip, at a time of high interest rates, a combination of circumstances that increases the fear that borrowers may have difficult in repaying their loans. Mizrahi Tefahot provided NIS 694 for credit losses in the third quarter, which compares with NIS 155 million in the corresponding quarter last year and NIS 247 million in the second quarter of this year.
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The bank does state, however, that the third quarter provision is almost entirely general rather than against specific loans, and that “at this stage there is no substantial indication of a deterioration in the risk profile of the bank’s credit portfolio.”
Because of the prevailing uncertainty and the need to preserve available capital, and also in the wake of the message conveyed to the banks by the Bank of Israel, Mizrahi Tefahot cut its dividend for the third quarter to 15% of net profits. The bank will thus distribute a dividend of NIS 165 million. The annualized return on equity for the quarter was 16.8%.
The bank estimates the value of benefits and relaxations that it offers, among other things in compliance with the guidelines published by the Bank of Israel for relief for residents of the war zone, for others affected by the war, and for reserve soldiers, assuming that they are fully taken up, at NIS 450 million.
Mizrahi Tefahot reports 6.4% growth in credit to the public in comparison with the third quarter of last year, to NIS 323.6 billion. Deposits from the public reached NIS 351 billion, representing growth of 1.6% in comparison with the third quarter of last year.
Mizrahi Tefahot’s share price is currently up 3.05% on the Tel Aviv Stock Exchange.
Published by Globes, Israel business news – en.globes.co.il – on November 28, 2023.
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