ISRAEL DISCOUNT BANK LTD
9.03.2015
Press Release
Israel Discount Bank Announces 4th Quarter and Annual Financial Results of 2014 2014 Net Income was NIS 596 m, ROE was 4.7% Q4 Net Income was NIS 5 m, ROE was 0.2% Basel 3 Capital Adequacy Ratio reached 9.4% Excluding provision for early retirement plan and the loss from the sale of DBLA; 2014 Net Income was NIS 918 m, ROE was 7.2% Q4 Net Income was NIS 237 m, ROE was 5.7% Tel-Aviv, Israel - Israel Discount Bank (TASE: DSCT), today announces its financial results for Q4 and 2014. Main highlights of 2014 results:Capital
Asset
Quality
Growth
Costs
Total capital increased by 8.8% to NIS 13.6 billion
Increase of CT-1 Basel III ratio to 9.4%
Sufficient capital to support the 5-year Strategic Plan
Continuous improvement of credit quality
LLP ratio declined to 0.14%
Coverage ratio increased to 72.8%.
Total Credit grew by 3.7%, mainly due to a 6.8% growth in the retail segment
Deposits grew by 2.7%, almost in all segments, mainly due to the strengthening of the USD
Strong subsidiaries' performance
Excluding non-recurring items, total expenses decreased by 2.5% ; salary and related expenses decreased by 1.9%
In Discount solo, excluding non-recurring items, total expenses decreased by 10.8% and salary and related expenses decreased by 5%
Several non-recurring items had negative impact on the results:
(NIS m) | 2013 | 2014 | % Change | 3Q-14 | 4Q-14 | % Change |
Net income as reported | 874 | 596 | (31.8) | 234 | 5 | (97.9) |
ROE as reported | 7.3 | 4.7 | - | 7.5 | 0.2 | - |
CIR (in %) | 77.5 | 85.3 | - | 77.3 | 95.1 | - |
Changes in the provision for severance pay, net (mainly the retirement plan) | - | 272 | - | 20 | 131 | - |
Loss from the sale of DBLA | - | 50 | - | - | 50 | - |
Net Income excluding items aforementioned | 874 | 918 | 5.0 | 254 | 186 | (26.8) |
ROE excluding items aforementioned (in %) | 7.3 | 7.2 | - | 8.2 | 5.7 | - |
CIR excluding all non-recurring items (in %) | 77.5 | 78.5 | - | 75.6 | 80.3 | - |
Loss from TRUPS sale by IDB NY | - | 65 | - | - | 4 | - |
Loss from OTTI of FIBI shares | - | 47 | - | - | 47 | - |
Provision for impairment of FIBI shares | 158 | 26 | - | - | - | - |
Net income excluding all non-recurring items | 1,032 | 1,056 | 2.3 | 254 | 237 | (6.7) |
Main metrics from the financial statements:
Net interest income for 2014 decreased by 0.8% over 2013 to NIS 4,218 m, mainly due to lower interest rates and CPI, which were partially offset by the growth of credit. Excluding the impact of FAS91, net interest income was NIS 4,027 m, a reduction of 5.2% versus 2013.
Net interest income in Q4 was NIS 1,039 m, a reduction of 2.1% compared to Q3-14.
Credit Loss Expenses dropped to NIS 164 m compared to NIS 580 m in 2013. Due to the BOI regulatory requirement regarding credit for private individuals, credit loss expenses of Q4 increased by NIS 84 m, out of which, NIS 54 m as a result of the aforementioned.
Non-interest income for 2014 decreased by 7.5% to NIS 3,254 m, mainly due to lower profits from bond and share realizations (NIS 377 m in 2014, NIS 537 m in 2013) and loss of NIS 8 m in other income, largely the employees' severance pay fund, which was affected by the weaker performance of the capital market. Non-interest income for Q4 decreased by 2.7% over Q3, to NIS 823 m.
Total operating & other expenses in 2014 increased by 5.9% to NIS 6,371 m, and by 20.1% to NIS
1,771 m in Q4. The annual and quarterly increases were due to a provision for severance pay, mainly the early retirement plan, of NIS 437 m, coupled with a NIS 66 m loss from the sale of DBLA by IDB NY. Excluding the above mentioned items, total annual expenses are NIS 5,868 m, a decline of 2.5% when compared to 2013, and total quarterly expenses are NIS 1,496 m, 3.8% higher than Q3-14.
Salary and related expenses in 2014 decreased by 10.2% to NIS 3,988 m due to a provision forseverance pay, mainly the early retirement plan. Excluding this provision, salary and related were NIS 3,551 m - a decline of 1.9%. If excluding bonuses payment as well, which amounted to NIS 79 m in 2014 and to NIS 229 m in 2013, salary & related expenses were NIS 3,472 m, an increase of 2.4%.
Main metrics from the Balance Sheet:
Total Credit to the public increased by 3.7% to NIS 120.1 billion, due to growth in all focused segments: consumer credit grew by 6.8%, SME by 6.6%, commercial credit increased by 17.3%, partially as a result of the strengthening of the USD.
Deposits grew by 2.7% to NIS 152.9 billion, mainly due to the strengthening of the USD.
Total capital grew by 8.8% to NIS 13.6 billion, while RWA increased to NIS 141.8 billion. Basel 3 capital adequacy ratio reached 9.4%.Following are the developments in certain income statement items in 2014, compared with 2013:
For the year ended December 31, In NIS millions 2014 2013 | Change in % |
Change in % | |
Interest income⁽³⁾ 5,736 6,822 (15.9) | |
Interest expenses 1,518 2,572 (41.0) | |
Interest income, net 4,218 4,250 (0.8) | |
Credit loss expenses 164 580 (71.7) | |
Net interest income after credit loss expenses 4,054 3,670 10.5 | |
Non-interest Income | |
Non-interest financing income 549 632 (13.1) | |
Commissions⁽³⁾ 2,586 2,704 (4.4) | |
Other income 119 183 (35.0) | |
Total non-interest income 3,254 3,519 (7.5) | |
Operating and other Expenses | |
Salaries and related expenses 3,988 3,619 10.2 | |
Maintenance and depreciation of buildings and equipment 1,212 1,247 (2.8) | |
Other expenses 1,171 1,152 1.6 | |
Total operating and other expenses 6,371 6,018 5.9 | |
Income before taxes 937 1,171 (20.0) | |
Provision for taxes on income 324 305 6.2 | |
Income after taxes 613 866 (29.2) | |
Bank's share in income of affiliated companies, net of tax effect ⁽¹⁾⁽²⁾27 ⁽¹⁾45 (40.0) | |
Net income attributed to the non-controlling rights holders in consolidated companies (44) (37) 18.9 | |
Net income attributed to Bank's shareholders 596 874 (31.8) | |
Net return on equity attributed to the Bank's shareholders, in % 4.7 7.3 | |
Net income attributed to Bank's shareholders - disregarding changes in the provision for severance pay, mostly the retirement plan and loss on the sale of DBLA operations, see certain components table above 918 874 5.0 | |
Net return on equity attributed to the Bank's shareholders, in % - disregarding changes in the provision for severance pay, mostly the retirement plan and loss on the sale of DBLA operations, see certain components table above 7.2 7.3 |
Footnotes:
(1) For details regarding the provision for impairment in value of the investment in FIBI, see Note 6 D (3) to the 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, and its classification to the statement of income, see Note 6 D (4) to the financial statements.
(3) For details regarding the effect of the implementation of the instruction regarding the measurement of interest income (classification of certain commissions), see Note 1 D (25) to the condensed financial statements.
BALANCE SHEET
December 31, December 31, In NIS millions 2014 2013 Change in % | |||
Total assets | 206,946 | 200,507 | 3.2 |
Credit to the public, net | 120,123 | 115,859 | 3.7 |
Securities | 37,353 | 41,325 | (9.6) |
Deposits from the public | 152,903 | 148,928 | 2.7 |
Equity attributed to the Bank's shareholders | 13,243 | 12,233 | 8.3 |
Total equity | 13,641 | 12,538 | 8.8 |
Developments in the balance of net credit to the public, by segments of operations:
In NIS millions 2014 2013 | ||||||||
Dec 30 | Sept 30 | June 31 | March 31 | Dec 30 | Sept 30 | June 31 | March 31 | |
Retail - household | 40,889 | 40,577 | ⁽²⁾39,445 | ⁽²⁾38,902 | ⁽¹⁾⁽²⁾39,191 | ⁽¹⁾⁽²⁾38,249 | ⁽¹⁾⁽²⁾37,850 | ⁽¹⁾⁽²⁾37,358 |
Of which - housing loans | 20,138 | 20,035 | 19,835 | ⁽3⁾19,686 | 19,753 | 19,739 | 19,540 | 19,393 |
Retail - small business | 14,255 | 13,857 | ⁽²⁾13,555 | ⁽²⁾13,423 | ⁽²⁾13,372 | ⁽²⁾13,180 | ⁽²⁾12,854 | ⁽²⁾12,611 |
Corporate banking | 39,105 | 39,409 | ⁽²⁾38,440 | ⁽²⁾40,421 | ⁽¹⁾⁽²⁾41,196 | ⁽¹⁾⁽²⁾42,694 | ⁽¹⁾⁽²⁾42,178 | ⁽¹⁾⁽²⁾44,447 |
Middle market banking | 21,953 | 21,415 | ⁽²⁾20,136 | ⁽²⁾19,582 | ⁽¹⁾⁽²⁾18,716 | ⁽¹⁾⁽²⁾18,808 | ⁽¹⁾⁽²⁾18,708 | ⁽¹⁾⁽²⁾18,307 |
Private banking | 3,921 | 3,716 | 3,585 | 3,543 | 3,384 | 3,576 | 3,530 | 3,432 |
Total | 120,123 | 118,974 | 115,161 | 115,871 | 115,859 | 116,498 | 115,120 | 116,155 |
Footnotes:
(1) Reclassified, see Note 31 B (1) to the financial statements. (2) Reclassified, see Note 31 B (3) to the financial statements.
(3) Amendment of the data reported in the report of the Board of Directors in respect of this quarter.
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