15.08.2017

Israel Discount Bank Announces Financial Results for 2nd Quarter of 2017

Net Income - NIS 272 m, ROE -- 7.5%, Cost-Income Ratio -- 67.8%

Main highlights of Q2-17 results:

Financial performance

Top line growth supported mainly by credit growth in all targeted segments (in Israel) and margin growth

Total expenses decrease driven by salary and related expenses decline

Increase in expenses for credit losses

Improvement in asset quality metrics

Capital and liquidity

Strong capital position - increase in CET-1 capital ratio

LCR and LR well above BOI target

Strategy execution

Further deployment of our new CRM in branches

New innovative service of digital AI based digital assistant

New engagement with a Fintech company, iCount.

Conference Call and WEBEX Details

  • To join the online presentation, please click on the following URL: https://idbank.webex.com/idbank/onstage/g.php?MTID=e070ffd6bf0b0d25ad04f7fc0a06784bc
  • To join the conference call, please dial:

    Israel: 1809216057

    International: +44 (0) 1452 555566

    USA: 18669669439

    UK: 08006940257

  • Conference ID: 64229944

    Main metrics from the Balance Sheet:

    • Total credit to the public (gross) increased by 8.2% YoY (0.5% QoQ) to NIS 146.3 billion. Total credit to the public in Israel, grew by 10.5% YoY (1.3% QoQ), due to growth in all targeted segments:
      • Consumer credit grew by 11.5% YoY (1.2% QoQ)

      • SME credit grew by 10.2% YoY (1.6% QoQ)

      • Mortgages grew by 16.4% YoY (3.0% QoQ )

    • Deposits grew by 5.8% YoY (stayed flat QoQ) to NIS 171.6 billion. Deposits in Israel, grew by 8.5% YoY (0.7% QoQ).
    • Total equity grew by 8.7% YoY (1.5% QoQ) to NIS 15.4 billion, RWA increased by 6.0% YoY (0.7% QoQ) to NIS 156.9 billion. Common equity tier 1 ratio stands at a level of 9.8%.

      Main metrics from the Statement of Income:

    • Net interest income for Q2-17 increased by 12.9% YoY to NIS 1,304 m, as a result of a positive quantitative impact of NIS 37 m and a positive price impact of NIS 100 m.
    • Non-interest income increased by 4.3% YoY to NIS 759 m compared to the adjusted corresponding quarter (excluding a NIS 360 m income from the sale of VISA rights). The increase is mainly due to a 4.4% increase in Commissions, particularly in credit cards and a

      16.2 % increase in non-interest financing income, due to an increase in income resulting from the realization of investments made by Discount Capital.

    • Financing income, which includes net interest income and non-interest financing income, totaled NIS 1,383 m, an increase of 13.1% compared to the adjusted financing income in Q2-16 as aforementioned.

      The impact on financing income of the CPI increase was income of NIS 31 m, compared to an expense of NIS 7 m in the previous quarter and income of NIS 17 m in the corresponding quarter.

    • Total operating & other expenses decreased by 4.5% to NIS 1,398 m compared to the corresponding quarter. Excluding a NIS 6 m provision for actuarial changes, (mainly due to retirements in Q2-17), and a NIS 40 m provision in CAL in connection with a legal procedure in Q2-16, total operating and other expenses decreased by 2.2%.
    • Salary and related expenses decreased by 5.5% compared to the second quarter of 2016. Adjusted salary and related expenses (excluding the NIS 360 m income from the sale of VISA rights) declined by 6.2% compared to salary and related expenses in Q2-16.
    • Credit loss expenses amounted to NIS 211 m, constituting a quarterly rate of 0.58% of the average balance of credit to the public. Q2-17 credit loss expenses were impacted mainly by write-offs of specific borrowers.

Developments in certain profit and loss statement items in the first half of 2017, compared with the first half of 2016

For the six months

ended June 30,

In NIS millions

2017

2016

% Change

Interest income

3,140

⁽¹⁾2,712

15.8

Interest expenses

669

508

31.7

Interest income, net

2,471

2,204

12.1

Credit loss expenses

356

104

242.3

Net interest income after credit loss expenses

2,115

2,100

0.7

Non-interest Income

Non-interest financing income

304

524

(42.0)

Commissions

1,327

1,257

5.6

Other income

41

89

(53.9)

Total non-interest income

1,672

1,870

(10.6)

Operating and other Expenses

Salaries and related expenses

1,673

1,720

(2.7)

Maintenance and depreciation of buildings and equipment

524

541

(3.1)

Other expenses

633

620

2.1

Total operating and other expenses

2,830

2,881

(1.8)

Profit before taxes

957

1,089

(12.1)

Provision for taxes on profit

345

⁽¹⁾447

(22.8)

Profit after taxes

612

642

(4.7)

Bank's share in loss of affiliated companies, net of tax effect

(7)

(3)

133.3

Net profit attributed to the non-controlling rights holders in consolidated companies

(30)

(67)

(55.2)

Net Profit attributed to Bank's shareholders

575

572

0.5

Return on equity attributed to the Bank's shareholders, in %⁽²⁾

8.0

8.8

Net Profit attributed to Bank's shareholders - disregarding certain components

585

470

24.5

Return on equity attributed to the Bank's shareholders, in %⁽²⁾ - disregarding certain components

8.1

7.2

Footnotes:

(1)

Reclassified, see Note 1 G (1) to the condensed financial statements.

(2)

On an annual basis.

Balance sheet

In NIS millions

June 30,

2017

June 30,

2016

December 31, 2016

% Change compared to

June 30,

Total assets

218,393

208,882

219,577

4.6

(0.5)

Credit to the public, net

144,217

133,092

140,760

8.4

2.5

Securities

34,828

38,053

38,818

(8.5)

(10.3)

Deposits from the public

171,598

⁽¹⁾162,155

172,318

5.8

(0.4)

Equity attributed to the Bank's shareholders

14,972

13,769

14,512

8.7

3.2

Total equity

15,418

14,181

14,936

8.7

3.2

2016

December 31, 2016

Footnote:

(1) Reclassified - see Note 1 G (2) to the condensed financial statements.

Developments in certain profit and loss statement items in the second quarter of 2017, compared with the first quarter of 2017 and compared with the second quarter of 2016

2017 2016

% Change

compared to

In NIS millions Q2 Q1 Q2

Q1 2017

Q2 2016

Interest income

1,700

1,440

1,494

18.1

13.8

Interest expenses

396

273

339

45.1

16.8

Interest income, net

1,304

1,167

1,155

11.7

12.9

Credit loss expenses

211

145

58

45.5

263.8

Net interest income after credit loss expenses

1,093

1,022

1,097

6.9

(0.4)

Non-interest Income

Non-interest financing income

79

225

428

(64.9)

(81.5)

Commissions

661

666

633

(0.8)

4.4

Other income

19

22

27

(13.6)

(29.6)

Total non-interest income

759

913

1,088

(16.9)

(30.2)

Operating and other Expenses

Salaries and related expenses

814

859

861

(5.2)

(5.5)

Maintenance and depreciation of buildings and equipment

260

264

268

(1.5)

(3.0)

Other expenses

324

309

335

4.9

(3.3)

Total operating and other expenses

1,398

1,432

1,464

(2.4)

(4.5)

Profit before taxes

454

503

721

(9.7)

(37.0)

Provision for taxes on profit

163

182

272

(10.4)

(40.1)

Profit after taxes

291

321

449

(9.3)

(35.2)

Bank's share in loss of affiliated companies, net of tax effect

(3)

(4)

(2)

(25.0)

50.0

Net profit attributed to the non-controlling rights holders in consolidated companies

(16)

(14)

(54)

14.3

(70.4)

Net Profit attributed to Bank's shareholders

272

303

393

(10.2)

(30.8)

Return on equity attributed to the Bank's shareholders, in %⁽¹⁾

7.5

8.6

12.3

Net Profit attributed to Bank's shareholders - excluding certain components

276

309

241

(10.7)

14.5

Return on equity attributed to the Bank's shareholders, in %⁽¹⁾

- excluding certain components

7.6

8.8

7.4

Footnote:

(1)

On an annual basis.

Review of developments in the balance of net credit to the public, by regulatory operating segments

In NIS millions

June 30,

2017

December 31, 2016

%

Change

Domestic operations:

Households*

54,183

51,488

5.2

Private banking*

249

214

16.4

Small and minute businesses

36,546

34,219

6.8

Medium businesses

11,932

12,398

(3.8)

Large businesses

22,310

21,438

4.1

Institutional bodies

961

1,047

(8.2)

Total Domestic operations

126,181

120,804

4.5

Total International operations

20,111

22,100

(9.0)

Total credit to the public

146,292

142,904

2.4

Credit loss expenses

(2,075)

(2,144)

(3.2)

Total credit to the public, net

144,217

140,760

2.5

*Of which - Mortgages

27,354

25,764

6.2

Israel Discount Bank Limited published this content on 15 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 15 August 2017 05:36:03 UTC.

Original documenthttps://investors.discountbank.co.il/sites/investors.discountbank.co.il/files/IR_Media/Results_Center/2017/PR/PR Q2-17 FINAL.pdf

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