Bank Leumi (TASE: LUMI) today reported the halving of its net profit for the second quarter despite higher revenue. Net profit fell 50% to NIS 280 million (NIS 0.48 per share) for the second quarter from NIS 564 million for the corresponding quarter of 2011. Net return on equity fell to 4.3% in the second quarter, on an annualized basis, from 10.3% in the corresponding quarter.
Net interest income before the expense for credit losses rose 8.3% to NIS 1.92 billion for the second quarter from NIS 1.78 billion for the corresponding quarter, and the expense for credit losses rose to NIS 333 million (0.46% of the credit portfolio) from NIS 73 million. Non-interest income, including fees, fell 13.2% to NIS 995 million for the second quarter from NIS 1.15 billion for the corresponding quarter.
Bank Leumi's capital adequacy ratio rose to 14.81% at the end of June from 13.96% a year earlier, and its core (Tier-1) capital adequacy ratio rose to 8.38% from 8.2%.
The bank attributed the drop in profit to a NIS 101 million write-down on its shares in Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and one-time profits in the corresponding quarter.
Net credit to the public rose 5.7% to NIS 241.4 billion at the end of June from NIS 228.3 billion a year earlier, and deposits from the public rose 115 to NIS 280.4 billion from NIS 252.7 billion.
Bank Leumi said that it reduced its exposure to Greece, Ireland, Italy, Portugal, and Spain by a further NIS 278 million during the second quarter to NIS 638 million at the end of June, of which NIS 316 million was to Italy and NIS 313 million was to Spain. Leumi added that it does not hold sovereign bonds of these countries, and that most of the exposure is to bonds of large international banks, with A or higher ratings, which have a broad revenue base that extends far beyond the borders of these countries.
Bank Leumi's share price fell 1% in morning trading to NIS 9.28, giving a market cap of NIS 13.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on August 30, 2012
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