Israel Discount Bank is attributing its dramatic rise in profits in the second quarter to the bank's strong and stable base and the success of a multiyear strategic plan covering all aspects of its business.
Israel's third-largest lender on Monday issued its second quarter earnings report, showing a 52.5 percent increase in earnings on the same period last year to NIS 337 million, from NIS 221m. First quarter earnings totalled NIS 140m.
Return on equity in the second quarter of the year rose to 15.8% on an annual basis, from 9.9% in the corresponding quarter of 2008 and 6.5% in the first quarter.
Zohar, Discount's chairman, said the group had managed "to substantially enlarge its earnings despite the difficulties in world markets and financial markets in the last year." He noted that Discount had also achieved its targeted capital-adequacy ratio of 12.08% "long before the planned date of the end of 2009."
In a statement, Discount's spokesman said the group's long-term strategic plan was bearing fruit. "Subsidiary companies in the Discount group are displaying impressive earnings," she said. "The Cal company is showing continuing improvement in earnings, particularly in customer credit. Mercantile Bank has seen impressive development in the Arab
and haredi sectors."
Discount New York
had accomplished "a fundamental improvement in its share balance and capital, and shows earnings in all quarters despite the deep financial crisis in the US," she said.
Giora Offer, Discount's president and CEO, said the bank's board of directors had recently approved an update for the group strategic plan, whereby "a new return-on-equity target range of 9%-11% has been set for the years 2010-2011."
This step, the bank said, stemmed from the demand for a significant increase in capital-yield rates and the necessary spending in implementing regulatory instructions affecting all banks.
The statement said the bank intended to focus considerable attention in 2009-2010 on increasing efficiency and was aiming for operational savings totalling some NIS 120m. by year's end. The bank has reduced computerization costs, with the completion of the "Project Horizon" computer project, which had required the investment of significant resources in past years.
"Even during these challenging times, the bank has succeeded in remaining attentive to our clients' needs, recruiting new clients and broadening the scope of banking activities across the franchise," Offer said. "Prudent risk management, improvement in asset quality and capital levels, coupled with a high level of liquidity, have continued to allow us to execute our business plans and at the same time improve group results."