Bank Leumi's third-quarter net profit surpassed expectations and rose 5.4 percent as provisions for doubtful debt were slashed 48%.
The bank said Wednesday that, for the three months ended September 30, net profit rose to NIS 568 million from NIS 539m. in the same period a year earlier, although return on equity fell to 14.9% from 15.2%. Excluding one-time charges of NIS 267m., net profit rose to NIS 835m.
Income from financing operations before provisions for doubtful debt rose to NIS 1.74 billion from NIS 1.6b., and provisions for doubtful debt dropped to NIS 166m. from NIS 322m.
Revenue rose 12.2% from charges in the capital markets and 8.1% from credit cards, while credit to the public increased to NIS 175.1b. from NIS 169.4b. and deposits increased to NIS 215.6b. from NIS 209.7b.
Leader & Co. analyst Alon Glazer was unrestrained in his enthusiasm for Leumi's results, saying they surpassed his expectations.
"After Bank Hapoalim issued its excellent earnings report we expected a good report from Leumi as well ... but we didn't think it would be this good," he said.
Excellence Nessuah analyst Micha Goldberg also said the earnings were much better than expected, with net profit 25% above his forecasts and loan loss provisions 47% below them. However, he warned market players not to read too much into the report.
"While we are more than satisfied with Leumi's quarterly result ... we caution investors not to seek too many conclusions from this report, which is riddled with 'one-time' items," said Goldberg.
Traders welcomed the results and shares rose 2.9% to NIS 16.94 on the Tel Aviv Stock Exchange.
Leumi increased its earnings against a background of giddying changes at the company. Two weeks ago, the government sold control of Leumi to New York firms Cerberus Capital Management and Gabriel Capital. Since September, the company has been selling its interests in mutual and provident operations in compliance with the Bachar reforms, which were passed into law in July. This week alone deals were reached to sell funds that manage assets worth more than NIS 58b.