Mizrahi Q3 profit slips on credit provision spike

Mizrahi Tefahot, Israel’s third- largest bank, reported a smaller- than- expected 8% fall in third- quarter profit after it more than quadrupled provisions for credit losses due to the coronavirus pandemic.

Mizrahi said on Monday that it had earned NIS387m. in the July- September period, down from NIS422m. a year earlier and compared with profit of NIS347m. in a Reuters poll of analysts.

Financing income rose 11.5% to NIS1.5b., while credit loss provisions jumped to NIS317m. from NIS70m. a year earlier.

CEO Moshe Lari said the acquisition of smaller rival Union Bank helped Mizrahi, Israel’s largest mortgage lender, to boost its market share to 22% of loans to the public, and deposits from the public to nearly 19%, while its share of business loans rose by 12%.

He added that despite a highly challenging economy that includes disinflation and low interest rates, as well as the higher credit loss provisions, Mizrahi was still able to post return on equity of 9.0% in the first nine months of this year and lower its cost- income ratio due to cost cutting measures.

Lari added he planned to soon bring a new strategic plan for 2021- 2025 to the board for approval.

Mizrahi’s Tier 1 ratio of capital to risk components, a key measure of financial strength, slipped to 9.98% in the quarter from 10.13% a year earlier.

It is not paying any dividends during the pandemic to free up funds to provide more credit to households and businesses. ( Reuters)