Bezeq, Mizrahi-Tefahot profits rise, Elbit drops
(Globes) – Israel’s Mizrahi-Tefahot Bank reported record a profit of NIS 1.154 billion in the first quarter of 2022, up 70.7% from the corresponding quarter of 2021.
However, the bank said that it will not be distributing a dividend due to an accelerated growth in credit to the public, especially in credit to construction and real estate and instructions from the Bank of Israel requiring higher capital allocation to cover projects financed with high leverage.
Higher profits saw Mizrahi-Tefahot’s return on equity rise to 21.9%, the highest of the four biggest banks, and up from 14.1% in the corresponding quarter of 2021 and 15.8% in 2021. Financing revenue in the first quarter was NIS 2.261b., up 20.3% from NIS 1.880b. in the first quarter of 2021.
Mizrahi-Tefahot CEO Moshe Lari said, “As of the end of the first quarter, the bank capital ratios meet the conditions for dividend distribution, in accordance with bank policy. Due to the Supervisor of Banks’ draft directive issued in March, whereby loans designated for purchase of land for development or construction, with an LTV higher than 75% of value of the acquired property, shall carry a risk weighting of 150%, instead of 100% – and the fact that should this be finalized, the directive would also apply retroactively, the bank decided that at this point in time, it would be preferable not to distribute a dividend. This is in order to maintain sufficient capital to allow the bank to further continue its growth momentum and to optimally address the growing demand for credit.”
Mizrahi-Tefahot plans on distributing a dividend in the
second quarter.
Bezeq Israel Telecommunications Company Ltd. on Tuesday reported first quarter revenue of NIS 2.26b., up 1.5% from the first quarter of 2021. Net profit in the first quarter of 2022 was NIS 282 million, down 31% from the corresponding quarter of 2021 but adjusted net profit was NIS 322m., up 7.7%.
Bezeq’s deployment of fiber optic cables is beginning to be felt with a 4% rise in revenue in the first quarter from the preceding quarter and a 9% rise in Internet revenue to NIS 434m. and a 6.7% rise in
revenue from data transmission to NIS 286m. But landline revenue fell 9.1% in the first quarter of 2022 to NIS 220m. from NIS 241m. in the first quarter of 2021. Fiber optic services now reach 1.193 million households, up 129,000 from the previous quarter, Bezeq reports.
BEZEQ CHAIRMAN Gil Sharon continued, “We presented excellent group financial results in the first quarter of the year, with improvement in key parameters, attesting to the strategic plan presented recently with a focus on
growth. The group’s strong results and financial stability enabled us to return to dividend distributions and for the first time in three and a half years, a dividend of NIS 240m. was distributed to shareholders this month.
Bezeq was boosted by strong results from its Pelephone mobile telecom unit. Revenue in the first quarter of 2022 was NIS 437m., up 11.7% from NIS 392m. in the corresponding quarter of 2021. The company benefited from the recovery of international travel and the sale of overseas roaming services. Net profit in the first quarter of 2022 grew sevenfold to NIS 56m.
Ran Guron, CEO of Pelephone, Yes and Bezeq International, said, “We posted a strong quarter with exceptional financial results. Pelephone and yes showed significant profitability and free cash flow improvements. Pelephone continued its turnaround that began in 2021 and maintained its positive trends, resulting in an increase in service revenues and the highest quarterly profit level achieved in the past eight years. In yes, we are the largest IPTV player in Israel today while maintaining positive free cash flow. In Bezeq International, we are already operating within the new regulatory reality and are focused on the business ICT sector.”
Meanwhile, Elbit Systems beat market forecasts with its first quarter revenue, but missed on net profit because of a large expense for stockbased employee compensation. Elbit’s share price was down nearly 7% on Wednesday morning, at NIS 680.90.
The Israeli defense company reported quarterly revenue of $1.35b., 21% more than in the corresponding quarter of 2021. Most of the growth is organic, but part is thanks to the acquisition of Sparton Corporation last year.
Non-GAAP operating profit was $65.8m. (4.9% of revenue) in the first quarter of 2022, down from $92.9m. (8.3% of revenue) in the first quarter of 2021. GAAP and Non-GAAP operating profit in the first quarter of 2022 were reduced by expenses of approximately $35m. related to the company’s stock price-linked compensation plans.
Non-GAAP net profit attributable to shareholders in the first quarter of 2022 was $54.3m. (4.0% of revenue), which compares with $76.2m. (6.8% of revenue) in the first quarter of 2021. Non-GAAP earnings per share were $1.22, which is lower than analysts had estimated.
GAAP net profit was $52.8m. (3.9% of revenue), which compares with $72.5m. (6.5% of revenue) in the first quarter of 2021.
Elbit Systems president and CEO Bezhalel (“Butzi”) Machlis said, “Elbit Systems is well-positioned to benefit from acceleration in defense budget growth, due to its portfolio of leading technological capabilities and positions in key global defense markets. Growth in the first quarter reflects strong demand for our solutions from customers around the world. Elbit Systems’ employee retention plans include stock price linked compensation, enhancing our ability to realize the long-term growth potential. The stock price appreciation during the first quarter resulted in a sharp increase in compensation costs related to stock price-linked compensation plans for employees.
“We believe the growing demand for our solutions coupled with a capable and motivated workforce will be the primary drivers of future growth and the long term success of Elbit Systems.”