A jump in provisions for doubtful debts and lower net interest income cut into net profit for Bank Leumi (TASE: LUMI). The bank reported first quarter net profit of NIS 429 million, a drop of 8.7% compared with the NIS 470 million recorded in the corresponding quarter of 2008.
Net interest income before provision for doubtful debts was NIS 1.36 billion, 30.5% lower than the NIS 1.96 billion recorded in the corresponding quarter of 2008. The bank attributed the drop to derivatives activity and to exchange rate differentials which cut into overseas investments.
The provision for doubtful debts rose 45.1% to NIS 354 million, from NIS 244 million in the corresponding quarter.
At the same time, operating and other income rose 18% to NIS 1 billion, from NIS 851 million in the first quarter of 2008. Operating and other expenses fell 12.8%, to NIS 1.56 billion, from NIS 1.79 billion. Leumi said that the decline in operating expenses was primarily a function of lower salary expenses, resulting from positive returns in its severance pay fund.
Credit to the public rose 6.3% to NIS 212.9 billion, while deposits from the public rose 11.6% to NIS 254.6 billion.
The bank's capital adequacy ratio was 11.9%. Its Tier 1 capital to risk weighted assets ratio was 7.73%, the same as the end of the first quarter of 2008, and up from 7.51% at the end of 2008.
Published by Globes [online], Israel business news - www.globes-online.com - on May 31, 2009
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