Mizrahi-TeTfahot Bank's net profit for 3rd quarter - NIS 387 billion with a return on equity of 9.5%

Bank Mizrahi Tefahot published the results of the third quarter of 2020 with a return on equity of 9.5% compared to 11.1% in the corresponding quarter. The net profit was NIS 387 million, despite a provision for credit losses of NIS 317 million as a result of the corona crisis. Based on the results for the quarter, the return on marketable capital is about 9.3%.
Net income was NIS 387 million, compared with NIS 422 million in the corresponding quarter last year. The total profit amounted to NIS 403 million, compared with NIS 388 million in the corresponding quarter last year.
Financing income in the third quarter amounted to NIS 1,518 million, compared with NIS 1,361 million in the corresponding quarter last year - an increase of 11.5%. Total revenues in the third quarter amounted to NIS 1,925 million, compared with NIS 1,761 million in the corresponding quarter last year, an increase of 9.3%. Revenues commission about 3% to NIS 399 million, compared with NIS 387 million in the corresponding quarter.
Expenditure on credit losses amounted to NIS 317 million in the third quarter, compared with NIS 70 million in the corresponding quarter last year. In total, the bank has set aside NIS 932 million for credit losses since the beginning of the year. The cost-income ratio in the third quarter of 2020 was 50.
As of the end of the third quarter, the equity attributed to the Bank's shareholders increased to approximately NIS 18.3 million - reflecting a capital multiplier of approximately 1.02 in relation to the current market value.

Increase in market shares following the acquisition of Union Bank
Following the completion of the transaction for the acquisition of Union Bank at the end of last September, Union's balance sheet data are included, for the first time, in the Bank's reports for the third quarter of 2020.

According to data from the banking system as of June 30, 2020, the connection with Union Bank increases the total share of the Mizrahi-Tefahot Group in the total credit activity and deposits in the banking system by approximately 2.5%.

The Bank notes that Union Bank's credit activity in the various channels diversifies Mizrahi-Tefahot's credit mix, in line with the Bank's strategic objectives and in particular in the area of ​​business credit, where the consolidated Bank's market share increases to approximately 12%.

The share of housing loans in the total credit portfolio of the Bank, after the acquisition of Union Bank, decreases by 3% to a rate of 63%, against a corresponding increase in the commercial portfolio, of which an increase of 1% in credit to individuals.
Moshe Larry, CEO of Mizrahi Tefahot: "The completion of the Union transaction places us beyond the strategic goals of increasing market shares and increasing business focus. Completion of the deal to acquire Union Bank helps the bank make a leap forward and increase its stake in the banking system, based on second-quarter data, to 22% in public credit and 18.6% in public deposits, beyond the goals of the current strategic plan. A new strategic plan, for the years 2021-2025, will soon be discussed and approved by the Bank's Board of Directors.
"The inclusion of Union's financial results in the Mizrahi-Tefahot reports leads to an improvement in the Bank's credit mix and an increase in the Group's market share in business credit to approximately 12% - in line with the strategic plan objectives, while reducing the weight of housing credit in the Bank's overall credit portfolio. The bank's competitiveness in general, and its ability to compete optimally for financing large and complex transactions in particular.
"Since Union Bank ceased to be a public company and became a wholly owned subsidiary of Mizrahi-Tefahot, the bank has begun comprehensive staff work, the purpose of which is to convert all of Union's activities into the bank. At this point, Union Bank continues to operate normally and provide full service , In the same format as before the completion of the purchase transaction.
"Despite particularly challenging macroeconomic conditions, including a negative cumulative index, interest rate cuts by central banks in Israel and the US and a significant increase in credit loss expenses - against the background of the uncertainty prevailing in the economy following the corona crisis, the bank manages to yield a return in the first nine months of the year" "To a capital of 9.0%, and to present, thanks to control of expenses, a quality efficiency ratio of 52.0% - better than the goal we set for ourselves in the strategic plan and the efficiency ratio of the corresponding period last year," Larry concluded.