Bank Leum was hit by Coronai and presents: profit of NIS 3.5 billion - a decrease of 40%

Bank Leumi ended 2020 with a net profit of NIS 2.1 billion, compared with NIS 3.5 billion in the corresponding period in 2019 - a decrease of 40%. The decrease in profit is mainly due to the significant increase in expenses for credit losses, mainly in the group provision, and a decrease in non-interest financing income, which in 2019 also included income from the sale of Leumi Card, in the amount of NIS 314 million.
The return on equity for 2020 amounted to 5.7%, compared with a return of 9.8% in 2019 (9.2% excluding the effect of the sale of Leumi Card in 2019), mainly due to the increase in credit loss expenses due to the corona crisis. Expenditure on credit losses in 2020 amounted to NIS 2.6 billion, compared with NIS 609 million in the corresponding period in 2019 - a jump of 326%.

Approximately 74% of the expense for credit losses was due to an increase in the group provision, against the background of the corona crisis. The expense ratio for credit losses for 2020 amounted to 0.88%, compared to 0.22% in the corresponding period in 2019.
The bank continued to focus its growth on the credit portfolio in the business, commercial and mortgage sectors. The business portfolio increased by 10.7% (including real estate) in the past year, the commercial portfolio increased by 9.8%, and the mortgage portfolio increased by 6.9%. Public deposits increased by 19.6% compared to December 31, 2019, and amounted to 31 December. In December 2020, to a total of NIS 447 billion, compared to NIS 374 billion on December 31, 2019.
From the outbreak of the crisis until near the date of publication of the financial report, Leumi approved business credit in the amount of NIS 6.4 billion as part of the state-guaranteed loan fund for businesses affected by the Corona crisis and the fund for increased risk business loans. .
Until January 31, 2021, Leumi froze current payments of loans to small and medium-sized businesses in the amount of NIS 1.2 billion. Of this, NIS 170 million is still in the status of a moratorium on payments. Until January 31, 2021, Leumi froze current payments of mortgage repayments in the amount of NIS 900 million, of which NIS 360 million are still in the status of payment freezes.
The five highest wage earners at the bank enjoyed wage costs of NIS 19.3 million. Chairman Samer Haj Yahya enjoys a salary of NIS 3.3 million, as does CEO Hanan Friedman. The high salary was taken by Avner Mendelssohn, CEO of Bank Leumi USA, with a salary cost of NIS 5.7 million.
Bank Leumi notes that the results for the fourth quarter indicate what is expected at the bank. Net income for the fourth quarter of the year amounted to NIS 890 million, compared with NIS 742 million in the corresponding quarter last year. The return on equity in the fourth quarter of 2020 was 9.8%, compared to 8.7% in the corresponding quarter last year (although the expense ratio for credit losses in the fourth quarter of 2020 was 0.37%, compared to 0.22% in the fourth quarter last year). The rate of expense for credit losses in the fourth quarter of the year is significantly lower than the rate of expense in the third quarter of the year - 0.76%, and from a rate of 1.19% in the first half of the year.