Financial Reports 2nd Quarter 2020
Return on equity in the second quarter and in the first half: 9.0%
Financing revenues in the first half of this year:
NIS 2,810 million
Compared to NIS 2,920 million in the corresponding period in 2019
Decrease by 3.8%*
Financing revenues in the second quarter of 2020:
NIS 1,399 million
Compared to NIS 1,632 million in the corresponding period last year
Decrease by 14.3%**
Net profit in the first half: NIS 717 million
Compared to NIS 980 million in the corresponding period in 2019
Decrease by 26.8%
Net profit in the second quarter of 2020: NIS 360 million
Compared to NIS 576 million in the corresponding period last year
Decrease by 37.5%
In the second quarter of 2020: 52.8%, In the first half of the year: 52.6%
* In the first half of this year, the CPI decreased by 0.7%, compared to an increase by 1.2% in the corresponding period
last year. The difference in CPI between these two periods reduced financing revenues in the first half of 2020 by NIS
** In the second quarter of this year, the CPI decreased by 0.2%, compared to an increase by 1.5% in the corresponding
period last year. The difference in CPI between these two periods reduced financing revenues of the Bank in the
second quarter of 2020 by NIS 275 million.
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Continued growth in Bank operations along with macro-economic effects
Results of the first half of 2020 reflect continued expansion of Bank business across diverse parameters:loans and deposits, total assets, shareholder equity and commission revenues.
Thus, inter alia, the Bank loan portfolio at the end of the first half amounted to NIS 214.5 billion, an increase by 6.8% compared to the corresponding period last year; deposits from the public amounted to NIS 231.8
billion, an increase by 13.0%; total assets amounted to NIS 291.6 billion, an increase by 10.3% compared to the first half last year; and shareholder equity increased by 5.8%, to NIS 16.7 billion.
Commission revenues in the first half of this year amounted to NIS 800 million, an increase by 5.8% compared to the corresponding period in 2019.
On the other hand, reported results were affected by multiple macro-economic events, including the following: CPI difference of 1.9% between the two six-month periods (decrease by 0.7% in the current one,
compared to increase by 1.2% in the corresponding period), interest rates lowered by central banks in the USA and in Israel, and a significant NIS 440 million increase in expenses with respect to credit losses,
due to the uncertainty in the market with regard to the Corona Virus pandemic and in line with supervisory expectation.
Special assistance to clients during the Corona Virus pandemic
Since the outbreak of the Corona Virus pandemic, the Bank is assisting clients in optimally addressing the implications of this crisis, through a range of tools and solutions customized for this unusual period.
These include an option to delay monthly repayments and to revise the repayment schedule for business loans, retail loans and mortgages. Since the start of this crisis, the Bank granted repayment deferrals by up
to 4 months, for more than 100 thousand housing loans, and as from mid-July, borrowers may apply for a further deferral in conformity with the Bank of Israel outline. As of this date, for 60% of the balance of loans
currently due for payment, no further deferral was applied for and the clients resumed making payments.
Along with an option to obtain a general-purpose loan of up to 70% of the property value, as a means for improving liquidity of households in this period of rising unemployment, the Bank also offers to those in thr process of buying an apartment a "mortgage at your own pace". This housing loan offers borrowers maximum flexibility and alignment of monthly repayments with their earning capacity throughout the loan
For senior citizens, some of whom are facing a decline in current income and erosion of their pension, the Bank offers a "retirement mortgage" – a long-term loan secured by their residential apartment.
This unique product allows them to receive a monthly payment for up to 15 years or, alternatively, a lump sum to finance major expenses, such as making a deposit payment for going into a nursing home or providing assistance
to their children.
Eldad Fresher: Despite highly challenging macro-economic conditions, the Bank succeeded in generating 9.0% return on equity and a cost income ratio below 53.0%
"In the first half of this year we succeeded in generating a 9.0% return on equity and thanks to our control over expenses, we presented an outstanding cost-income ratio of 52.6% –
better than the target we had set for ourselves in the strategic plan and better than the cost-income ratio for the corresponding period last year – despite highly challenging macro-economic conditions, which is an achievement and testament to the Bank's robustness.
The negative CPI, lowered interest rates in Israel and in the USA and significant increase in expenses with respect to credit losses due to the current uncertainty
in the market due to the Corona Virus crisis – all have offset the results of further growth in Bank operations and increase in most balance sheet items, and have decreased net profit compared to the corresponding period
We should note the thousands of dedicated Bank employees and managers who contributed to expansion of the Bank's business, with an on-going effort to maintain the unique service level
offered by Mizrahi-Tefahot, despite the challenges and restrictions imposed by the health crisis.
Bank staff are doing their utmost to stand by our clients in these difficult times, and to provide them with unique value propositions designed to help them get through this crisis in the best way
Bank Yahav of Mizrahi-Tefahot Group continues to show strength and to achieve impressive performance, despite the implications of the Corona Virus crisis for the economy in general and for the banking system in particular.
In the first half of this year, Bank Yahav achieved net profit amounting to NIS 85 million and a remarkable return on equity at 11.0%, which is evidence of the
quality of Bank Yahav's loan portfolio.
At the same time, we are approaching the completion of the merger transaction with Union bank.In July, the Bank signed an agreement with Peninsula Group, whereby upon closing of the merger Union bank would sell to Peninsula its diamond sector credit activities. Thus we resolved one of the key conditions imposed by the Competition Commissioner for going forward with the merger
The next stage, expected to take place in the coming weeks, would see the Bank issue a purchase offer for Union bank's shares. Should this step be successfully completed, Mizrahi-Tefahot would gain control over Union bank and the most significant merger of recent years in the Israeli banking system would be under way. The Union bank transaction would enhance the Bank's competitive
position and would be one of the growth engines that form the basis for our next strategic plan",said Bank President & CEO, Eldad Fresher.