Financial Statements - Annual Report 2016
Leumi reports a net profit of NIS 2.8 billion ($728 million) in 2016. For the first time in 6 years, the Bank announces a new 20% dividend policy
Net return on equity reached 9.3%. The core capital ratio (Tier 1) increased to 11.15%.
For the first time in 6 years, the Bank adopts a dividend policy - Leumi's Board of Directors set a payout ratio of 20% from the quarterly profit, as of the first quarter of 2017.
Net profit of NIS 2.8 billion ($728 million) in 2016, similar to 2015. The profit increased due to an increase in interest income, a decrease in credit loss expenses and a decrease in operating expenses. The increase in net profit was offset by a significant decrease in one-time profits, which were higher in 2015, and by an increase in tax expenses resulting from a decrease in the corporate tax rate.
Net return on equity reached 9.3% in 2016, compared with 10.3% in 2015 (which resulted from high one-time profits last year). This is against the backdrop of a significant improvement in the capital adequacy ratio.
Improvement in capital ratio - the core capital ratio (Tier I) increased from 9.58% at the end of 2015 to 11.15% at the end of 2016. The capital adequacy ratio reached 15.21%. This improvement will allow the Bank to further expand its activities in all business lines.
- Leumi is the only Israeli Bank to have resolved the issue of the investigation of US authorities (out of the banks involved).
Leumi continues to maintain a high quality credit portfolio:
Problem debts as of December 31, 2016 decreased by 4% compared to December 31, 2015. The NPL ratio (non-performing loans) decreased to 1.2%.
- Credit loss income out of net credit to the public as of December 31, 2016 reflected 0.05% of the bank's credit portfolio. This is compared with credit loss expenses in the corresponding period last year, which then reflected 0.08% of the bank's credit portfolio.
Continued implementation of efficiency plan:
Decrease in salary expenses – a decrease of NIS 300 million ($78 million) in salary expenses (5.3%), when excluding one-time payments.
The Group's workforce decreased by over 1,000 employees during 2016. Most employees ended their employment towards the end of 2016, meaning further reduction in salary expenses will be reflected in 2017 and will improve the Bank's efficiency ratio (which stood at 66% in 2016).
- In the past 5 years the Group's workforce decreased by approximately 2,300 employees.
Leumi continues to lead the digital banking field in Israel.
- 'Pepper' and the payment app 'Pepper Pay' have recently been released to app stores. Pepper is Israel's first mobile-only digital banking platform, enabling customers to manage all of their banking activity via their mobile phone. At this stage Pepper is open to invites only.
An improvement in balance sheet parameters:
The Group's equity increased by 9% compared to December 31, 2015, amounting to NIS 31.3 billion ($8.1 billion).
Total assets increased by 5.3%, amounting to NIS 438.6 billion ($114.1 billion).
Net Credit to the public increased by 0.2%, amounting to NIS 261.9 billion ($68.1 billion), while the increase in retail and commercial credit was offset by a decrease in corporate credit.
Deposits of the public increased by 5.5%, amounting to NIS 346.9 billion ($90.2 billion).
- Total managed assets increased by 2.9%, amounting to NIS 820.6 billion ($213.4 billion).