Press Releases
Leumi Reports Q3 2017 Results: ROE of 10.3% and 9.7% for First 9 Months; The Bank Increases the Dividend Payout Ratio from 20% to 40%
Return on Equity in the First Nine Months of 2017 Reached 9.7%
The Bank increases the dividend payout ratio from 20% to 40%.
21.11.2017
-
High Return on Equity – further to past quarters, in the third quarter of 2017 the Bank reported a significant improvement in the return on equity from core business activities: an increase in income alongside a significant decrease in expenses.
-
Net income in the first nine months of 2017 reflects a return on equity of 9.7% and a return on equity of 10.3% in the third quarter of 2017.
Net income in the first nine months of 2017 totaled NIS 2,318 million ($657 million), while net income in the third quarter of 2017 totaled NIS 820 million ($232 million). Net income in the corresponding period last year included several material non-recurring items: the sale of Visa Europe, the insurance refund in respect of the settlement regarding U.S. customers, one-time salary expenses and non-recurring tax income. When excluding these items, the return on equity in the first nine months last year was 8.6% and 9.4% in the corresponding quarter last year.
-
Increase in the dividend payout ratio – the Bank's Board of Directors approved a change in the dividend policy, from a payout ratio of 20% to up to 40% of the profit. In light of third quarter earnings, the Bank will distribute a dividend of 40% amounting to NIS 328 million ($93 million), reflecting an annual dividend yield of 4.6%. From the beginning of 2017 dividend payments totaled NIS 628 million ($178 million).
-
Common equity tier I capital ratio at September 30, 2017 reached 11.35%.
-
Leumi continues to maintain the highest quality loan portfolio in the Israeli banking system - in the first nine months of 2017 the provision for credit losses stood at a rate of only 0.07%, while credit loss expenses in the third quarter of 2017 amounted to zero (0).
- Continuing trend of cost cutting – salary expenses in the first nine months of 2017 decreased by 7.5% compared with the corresponding period last year, and by 6.6% in the third quarter of 2017 compared with the corresponding period last year. Total operating expenses in the first nine months and in the third quarter of 2017 decreased by 5% compared with the corresponding periods last year (excluding non-recurring items recorded last year, mainly the one-time bonus in respect of the collective wage agreement and the insurance refund).
-
Net interest income in the first nine months of 2017 increased by 5% compared with the corresponding period last year. Net interest income in the third quarter of 2017 decreased by 2.6% compared with the corresponding period last year. The decrease was due to the negative CPI of 0.5% recorded in the third quarter of 2017, as compared to the positive CPI of 0.4% recorded in the corresponding period last year.
In accordance with the Bank's Strategy:
- Leumi continues to lead the digital banking field in Israel, while expanding the activities of 'Pepper' and 'Pepper Pay' to customers of all banks.
- The Bank continues to implement efficiency – during the fourth quarter of 2017 an additional significant reduction in the workforce is expected, following a significant reduction in the Group's workforce in the past five years.
- The Bank continues to selectively grow its loan portfolio, while maintaining a balanced risk management policy. Net loans to the public as of September 30, 2017 increased by NIS 4.4 billion ($1.2 billion) compared with December 31, 2016. Excluding the effect of the shekel appreciation, the increase in loans amounted to NIS 6.7 billion ($1.9 billion).
Balance Sheet Parameters:
- The Group's total shareholders' equity as of September 30, 2017 amounted to NIS 32.8 billion ($9.3 billion), compared with NIS 31.3 billion ($8.9 billion) as of December 31, 2016 (an increase of 4.6%).
- The leverage ratio as of September 30, 2017 reached 7.03%, compared to the Bank of Israel's minimal threshold of 6%.
- The liquidity coverage ratio as of September 30, 2017 reached 122%, compared to the Bank of Israel's minimal threshold of100%.
- Net loans to the public as of September 30, 2017 increased to NIS 266.4 billion ($75.5 billion), compared with NIS 262.0 billion ($74.2 billion) as of December 31, 2016.
- Deposits from the public as of September 30, 2017 increased to NIS 350.2 billion ($99.2 billion), compared with NIS 346.9 billion ($98.3 billion) as of December 31, 2016.