Bank Leumi (TASE: LUMI) released its 2023 financial report today, showing an annual net profit of NIS 7 billion, a 9% decrease from 2022. This drop in net profit was primarily due to a write down of NIS 1.1 billion on the value of Leumi’s 14.2% stake in US bank Valley National. Excluding this one-time write down, the net profit for 2023 was NIS 8.1 billion.
In 2023, Leumi’s return on equity was 13.7%, down from 17% in 2022. The bank will pay out a dividend of NIS 365 million on its fourth quarter profits, which is 20% of the quarterly profit and aligns with Bank of Israel guidelines recommending lower dividend payouts during times of conflict. Dividend distributions and share buybacks in 2023 totaled NIS 2.35 billion.
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Net interest income, which was a major contributor to the bank’s profit last year due to the high interest rate environment and credit portfolio growth, reached NIS 16 billion in 2023, a 21% increase from 2022.
Mortgage Growth
Bank Leumi’s credit portfolio expanded by 9% in 2023. Despite market challenges such as high interest rates, the bank focused on growing its mortgage portfolio, which saw a 9% increase last year to NIS 132.1 billion. Leumi captured 30% of all new mortgage loans in 2023, positioning itself as a key competitor to Mizrahi Tefahot Bank in the home loans market.
Conversely, credit to individual customers, excluding mortgages, decreased by 7% to NIS 30.2 billion in 2023 due to high interest rates leading to fewer loan applications and more loan repayments.
Credit to small businesses also declined by 1.9% to NIS 26.2 billion, while commercial credit increased by 3% to NIS 62.6 billion, and corporate credit, including real estate, grew by 16% to NIS 127.4 billion by year-end.
Increased Credit Loss Provisions
The bank raised its provisions for credit losses significantly in response to the high interest rate environment and war-related impacts. In 2023, provisions totaled NIS 2.4 billion, nearly five times the NIS 500 million set aside in 2022.
Public deposits reached NIS 567.8 billion by the end of 2023, showing a 2% year-on-year growth. Non-interest bearing current account balances decreased by 24% to NIS 150.4 billion in 2023.
Published by Globes, Israel business news – en.globes.co.il – on March 19, 2024.
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