Israel Discount Bank Announces Q4 & FY 2010 Financial Results
TEL-AVIV, Israel, March 31, 2011 /PRNewswire/ -- Israel Discount Bank Limited (TASE: DSCT), one of Israel's leading banks, today reported Q4 and FY 2010 financial results:
FINANCIAL HIGHLIGHTS FOR 2010:
Net Income - NIS 724 million compared with NIS 923 million in 2009, a decrease of 21.6%
Return on Equity for 2010 - 6.9% compared with 9.8% in 2009
FINANCIAL HIGHLIGHTS FOR Q4/2010:
Net Income Q4/2010 - NIS 135 million compared to NIS 154 million in Q4/2009
Return on Equity Q4/2010 - 5.1% compared to 6.3% in Q4/2009
Capital Adequacy Ratio (Basel II) - 13.7%
Tier-1 Capital Ratio - 8.5%
Core Tier-1 Ratio - 7.9%
Main factors affecting the Group's NET INCOME in 2010, compared to the corresponding period:
- An increase of 1.5% in income from financing activities before provision for doubtful debts.
- A decrease of 17.7% in Provisions for Doubtful Debts.
- A decrease of NIS 40 million in Tax Provisions.
- Income from Affiliates amounted to NIS 186 million, compared to NIS 158 million in 2009, an increase of 17.7%.
MAIN FACTORS negatively impacting NET INCOME IN 2010:
- A decrease of 13.9% in Operating and Other Income; a decrease of NIS 86 million in Commissions, primarily from credit card commissions; a decrease of NIS 178 million in Other Income, mostly due to a decline in profits of the employee severance compensation fund, and a decline of NIS 166 million in profits from investments in shares.
- An increase of 2.6% in Operating and Other Expenses, due to an increase of 0.5% in salary expenses and an increase of 11.2% in Depreciation and Other Expenses.
MAIN BALANCE SHEET DEVELOPMENTS IN 2010:
- Total Assets of the Discount Group decreased by 1%, amounting to NIS 185.8 billion, compared to NIS 187.8 billion in 2009.
- Credit granted to the Public increased by 3.7%, amounting to NIS 118.7 billion, compared to NIS 114.4 billion in 2009.
- Deposits from the Public decreased by 2.7%, amounting to NIS 138.0 billion, compared to NIS 141.8 billion in 2009.
- Shareholders' Equity increased by 12.5%, to NIS 11.2 billion, compared to NIS 10 billion in 2009.
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LETTER FROM THE CHAIRMAN AND CEO OF DISCOUNT BANK
This past year has been a challenging one for the Discount Group. The bank's activities in 2010 focused on further strengthening our capital base, on implementing organizational and structural changes and on formulating a corporate strategy. In 2010, the Bank's Net Income was NIS 724 million and the Return on Equity was 6.9% - a result that in our opinion does not reflect the potential profitability of the Discount Group.
This year too, the bank's subsidiaries continued to constitute an important and central factor in the success of the Group: The positive trend in the results of IDB New York continued and it posted record profits of $51 million; Mercantile Discount Bank closed the year with Net Income of NIS 147 million; and, despite being confronted by business and organizational challenges, Israel Credit Cards (ICC) closed the year with Net Income of NIS 215 million and distributed a dividend of NIS 150 million.
During the year, the bank successfully completed a capital issuance of NIS 450 million in Tier-I capital and formalized a detailed and comprehensive plan for managing the group's capital. The aim of the plan is to achieve, by year-end 2011, a Core Tier-1 Capital Ratio of 7.5%-8% and a Total Capital Ratio of 13%.
At the beginning of 2010, the Bank embarked on a comprehensive process of structural and personnel changes. As part of the process, most of which will be completed during 2011, the Chairman of the Board and President & CEO were replaced and new appointments were made to the positions of Head of the Banking Division, Head of the Corporate Banking Division, and President & CEO of IDB New York. In addition, extensive changes took place in ICC's management and a risk management organization was established. In the coming months, the establishment of the Strategy, Marketing and Service Division will be completed, a Customers' Assets Division will be created and the new service structures will be implemented in the business divisions.
During 2010, the initial stages of the group strategic plan got underway. As part of this process goals and guidelines have been established for the group strategy and the core principles of the plan have been approved. These principles include effective management of the group's capital, cost-savings by means of striving for a comprehensive and durable solution in the field of labor relations, improved processes in IT and operations, increasing profitability by expanding the product offering to our customers, and the development of business activities with lower capital requirements, or where the bank has a lower market share, relative to the sector.
We are currently in the process of making a comprehensive change to Discount's business focus. During 2011, the group expects to complete the structural changes that were begun in 2010 and to present a comprehensive and updated strategic plan. We are appropriately organized to address all of the issues, working in cooperation with the group's employees and managers. We have no doubt that we will execute these changes, and return to the path of continuous improvement in our efficiency ratios, profitability and return on equity, as well as improving service to our customers, and providing value to our shareholders.
Data Regarding Subsidiaries
2010
Return on Capital
Net Shareholders' Adequacy
Income Equity Ratio
Discount Bancorp Inc. USD 51 M 6.8% *14.7%
Mercantile Discount Bank NIS 147 M 8.2% 13.6%
Discount Mortgage Bank NIS 30 M 2.8% 18.3%
Israel Credit Cards (ICC)
(the Bank holds
71.83% of the equity) NIS 215 M 18.3% 16.2%
2009
Return on Capital
Net Shareholders' Adequacy
Income Equity Ratio
Discount Bancorp Inc. USD 44 M 6.6% *14.9%
Mercantile Discount Bank NIS 180 M 11.1% 12.2%
Discount Mortgage Bank NIS 31 M 3.4% 18.8%
Israel Credit Cards (ICC)
(the Bank holds
71.83% of the equity) NIS 249 M 26.3% 13.7%
* In conformity with mandatory rules in the U.S.A.
Discount Group - Principal Data from the Financial Statements
Income and Profitability (in NIS millions)
Annual Quarterly
% %
2010 2009 change 2010 2009 change
Income from financing
activities before
provision for doubtful debts 4,830 4,757 1.5 873 1,222 (28.6)
Provision for doubtful debts 821 998 (17.7) 366 269 36.0
Operating and other income 2,661 3,091 (13.9) 745 802 (7.1)
Operating and other expenses 5,631 5,486 (2.6) 1,468 1,476 (0.5)
Net operating income 688 943 (27.0) 130 156 (12.3)
Net income for the period 724 923 (21.6) 135 154 (12.3)
Return on net operating income
in % 7.6 11.8 5.5 7.4
Return on net income in % 6.9 9.8 5.1 6.3
Development of Assets and Liabilities (in NIS millions)
December 31 December 31 %
2010 2009 change
Total assets 185.8 187.8 (1.1)
Credit granted to the public 118.7 114.4 3.7
Deposits from the public 138.0 141.8 (2.7)
Securitiesd 37.2 36.3 2.3
Shareholders' equity 11.2 10.0 12.5
Principal Financial Ratios (in percentages)
December 31 December 31
2010 2009
Financial resources in relation to total
assets 6.2 5.5
Credit granted to the public to deposits from
the public 86.0 80.7
Total capital to risk assets (capital
adequacy ratio) 13.69 12.15
Core capital to risk assets 7.9 6.9
Original Tier I capital to risk assets 8.0 7.1
Provision for doubtful debts to credit
granted to the public 0.66 0.83
Interest margin 1.48 1.41
Operating expenses to total income
(efficiency ratio) 75.2 69.9
Israel Discount Bank
Israel Discount Bank is a leading financial group in Israel. With nationwide coverage, Israel Discount Bank provides a full spectrum of corporate and retail financial products and services to its clients, both in Israel and key financial centers around the world. Israel Discount Bank is traded on the Tel-Aviv Stock Exchange under the ticker DSCT.
For additional details please contact:
Sarit Weiss
Spokesperson
Tel: +972-3-5145516
Mobile: +972-52-2461151
E-mail: spokes@discountbank.net
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