Bank discount Published the reports for the year 2022 and reported a 26% increase in the annual net profit, which amounted to NIS 3.5 billion. The return on equity in 2022 reached a rate of 15.1%, compared to 13.6% in 2021. The bank will distribute a dividend amounting to NIS 187.8 million, about 20% of the profits of the fourth quarter (which amounted to NIS 939 million compared to NIS 529 million in the corresponding quarter in 2021).
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The bank reported a high growth in credit at a rate of 13.1% compared to the end of 2021 to a credit portfolio of NIS 241 billion, and at the same time noted that in the fourth quarter there was a moderation in the demand for credit due to the economic slowdown. Credit for housing (mortgages) increased by 21.1%, credit for medium-sized businesses increased by 16.6%, credit for large businesses increased by 15.9%, and credit for households without housing loans increased by 8.6% since the beginning of the year.
The increase in the credit portfolio, together with the Bank of Israel’s interest rate increase (which rose sharply during 2022 from a level of 0.1% in March to 3.25% in November), boosted the bank’s income. These amounted in 2022 to a total of NIS 12.9 billion, an increase of 23.4%. In the fourth quarter, all revenues totaled NIS 3.7 billion, an increase of 34.2% compared to the corresponding quarter of the previous year.
When looking at the income from interest alone, an amazing figure is revealed. The bank increased the income from interest in the last quarter of the year by 50% compared to the corresponding quarter in 2021, so that the quarterly interest income, net, stood at NIS 2.54 billion. In 2022, net interest income amounted to NIS 8.7 billion, a jump of 33%.
The bank noted that in 2022 an expense for credit losses was recorded in the amount of NIS 407 million, compared to an income of NIS 693 million in 2021. In the fourth quarter, an expense for credit losses was recorded in the amount of NIS 230 million, compared to an income of NIS 10 million in the corresponding quarter. “The increase was mainly due to provisions due to the expected impact of the macro conditions and an increase in credit,” we noted.
“The decision to separate Kal is wrong and will not contribute to increasing competition”
The chairman of the bank, Shaul Kobrinsky, noted in his opening remarks the state’s decision to separate the credit card company as a god, in which Discount controls 72%, from the bank. “Recently, a decision was made requiring Discount to sell the means of control it holds in Cal, within a period of several years as detailed in the report. Although in our view the decision is wrong and will not contribute to increasing competition in the banking system, we respect the decision and are working to implement it as required. The separation from Cal is expected to lead to For a minor decrease in net profit and return on capital and a significant improvement in Discount’s operating efficiency ratio,” Kobrinsky wrote.
The chairman also referred to the revolution in the legal system that the government is leading these days, and this follows the warnings that the bank’s CEO, Uri Levin, made regarding the effects of the changes in the legal system, also in a conversation with Prime Minister Benjamin Netanyahu. “During January 2023, the government began promoting a plan to make substantial changes to the legal system in Israel, which arouses significant controversy in the Israeli public. According to economic factors in Israel and the world, these changes may have a negative impact on the financial markets and the stability of the economy and economy in Israel,” Kobrinsky noted.
Later in the report, another reference by the bank to the legal revolution was recorded. “The aforementioned effects may also harm the bank and its customers. It should be noted that the rating company Fitch recently confirmed the credit rating of the State of Israel at the level of A+ with a stable rating forecast. Fitch noted, among other things, that a number of countries that have undergone significant institutional reform went so far as to reduce their credit rating and that at this stage it is not clear whether the proposed reform in Israel will have a similar widespread effect. The rating company Moody’s published a report regarding the move promoted by the Israeli government, in which it stated, among other things, that in its opinion, if the proposed reform is fully implemented, it will weaken the power of the judicial system Negative on the credit of the State of Israel. At this stage it is not possible to estimate what the components of the change plan in the legal system will be, if and as soon as it is completed, and accordingly – what the consequences will be on the state of the financial markets and the state of the economy and economy in Israel,” Discount wrote.
Discount even managed to refer in the report to the closing of Silicon Valley Bank (SVB) at the end of the week. “The move could have a negative impact on the high-tech sector in Israel, which as of this time is difficult to assess. The bank does not anticipate a material impact on its results as a result,” the report states.