Bank Leumi announced the launch of a NIS 2 billion capital raising issue in a share issue. This seems to be the bank’s way of improving the capital adequacy ratio, which has weakened in the past year and has been hurt due to the high growth in the real estate credit portfolio.
Leumi’s credit portfolio increased by 7.6% in the first quarter, after an increase of 16.1% in 2021 – Leumi is not the only one, and other workers and banks also provided huge amounts of credit, mainly to real estate companies.
The bank’s announcement stated that the offering is “for the purpose of continuing the credit growth strategy and addressing the opportunities that exist in the market.” The offering will take place in the coming days and is intended for foreign and Israeli investors. Leumi is following in the footsteps of Discount Bank, which raised NIS 1.4 billion in March this year by issuing its own shares.
The issue also states that “the increase in capital will support the further expansion of Leumi’s credit portfolio, with an emphasis on the areas: commercial, mortgage and business. The issue will enable the capital base to be strengthened, given the timing gap between “Contribution to capital spread over eight quarters.” In essence, this is only a timing gap.