Mizrahi-Tefahot Bank publishes the results for 2021, including a net profit of NIS 3,188 million, which reflects a return on equity of 15.8%. This is an unprecedented record for the bank, achieved thanks to a combination of several key factors:
Continued growth in the Bank’s operations – in 2021, the Bank recorded an increase in most items in the balance sheet: credit to the public amounted to approximately 271.4 billion, an increase of 10.6% compared to 2020; Deposits from the public reached NIS 307.9 billion, an increase of 8.3% compared to the corresponding year; The total balance sheet reached NIS 392.3 billion at the end of the year, an increase of 8.9% compared to 2020 and shareholders’ equity reached NIS 20.8 billion, an increase of 10.5% compared to 2020.
Contribution of the transaction to the acquisition of Union Bank – On September 30, 2020, the transaction for the acquisition of Union Bank was completed and from that date, Union Bank is a wholly owned subsidiary of the Bank. Union Bank’s contribution to the profits of the Mizrahi-Tefahot Group amounted to NIS 169 million in 2021. In addition, a net profit of NIS 216 million was recorded, in respect of a deferred credit balance as a result of the acquisition of an association. This balance is recognized in the Group’s profit and loss statement and is spread over five years, starting in the fourth quarter of 2020.
Decrease in provisions for credit losses – Due to the outbreak of the corona plague in the first quarter of 2020, relatively high expenses for credit losses in the amount of NIS 1,050 million were recorded this year, which also included expenses for group provisions, due to the corona crisis. Against the background of the improvement in the morbidity and recovery in economic activity in the economy, an income of NIS 278 million was recorded in 2021, due to a decrease in expenses for credit losses, as a result of a decrease in the group provision.
Operational preparation – in the face of record mortgage demand
The residential real estate industry and the mortgage market were characterized in 2021 by unprecedented activity, which was reflected in the record performance of housing loans, amounting to approximately NIS 116 billion.
In view of the sharp jump in customer inquiries, the bank – as the largest factor in the industry, is required to make exceptional operational preparations, and to develop advanced tools such as Tefahot Touch – an innovative application that allows customers to carry out most of the loan process remotely, with the close assistance of a personal banker. The success of the Bank’s mortgage banker in providing the best service, under an unconventional load, testifies to their expertise and professionalism, thanks to which the Bank maintains its leading position in the industry.
In total, new loans and turnovers of approximately NIS 46.2 billion were made in the Bank in 2021, compared with approximately NIS 31.8 billion in 2020, a jump of approximately 45%. The number of borrowers, including turnover, amounted to just over 70,000, compared with close to 53,000 in 2020, an increase of 32.6%. This intensive activity was carried out with maximum care for the quality of the underwriting, and maintaining a particularly low risk profile of the mortgage portfolio.
Mizrahi-Tefahot CEO Moshe Larry says that “2020 was marked by the corona crisis and the contraction in global and local economic activity, which affected the performance of the banking system and other business companies. The decline in morbidity and the success of vaccination campaigns have led to a positive turnaround, and from the beginning of 2021 there has been a rapid recovery in economic activity and the business sector. Against this background, the Bank was able to show impressive growth in a variety of areas, which together with the contribution of the Union transaction, were the main factors for the peak profits in 2021.
Mizrahi-Tefahot’s momentum of expansion is reflected in an increase in most items in the balance sheet: credit to the public rose by 10.6% compared to 2020, when business credit grew by 9.4%, in line with the goals of the strategic plan; Public deposits increased by 8.3% and the total balance sheet grew by 8.9% compared to the corresponding year. Financing income, excluding Union Bank, jumped by 23.4% compared to 2020, and financing income from current operations increased by 9.6% compared with the previous year.
In April 2021, the Bank published a new strategic plan for 2025-2021, with defined goals in market shares, efficiency and profitability, and a number of key pillars, including: making Mizrahi-Tefahot a key player in commercial banking, establishing its leadership in households in general and in the mortgage sector in particular. The bank, which combines human banking and a shell of advanced digital channels and leverage the merger with Union Bank to create operational synergy.
The operations to merge Union Bank and convert its customers to Mizrahi-Tefahot took place throughout the year, with the intention of accelerating the process and completing it by the end of 2022. This, while ensuring an easy and friendly transition experience and ensuring regular and continuous service to Union customers whose branches are still active.
The return of the economy to routine and the note activity in the real estate market created unconventional loads throughout the year in the Bank’s service system, and especially in the mortgage system. Thanks to the mobilization of all our employees, we have been able to overcome the significant increase in the volume of referrals, provide optimal service to customers and consequently also present exceptional profits, for which the bank employees deserve praise and great gratitude.
Mizrahi-Tefahot returns to implement its dividend policy and will distribute to shareholders a sum of NIS 271.6 million, which constitutes 40% of the profits for the fourth quarter of the year. This is in addition to two dividends that have already been distributed in 2021: NIS 483 million, which constitutes 30% of the Bank’s profits in 2020, as well as NIS 752.7 million – 30% of the Bank’s profits in the first nine months of 2021. This is a cumulative dividend of NIS 1.5 billion. Moshe Larry, CEO of the bank.