Leumi retains top

Israel’s top five banks
dominate the country’s banking sector and the first half of 2010
has been no exception. Bank Leumi, Israel’s largest lender by
assets, retains its number one spot. First International Bank sits
at the other end of the spectrum but hangs onto its position as
fifth largest. Farah Halime reports.


Chart showing NET PROFIT: Israel – top 5 banks, first half 2010 Bank Leumi posted a
net profit of NIS1.256bn ($324m) in the first half of 2010, an
increase of 34.2% on the year-ago period.

The bank said the profit was partly
due to a 54% decrease in provisions for doubtful debts and an
increase in net interest income.

But analysts said that the profit
was still lower than expected due to higher expenses and weaker
capital markets.

Total assets amounted to NIS328.3bn
in the six months to June 2010, up 2.8% compared to the same period
in 2009.

The bank held onto its title as the
country’s largest lender and boasts the number one position for
total assets. It is also the biggest bank in Israel by market
capitalisation of $6.2bn.

Leumi’s retail loans stood at
NIS212.5bn at the end of June compared with NIS207.2bn a year
earlier as the bank experienced continued credit growth. But retail
deposits inched 0.6% lower to NIS251.7bn.

Leumi’s retail loan segment made
the largest contributions to the overall loan portfolio at 33.5%,
out-performing its private banking and corporate segments.

The bank has had to refocus its
attention to rival Bank Hapoalim as a realistic contender for the
number one status.

Bank Hapoalim ceded to Leumi in the
wake of the financial crisis, but has since started an aggressive
marketing campaign to regain its title.

The bank launched a three-year plan
at the beginning of the year “to solidify its leadership in Israeli

It managed to more than double net
profit in the first half of 2010 to NIS975m, from NIS424m in the
comparable period of 2009.

Hapoalim experienced a higher than
expected rise in net profit as a stronger economy led to lower bad
debt provisions and higher income from credit transactions and
credit card fees. However, it was the only bank to experience a dip
in both retail loans and assets, falling 1.3% to NIS430.8bn and
slipping 2.7% to NIS448.4bn respectively.

Israel Discount Bank, the
third-largest bank, was one of only two banks in the top five to
record a drop in net profits.

It suffered the biggest drop in
earnings in the sector with a 36.9% decrease in net profit to
NIS307m at the end of June.

The bank said the dip in profit was
mainly caused by income from affiliated companies, the impact of
the markets on the investment banking division of the bank and
profits from a severance pay fund.

It said it is achieving strong
financing income in the retail banking sector, however.

The retail segment makes up the
largest part of Discount Bank’s total loan and deposit portfolio
with 41% of the loans coming from the retail division and 51%
retail deposit contribution.

The bank launched the “Discount
Key” marketing campaign in the credit cards sector, which it said
was producing “exceptional results”. More than 170,000 credit
cardholders joined the various savings plans in the first three

First International Bank of Israel
(FIBI), Israeli’s fifth-largest bank by assets, recorded a 13.6%
slump in net profit to NIS215m in the six months of 2010, compared
to the year-ago period.

Total assets were relatively flat
year-on-year, rising 0.6% to NIS100.9m from NIS100.3m in the first
half of 2009.

As the bank with the smallest
branch network of the top five, it is unsurprising retail deposits
are the lowest at NIS80.1bn.

Peer Mizrahi Tefahot Bank made one
of the largest leaps in net profit to NIS373m, from NIS260m a year

The bank increased total assets, retail loans and deposits by
the highest amount, compared to its four peers.

Table showing Israel – top 5 banks, first half 2010 (NISbn)