JERUSALEM, May 27 (Reuters) – Israel Discount Bank reported a 31% decline in quarterly profit due to a sharp increase in credit loss expenses aimed to protect itself from potential bad loans stemming from the coronavirus outbreak.
Israel’s fourth-largest bank by assets said on Wednesday it earned 279 million shekels ($79 million) in the first quarter, compared with 405 million a year earlier but above a forecast of 93 million shekels in a Reuters poll of analysts.
Net interest income rose 2.4% to 1.46 billion shekels, while credit loss expenses jumped to 656 million shekels from 141 million a year earlier.
Discount, which allowed customers to delay mortgage and credit payments, said its results were “materially impacted” by the COVID-19 outbreak and that due to the uncertainty ahead, it put its 2021 targets up for review.
It had already suspended dividend payments in order to be able to provide more credit to households and businesses during the coronavirus crisis and reduced its Tier 1 capital ratio to 8.9% from 9.9% after Israel’s banking regulator temporarily lowered the capital requirements of commercial banks.
Discount’s Tier 1 capital ratio stood at 9.99% in the first quarter, down from 10.31% at the end of 2019.
$1 = 3.5130 shekels
Reporting by Steven Scheer, Editing by Ari Rabinovitch