Mizrahi-Tefahot’s (MZTF.TA), opens new tab fourth-quarter profit edged lower, the Israeli lender said on Tuesday, on higher provisions to guard against loan defaults due to Israel’s war with Hamas militants, while it raised its dividend.
The bank said it earned 1.05 billion shekels ($288 million) versus 1.09 billion a year earlier, for a return on equity of 15.5%.
Israel’s third-largest bank and market leader in mortgage loans with a 36% share said it would pay a dividend of 209 million shekels, or 20% of its quarterly net profit.
After paying 35% of profit in the second quarter, it cut that to 15% in the third quarter following a directive from Israel’s banking regulator to remain conservative on dividends while providing credit with the country at war and the economy set to slow.
The war has raged since Oct. 7 after Hamas gunmen attacked Israeli towns near Gaza.
Net interest income in the October-December period dipped to 2.7 billion shekels from 3 billion, while expenses with respect to credit losses rose to 295 million shekels from 191 million.
The higher provision, Mizrahi added, was partly due to growth in its loan portfolio and to higher risk in the market, primarily due to higher interest rates that hurt businesses and households.
“To date, no material indications of this increased risk have been observed at the bank,” it said.
For all of 2023, net profit rose 10% to 4.9 billion shekels.
CEO Moshe Lari said 2023 was “one of the toughest, most complicated years Israel has ever known,” starting with the fierce internal controversy on judicial matters and culminating with war.
Mizrahi’s Tier-1 ratio of equity to risk components rose to 10.32% as of end-2023 from 9.94 a year earlier.
Mizrahi and its peers will have to pay as much as 2.5 billion shekels in extra taxes over the next two years as lawmakers look for new ways to boost state coffers heavily depleted by war expenses.
($1 = 3.6472 shekels)
