JERUSALEM, Nov 27 (Reuters) - Israel Discount Bank on Monday reported an 8.5% drop in third-quarter profit and temporarily slashed its dividend payout due to the fallout from Israel's war with Hamas militants.
Discount's quarterly net profit slipped to 817 million shekels ($220 million) from 893 million a year earlier, while net interest income - boosted by aggressive Bank of Israel interest rate hikes aimed at fighting inflation - grew 19% to 2.7 billion shekels.
But its credit loss expenses soared to 596 million shekels from 106 million a year earlier to "reflect expectations for slowdown in economy due to the war in Gaza," it said.
Israel's banking regulator had asked banks to bring forward higher loan loss provisions to their third-quarter results despite the war breaking out at the start of the fourth quarter. The central bank also told banks to remain conservative when issuing dividends, and to provide credit while the country was at war and the economy was set to slow.
Discount, Israel's fourth-largest bank, said it would pay a dividend of 123 million shekels, or 15% of third-quarter net income, down from 30% the last two quarters.
CEO Avi Levi said trimming the dividend "demonstrates a conscientious approach to meeting the credit needs essential for sustaining both small and large businesses, many of whom are our clients."
"It's crucial to underscore that we entered this wartime period with a robust and secure financial position, boasting high capital adequacy and surplus liquidity," he said.
Discount's Tier-1 capital ratio rose to 10.36% as of end-September from 10.35% at the end of June.
Earlier this month, larger rival Hapoalim reported lower quarterly profit due to a spike in its loan loss provisions and cut its dividend payout to 20% from 40% of net income.
($1 = 3.7154 shekels)
Reporting by Steven Scheer; Editing by Sharon Singleton
Source: Reuters