Mizrahi Tefahot's year: doubled its net profit

The Mizrahi-Tefahot Group published its reports for the last quarter of 2021, which show that net profit reached NIS 3,188 million, compared with NIS 1,610 million in 2020, an increase of 98.0%.

A significant contribution to profit was recorded thanks to the mortgage activity

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Of money

01/03/2022

Tuesday, 01 March 2022, 08:55 Updated: 09:21

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2021 was good for the banking system as a whole, but in the case of the Mizrahi-Tefahot Group there seems to be a special reason for the party: the bank doubled its net profit, literally - and set it at NIS 3,188 million, compared to NIS 1,610 million in 2020, an increase of 98.0%

Other data that make Mizrahi-Tefahot smile this morning: The return on capital in 2021: 15.8%, compared to 9.5% in 2020.

Financing income without Union Bank: NIS 7,164 million, compared to NIS 5,806 million in 2020. Net income in the fourth quarter was NIS 679 million, compared to NIS 506 million in the corresponding quarter in 2020, an increase of 34.2%.

In light of the data, the Bank announced that it will distribute a dividend to shareholders in the amount of NIS 271.6 million, which is approximately 40% of the profits for the fourth quarter of 2021.

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The real estate frenzy and record demand for mortgages have benefited the bank, which thanks to "Tefahot" has grown in Israel in the field of mortgages (Photo: Reuven Castro)

The peak data published by the Bank are attributed to a number of 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 NIS 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 with 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 to the acquisition of Union Bank - On September 30, 2020, the transaction to acquire a bank was completed Union and from that date on, Union Bank is a subsidiary wholly owned by 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 Union.

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, against the background of the corona crisis.

Against the background of the improvement in the state of morbidity and recovery in economic activity in the economy, 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.

Mizrahi- Tefahot

also reports on exceptional operational preparation in the face of record demand for mortgages The

residential real estate industry and the mortgage market were characterized in 2021 by unprecedented activity, which was reflected in a record performance of housing loans, amounting to NIS 116 billion.

Customers, the bank is required - as the largest factor in the industry, for exceptional operational preparation, and for the development of advanced tools such as Tefahot Touch and more.

In total, new loans and turnover of NIS 46.2 billion were made in the Bank in 2021, compared with NIS 31.8 billion in 2020, a jump of about 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%.

Mizrahi-Tefahot CEO, Moshe Larry. Concludes an excellent year. (Photo: Mizrahi Tefahot spokesperson)

Mizrahi-Tefahot CEO Moshe Larry: "The year 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 in peak profits in 2021.

The momentum of Mizrahi-Tefahot's expansion was reflected in most balance sheet items: 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 the years 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 business banking, establishing its leadership in households in general and mortgages in particular, strengthening the Bank's unique service concept , Which combines a human banker and a shell of advanced digital channels and leverage the merger with Union Bank to create operational synergy.

The actions 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 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 were able to overcome significant increases "For this, the bank's employees deserve praise and great gratitude."

Larry also referred to the profit the group made to its shareholders: "Mizrahi-Tefahot returns to implement its dividend policy and will distribute to shareholders a sum of NIS 271.6 million, which is 40% of the fourth quarter profits of the year.

This is in addition to two dividends already distributed in 2021: 483 "NIS 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 dividend in the cumulative amount of NIS 1.5 billion," says Mizrahi-Tefahot CEO Moshe Larry.

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