Net profit in the last quarter of 2020 decreased by 18.8% compared to 2019 • Most of the damage - an expensive retirement plan for 656 employees • The Supervisor of Banks' pilot of the digital bank: "Promoting competition"
Discount Bank
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Coco
Discount Bank's profits were cut by more than 40% in the past year, according to the group's financial report published yesterday. Despite this, the company's share rose by about 2% during the trading day on the Tel Aviv Stock Exchange yesterday.
The damage to Discount's profits is mainly due to Corona and the largest retirement plan in the group's history, in which 656 employees retired.
Net income in 2020 amounted to NIS 975 million, compared with NIS 1.7 billion in 2019, when the return on capital amounted to 5.1%.
Excluding the one-time components, including the retirement plan, the net profit would have amounted to NIS 1.3 billion - 400 million less than in 2019.
Net income in the last quarter of 2020 decreased by 18.8% compared to the fourth quarter of 2019 and amounted to NIS 264 million.
Excluding certain components, the net profit in the fourth quarter amounted to NIS 421 million, an increase of 16.6% compared to the end of 2019, and the return on capital of 9.1%.
The one-time components in the fourth quarter (after tax) include an expense of NIS 243 million for the retirement of employees (85% of the expense for the retirement of employees in all of 2020).
In this quarter, a one-time income of NIS 112 million from insurance income was also recorded.
The total of one-time components in the fourth quarter amounts to NIS 157 million.
Expenses for credit losses amounted to NIS 1.7 billion - 2.5 times more than in 2019.
The dramatic increase is mainly due to the consequences of the corona crisis, and in particular an increase in the group provision for credit losses.
Gross credit to the public amounted to NIS 192.5 million in 2020, an increase of 5.2% compared to the end of 2019. Business credit amounted to NIS 58.6 billion, an increase of 12.3% compared to the end of 2019;
Housing credit stood at NIS 42.7 billion, an increase of 14.8%, and consumer credit (excluding housing loans) amounted to NIS 30.4 billion, a decrease of 6.3% compared to the end of 2019.
Nearly 70% of the volume of loans rejected following the corona were repaid, of which about 63.7% of housing loans, about 80.6% of loans to small businesses and about 66.2% of loans to households and individuals.
NIS 5.5 billion in credit balances remained deferred.
New bank
Uri Levin, CEO of the Discount Group, said: "Along with dealing with the effects of the Corona crisis, we have succeeded in the past year in implementing the largest retirement plan in the group's history, which will have a significant impact on organizational expenses and culture."
Meanwhile, the Supervisor of Banks, Yair Avidan, said yesterday that "the launch of the pilot phase of the digital bank a few days ago is another significant step on the way to launching a new bank in Israel. This is another step The bank in the process of its establishment and we will work to assist any other venture that would like to establish a bank in Israel. "
In recent years, the Bank of Israel has worked to promote competition in the financial system, among other things by removing barriers to entry for new banks, a move designed to increase and diversify the number of competitors in the market and the competitive threat to existing players.
Avidan mentioned that in recent years the Bank of Israel has dealt with the removal of obstacles that constituted barriers to entry for new banks.
In fact, no new bank has been opened in Israel since the 1950s, despite the unusual increase in population size.