Israel’s Mizrahi Tefahot Bank reported record profit of NIS 1.154 billion in the first quarter of 2022, up 70.7% from the corresponding quarter of 2021.
But the bank said that it will not be distributing a dividend due to an accelerated growth in credit to the public, especially in credit to construction and real estate and instructions from the Bank of Israel requiring higher capital allocation to cover projects financed with high leverage.
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Higher profits saw Mizrahi Tefahot’s return on equity rise to 21.9%, the highest of the four biggest banks, and up from 14.1% in the corresponding quarter of 2021 and 15.8% in 2021. Financing revenue in the first quarter was NIS 2.261 billion up 20.3% from NIS 1.880 billion in the first quarter of 2021.
Mizrahi Tefahot CEO Moshe Lari said, “As of the end of the first quarter, the bank capital ratios meet the conditions for dividend distribution, in accordance with bank policy. Due to the Supervisor of Banks’ draft directive issued in March, whereby loans designated for purchase of land for development or construction, with an LTV higher than 75% of value of the acquired property, shall carry a risk weighting of 150%, instead of 100% – and the fact that should this be finalized, the directive would also apply retroactively, the bank decided that at this point in time, it would be preferable not to distribute a dividend. This is in orded to maintain sufficient capital to allow the bank to further continue its growth momentum and to optimally address the growing demand for credit.”
Mizrahi Tefahot plans distributing a dividend in the second quarter.
Published by Globes, Israel business news – en.globes.co.il – on May 24, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.
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