Israel Discount Bank Earns NIS 158 Million in Q2 2010

Aug 31, 2010, 04:00 ET from Israel Discount Bank Ltd

TEL-AVIV, Israel, August 31, 2010 /PRNewswire-FirstCall/ --

- Second Quarter Net Income Decreases 53.1% to NIS 158 Million, Compared With NIS 337 Million in Second Quarter 2009; Return on Shareholders' Equity 6.3% Compared With 15.8% in 2009 Operating Income After Taxes Decreases by 37.2 % to NIS 123 Million, Compared With NIS 196 Million in 2009

Israel Discount Bank Limited (TASE:DSCT), one of Israel's leading banks, today announced its financial results for the second quarter of 2010. Additional key results include:

    (Logo: http://www.newscom.com/cgi-bin/prnh/20100810/403645 )

    - Second Quarter Net Income - NIS 158 million, compared with NIS 143
      million in the first quarter of 2010 and compared with NIS 337 million
      in the corresponding quarter last year, a decrease of 53.1%.

    - Second Quarter Return on Shareholders' Equity - 6.3% on an annual
      basis, compared with 5.8% in the first quarter of 2010 and compared
      with 15.8% in the corresponding quarter last year.

    - First Half 2010 Net Income - NIS 301 million, compared with NIS 477
      million in the corresponding period last year, a decrease of 36.9%.

    - First Half 2010 Return on Shareholders' Equity - 6.0% on an annual
      basis, compared with 11.0% in the corresponding period last year and
      9.8% for the whole of 2009.


    - Ratio of capital to risk assets at June 30, 2010:

    ___________________________________
                      Basel II  Basel I
    ___________________________________
    Total capital ratio   12.5     13.2
    ___________________________________
    Tier I capital
    ratio                  7.7      8.9
    ___________________________________
    Core capital ratio     7.2      7.7
    ___________________________________

Commenting on the results, President & CEO, Giora Offer, noted, "The Net Income for the second quarter and the first half of 2010 totals NIS 158 million and NIS 301 million, respectively, and the return on shareholders' equity is 6.3% and 6%, respectively. The shareholders' equity of the Bank amounts to NIS 10.5 billion, representing 5.7% of total assets and a total capital adequacy ratio of 12.5%, in accordance with Basel II guidelines.

The weaker results, as compared with the corresponding period, is due mainly to changes in the income from affiliated companies, the impact of the markets on the investment portfolio yield and profits from the severance pay fund. We are experiencing a downturn in growth, which is impacting both the Israeli and global business environment. Nevertheless, the Group continues to achieve strong financing income in the retail banking sector and is maintaining a high level of operating income.

The Bank has launched the "Discount Key" marketing campaign in the credit cards sector, and this is producing exceptional results, with more than 170,000 credit cardholders having joined the various savings plans in a 3-month period.

The Group is preparing a multi-year business plan, with emphasis on the changes required by the changes in the economic and regulatory environment. The plan will continue to focus on ensuring a high level of liquidity and capital stability, and will maintain the conservative risk profile that characterizes the activities of the Discount Group, while striving for further improvement in the business results.

I would like to take this opportunity to wish all the Group's stakeholders a "Happy, Healthy and Successful New Year."

First Half 2010 Net Income - NIS 301 million, compared with NIS 477 million in the corresponding period last year, a decrease of 36.9%.

First Half 2010 Return on Shareholders' Equity - 6.0% on an annual basis, compared with 11.0% in the corresponding period last year.

Main factors affecting the Group's profits for the first half of 2010, compared with the corresponding period last year:

    - A decrease of 21.7% in the provision for doubtful debts.

    - An increase of 0.5% in income from financing activities
      before provision for doubtful debts.

    - A decrease of 12.8% in operating and other income that was
      affected by a NIS 129 million reduction in other income, mainly from
      profits recognized on the severance pay fund, and also from a 3.4%
      reduction in operating commissions, arising primarily from the decrease
      in account management commissions, conversion differences and credit
      cards.

    - A decrease of 65% in the Bank's share in the operating
      income of affiliated companies, from NIS 190 million in the
      corresponding period last year (including NIS 130 million with respect
      to the reversal of a provision for taxes on the investment in The First
      International Bank of Israel) to NIS 67 million in the first half of
      2010.

    - An increase of 4.6% in operating and other expenses, due
      mainly to the revision of remuneration agreements and the higher
      depreciation expense.

Main Developments in Assets and Liabilities of the Discount Group in the First Half of 2010

    - Total assets increased by 1.0% to NIS 189.6 billion,
      compared with NIS 187.8 billion at December 31, 2009.

    - Credit granted to the public increased by 2.2% to NIS 116.9
      billion, compared with NIS 114.4 billion at December 31, 2009.

    - Deposits from the public decreased by 0.8% to NIS 140.7
      billion, compared with NIS 141.8 billion at December 31, 2009.

    - Shareholders' equity increased by 5.1% to NIS 10.5 billion,
      compared with NIS 10.0 billion at December 31, 2009.

    Data Regarding Subsidiaries

    H1 2010
    ________________________________________________________________________
                                                          Return on  Capital
                                                  Net Shareholders' Adequacy
                                               income        Equity    Ratio
    ________________________________________________________________________
    Discount Bancorp Inc.                    USD 28 M          7.9%  **14.9%
    ________________________________________________________________________
    Mercantile Discount Bank                 NIS 90 M         10.7%   *13.5%
    ________________________________________________________________________
    Discount Mortgage Bank                   NIS 16 M          2.9%   *18.1%
    ________________________________________________________________________
    Israel Credit Cards ICC (the Bank holds
    71.83% of the equity)                   NIS 120 M         23.2%   *16.3%
    ________________________________________________________________________

    * Computed according to Basel II guidelines.

    ** In accordance with the obligatory US guidelines.

    H1 2009
    ________________________________________________________________________
                                                          Return on  Capital
                                                  Net Shareholders' Adequacy
                                               income        Equity    Ratio
    ________________________________________________________________________
    Discount Bancorp Inc.                    USD 15 M          4.9%  **12.0%
    ________________________________________________________________________
    Mercantile Discount Bank                 NIS 98 M         13.1%   *12.7%
    ________________________________________________________________________
    Discount Mortgage Bank                 NIS 18.3 M          4.1%   *10.5%
    ________________________________________________________________________
    Israel Credit Cards ICC (the Bank holds
    71.83% of the equity)                   NIS 129 M         32.6%   *21.0%
    ________________________________________________________________________

    * Computed according to Basel I guidelines.

    ** In accordance with the obligatory US guidelines.

    2009
    ________________________________________________________________________
                                                          Return on  Capital
                                                  Net Shareholders' Adequacy
                                               income        Equity    Ratio
    ________________________________________________________________________
    Discount Bancorp Inc.                    USD 44 M          6.6%  **14.9%
    ________________________________________________________________________
    Mercantile Discount Bank                NIS 180 M         11.1%   *12.2%
    ________________________________________________________________________
    Discount Mortgage Bank                   NIS 31 M          3.4%   *18.8%
    ________________________________________________________________________
    Israel Credit Cards ICC (the Bank holds
    71.83% of the equity)                   NIS 249 M         26.3%   *13.7%
    ________________________________________________________________________

    * Computed according to Basel II guidelines.

    ** In accordance with the obligatory US guidelines.

    Discount Group - Principal Data from the Financial Statements

    Income and Profitability (in NIS millions)
    _________________________________________________________________________
                     Second Quarter               Half Year            Annual
    _________________________________________________________________________

                                        %     June     June        %
                   2010     2009   change     2010     2009   change     2009
    _________________________________________________________________________
    Income from
    financing
    activities
    before
    provision
    for
    doubtful
    debts         1,091    1,259   [13.3]    2,206    2,196      0.5    4,757
    _________________________________________________________________________
    Provision
    for
    doubtful
    debts           261      231     13.0      378      483   [21.7]      998
    _________________________________________________________________________
    Operating
    and other
    income          658      760   [13.4]    1,298    1,483   [12.5]    3,091
    _________________________________________________________________________
    Operating
    and other
    expenses      1,358    1,281      6.0    2,755    2,635      4.6    5,486
    _________________________________________________________________________
    Operating
    income
    before
    taxes           130      507   [74.4]      371      566   [34.5]    1,364
    _________________________________________________________________________
    Operating
    income
    after taxes     123      196   [37.2]      241      341   [29.3]      857
    _________________________________________________________________________
    Net income      158      337   [53.1]      301      477   [36.9]      923
    _________________________________________________________________________
    Return on
    net income
    in %            6.3     15.8               6.0     11.0               9.8
    _________________________________________________________________________


    Development of Assets and Liabilities (in NIS millions)
    _______________________________________________________________
                                 June 30               December 31
    _______________________________________________________________
                                                  %               %
                                  2010  2009 change     2009 change
    _______________________________________________________________
    Total Assets                 189.6 189.6      -    187.8    1.0
    _______________________________________________________________
    Credit granted to the public 116.9 116.8    0.1    114.4    2.2
    _______________________________________________________________
    Securities                    38.0  37.8    0.7     36.3    4.6
    _______________________________________________________________
    Deposits from the public     140.7 143.1  [1.6]    141.8  [0.8]
    _______________________________________________________________
    Shareholders' equity          10.5   9.5   10.1     10.0    5.1
    _______________________________________________________________

    Principal Financial Ratios (in percentages)
    ________________________________________________________________________
                                                  June 30        December 31
    ________________________________________________________________________
                                                 2010   2009            2009
    ________________________________________________________________________
    Financial resources in relation to total
    assets                                        5.7    5.2             5.5
    ________________________________________________________________________
    Credit granted to the public to deposits
    from the public                              83.1   81.7            80.7
    ________________________________________________________________________
    Total capital to risk assets (capital
    adequacy ratio)                              12.5      -            12.1
    ________________________________________________________________________
    Total capital to risk assets (capital
    adequacy ratio)*                             13.2   11.6            13.2
    ________________________________________________________________________
    Tier I capital to risk assets                 7.7      -             7.6
    ________________________________________________________________________
    Provision for doubtful debts to credit
    granted to the public                        0.61   0.79            0.83
    ________________________________________________________________________
    Interest margin                              1.29   1.21            1.39
    ________________________________________________________________________
    Operating expenses to total income
    (efficiency ratio)                           78.6   71.5            69.9
    ________________________________________________________________________


    * Computed according to Basel I guidelines.
    About Israel Discount Bank

Israel Discount Bank is a leading financial group in Israel. With nationwide coverage, and a fast-growing domestic franchise, Israel Discount Bank provides a full spectrum of corporate and retail financial products and services to its clients, both in Israel and key financial centers around the world. Israel Discount Bank is a member of and is traded on the Tel-Aviv Stock Exchange under the Ticker DSCT; Bloomberg: DSCT.IT Reuters: DSCT.TA

For additional information, please visit the Company's investor relations website at http://www.discountbank.co.il/IR

The above constitutes an English convenience translation of the Hebrew Press Release issued by the Bank

It is hereby emphasized that no representation or warranty whatsoever is given as to the achievement or fulfillment of any forecasts regarding the future prospects of the Bank. The actual performance of the Bank may vary materially from any forecasts provided, due, among others, to changes in macro economic conditions, changes in capital markets, regulatory and other changes not within the control of the Bank. Such changes may contribute to certain risks and uncertainties regarding and predictions and or forecasts provided by the Bank, and which could lead to material differences between actual performance of the Bank and any forecasts provided. Forward-looking information is generally typified by terms such as "believe", "anticipate", "expect", "intend", "project" "forecast" and or similar expressions.

For further details, please refer to the "Forward Looking Information" section in the Bank's financial statements.

    Company Contact

    Barry Simon
    Investor Relations
    Tel: +972-3-5146593
    barry.simon@discountbank.co.il


SOURCE Israel Discount Bank Ltd