Bethel Finance: Leumi profit down 74% to NIS 155m

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Bethel Finance news:

Bank Leumi's (TASE: LUMI) net profit for the third quarter of 2011 fell 74% on lower revenue. Net profit fell 74% to NIS 155 million from the third quarter from NIS 606 million for the corresponding quarter. Earnings per share of NIS 0.11 was well below the analysts' forecast of NIS 0.27 before the bank's recent profit warning.

Bank Leumi attributed the plunge to losses on its investment in Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), a higher provision for credit losses, and losses on its severance and provident funds which serve as the reserve for employees' pensions. The return on net profit fell to 7.5% from 9.9%.

The capital adequacy ratio fell to 13.75% at the end of September from 14.65% a year earlier, and the core tier-1 capital ratio fell to 7.89% from 8.39%.

Net interest income before the expenses for credit losses fell 8.3% to NIS 1.69 billion for the third quarter from NIS 1.85 billion for the corresponding quarter, while the provision for credit loss rose nine-fold to NIS 378 million from NIS 46 million.

Operating and other income fell 15.4% to NIS 832 million for the third quarter from NIS 983 million for the corresponding quarter, due to a NIS 239 million loss on the bank's investment in Partner and a NIS 90 decline in dividends from it. This was partly offset by a pretax gain NIS 143 million from a settlement with Lehman Brothers. Bank Leumi's share of profits in held companies fell by NIS 184 million, and by NIS 114 million on an equity basis.

Operating and other expenses, including salaries, rose to NIS 2.06 billion for the third quarter from NIS 1.81 billion for the corresponding quarter.

Bank Leumi reduced its exposure to the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) by NIS 262 million during the third quarter, reducing it to NIS 1.12 billion. The exposure is NIS 560 million to Italy, NIS 504 million to Spain, NIS 51 million to Ireland, and NIS 9 million to Greece. The bank owns no government bonds of the countries; most of the exposure is to bonds of large international banks.

Total assets rose 6.8% to NIS 353.2 billion at the end of September from NIS 330.8 billion a year earlier. Credit to the public rose 9.3% to NIS 237.3 billion from NIS 217.2 billion, and deposits from the public rose 8.75 to NIS 267.2 billion from NIS 245.8 billion.

Bank Leumi's share price rose 1.2% in early trading to NIS 10.24, giving a market cap of NIS 14.9 billion.