Israel Discount Bank (TASE: DSCT) subsidiary Israel Discount Bank of New York posted a net profit of $14 million for the second quarter of 2011, up 7% on the corresponding quarter of 2010. First half net profit rose 2% to $28.3 million over the first half of last year.
However, Discount New York's return on equity fell to 7.4% in the half from 7.8% in the corresponding half. Its shareholders' equity totaled $795 million at the end of June, a quarter of the shareholders' equity of Discount Bank as a whole.
Discount New York did not distribute a dividend, due to tax problems, so its capital adequacy ratio was especially high, but its return on equity was reduced.
The Federal Deposit Insurance Corporation (FDIC) categorizes Discount New York as "well capitalized", with a capital adequacy ratio of 16.1%, up from 14.6% at the end of 2010.
Despite Friday's downgrade of the US credit rating by S&P, the Federal Reserve yesterday notified Discount New York that there was no need to set aside addition capital for the T-bills held by the bank.
Discount New York's credit portfolio fell by 2.7% in the first half to $3.8 billion at the end of June. Its net credit portfolio amounted to 40% of its total assets. Deposits rose by 5% to $6.4 billion at the end of June. 60% of the deposits are by Latin American Jews.
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