Israel Discount Bank (DSCT) Q1 2021 earnings summary

Executive summary

• Q1 net profit attributable to shareholders rose 137.3% YoY to NIS 662 million; reported ROE was 14.5%, supported by a NIS 147 million credit-loss release.

• Results also reflected higher net interest income, lower non-interest income and increased operating expenses, including settlement-related and retirement-plan costs.

Financial highlights

• Net interest income was NIS 1,504 million, up 3.4% YoY; total net financing income was NIS 1,802 million, down 3.7% as bond and derivatives gains declined.

• Non-interest income fell 10.6% YoY to NIS 1,033 million; fees and commissions declined 2.0% to NIS 724 million.

• Operating and other expenses increased 7.9% YoY to NIS 1,652 million; other expenses rose 32.0%, mainly reflecting settlement costs and long-term benefits.

• Net profit excluding identified components was NIS 738 million vs NIS 283 million YoY; adjusted ROE was 16.2% and adjusted efficiency ratio was 60.6%.

• Total assets were NIS 306.1 billion at March 31, up 4.1% from year-end 2020; deposits grew 6.5% and net public credit rose 2.4%.

Outlook and guidance

• The strategic plan for 2021–2025 targets faster growth in credit and income, greater digital innovation, improved operating efficiency and increased value from group synergies.

• Management estimated Israeli GDP growth of ~5% for 2021 and inflation of 1.9%; the Bank of Israel rate was expected to remain 0.1% at year-end.

• The Bank of Israel forecast GDP growth of 6.3% in 2021 and 5.0% in 2022; recovery pace, unemployment, inflation and the pandemic remained uncertain.