Israel Discount Bank (DSCT) Q2 2021 earnings summary

Executive summary

• H1 2021 net profit attributable to shareholders was NIS 1,522 million vs. NIS 453 million YoY; annualized ROE reached 16.1%.

• Results benefited substantially from a NIS 557 million credit-loss release, compared with NIS 1,188 million of credit-loss expense in H1 2020.

• Net credit to the public grew 5.4% from year-end 2020 to NIS 198,986 million; deposits from the public increased 6.4% to NIS 240,691 million.

Financial highlights

• H1 net interest income rose 9.3% YoY to NIS 3,189 million; total net financing income was NIS 3,576 million, down 0.1%.

• H1 non-interest income declined 8.7% to NIS 1,908 million; fees and commissions rose 8.6% to NIS 1,509 million.

• H1 operating and other expenses increased 4.8% to NIS 3,263 million; profit before taxes was NIS 2,391 million vs. NIS 706 million YoY.

• Excluding settlement effects, claims provisions net of insurance, and IDB New York building-vacating costs, H1 net profit was NIS 1,616 million vs. NIS 509 million YoY.

• Q2 net profit was NIS 860 million vs. NIS 662 million in Q1 and NIS 174 million in Q2 2020; adjusted Q2 profit was NIS 878 million.

Outlook and guidance

• Management estimated Israeli GDP growth of 5.5% in 2021, assuming further COVID outbreaks do not materially impair activity; the Bank of Israel rate was expected to remain at 0.1% through year-end.

• The Bank of Israel’s forecast cited GDP growth of 5.5% in 2021 and 6.0% in 2022, with unemployment expected to return to 5.5% by end-2021.

• After regulatory dividend limitations are removed, the Board intended to resume quarterly dividends at 20% of quarterly net distributable profit, or a lower rate if restrictions apply.

• The strategic plan for 2021–2025 targets faster credit and income growth, greater market share, operational efficiency, digital innovation, and value realization across subsidiaries.