Israel Discount Bank (DSCT) Q3 2022 earnings summary

Executive summary

• 9M 2022 net profit attributable to shareholders was NIS 2,556m, up 13.9% YoY; excluding specified one-time components, profit was NIS 2,232m, down 4.7%.

• Q3 net profit was NIS 893m, up 23.7% YoY and 31.3% QoQ; annualized ROE reached 15.0%.

Financial highlights

• 9M net interest income rose 27.0% to NIS 6,153m; fees and commissions increased 10.0% to NIS 2,547m, while non-interest financing income fell 71.1% to NIS 169m.

• 9M credit loss expense was NIS 177m, versus a NIS 683m release in 9M 2021; operating and other expenses increased 6.7% to NIS 5,250m.

• Q3 net interest income was NIS 2,280m, up 10.0% YoY; non-interest income reached NIS 1,027m, up 1.2% YoY, and expenses rose 10.3% to NIS 1,827m.

• Total assets grew 13.1% from year-end 2021 to NIS 379,074m; net credit to the public rose 11.1% to NIS 236,881m and public deposits increased 11.4% to NIS 290,646m.

Outlook and guidance

• 2025 strategic targets: ROE above 12.5%, efficiency ratio below 55%, net profit above NIS 3.5bn; dividend distributions targeted at up to 30% of profits, subject to progress and review.

• Management projected Israeli GDP growth of 2.5% in 2023 versus 6%-6.5% in 2022, with unemployment rising and bank-credit growth slowing as inflation, higher rates and weaker activity weigh on demand.