Israel Discount Bank (DSCT) Q4 2021 earnings summary

Executive summary

• FY2021 net profit was NIS 2,773m, up 184.4% YoY; ROE rose to 13.6% from 5.1%, with results boosted by an exceptional credit-loss release.

• Excluding estimated pre-Corona-level credit-loss expense and other non-recurring components, estimated FY2021 net profit was NIS 2,070m and ROE 10.1%.

Financial highlights

• Net interest income rose 10.7% to NIS 6,529m; fees and commissions increased 10.6% to NIS 3,125m, while total non-interest income declined 1.1% to NIS 3,962m.

• Credit-loss expense was a release of NIS 693m in 2021 versus expense of NIS 1,718m in 2020; operating and other expenses increased 2.6% to NIS 6,858m.

• Q4 net profit was NIS 529m, down 26.7% QoQ and up 100.4% YoY; adjusted Q4 net profit excluding specified components was NIS 674m.

• Total assets grew 14.0% to NIS 335,088m; net public credit increased 12.9% to NIS 213,156m and public deposits rose 15.4% to NIS 260,907m.

Outlook and guidance

• 2025 targets: ROE above 12.5%, efficiency ratio below 55%, and net profit above NIS 3.5bn; dividend distributions may continue at up to 30% of distributable profit, subject to approvals and conditions.

• The 2022 outlook cited Israel GDP growth of 5.5% in the Bank of Israel forecast, alongside risks from Omicron, inflation, commodity prices, monetary tightening and Russia's invasion of Ukraine.