Leumi issues Q3 profit warning
Bank estimates bottom line will total NIS 50-100 million. Net profits pushed down by lagging performance on TASE, especially due to 'cumulative effect of the depreciation of the investment in Partner's stock'
Leumi stated that preliminary estimates indicated that its bottom line for the third quarter of 2011 would be much lower than in the two previous quarters, totaling between NIS 50-100 million ($13-27 million).
The bank's profits were pushed down by the lagging performance on TASE. The bank is expected to post a net profit of NIS 1.17-1.2 billion (about $320 million) for the first nine months of the year.
Leumi also said that the downward adjustment in the books of the banks holdings in Partner Communications stems from ongoing declines in the share's market price which began in February and culminated at the end of the third quarter, which entailed the need for an downward adjustment of the bank's profit and loss statement due to "significant and ongoing" depreciation of the stock's price.
The bank also said that in the two years since it had begun investing in Partner Communications two years ago, it was able to repay – namely by means of dividends distribution – about a third of its investment in the cellular provider – some NIS 177 million ($48 million) out of the NIS 520 million ($140 million) investment.
The First International Bank, under Smadar Barber-Tsadik, posted a profit warning for its third quarter earnings as well due to the global crisis which impacted the bank's activity in the third quarter of 2011.
The bank estimated that due to sharp declines on local and global exchanges, its third quarter results may amount to marginal profits.
"The estimate of the bank's results stems from declines in stock value on the stock markets and events in the local and global stock exchanges and their effect on the bank's statements which is expressed in its accounting records in items such as the Bank's nostro investment value, the fair value of its financial instruments and compensation fund loses," FIBI noted.
The bank said it was continuing with the processing and preparation of its financial statements for the quarter and that the final figures may still change due to changes in the value of its nostro investments, accounting for fluctuations in exchange rates that might occur up to the release of the statements.
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