Israel Discount Bank reverted to a loss of NIS 77 million for the third quarter, after having achieved black ink in the second quarter.
In the third quarter of last year, the bank lost NIS 33 million.
Financing income before provision for doubtful debts dropped to NIS 657 million, 8% less than for the third quarter of 2000.
In the third quarter the bank set aside NIS 236 million for doubtful debts, 21% more than for the parallel, when the bank provided NIS 195 million for this purpose.
The rise is partly due to a special provision of NIS 22 million for loans made to businessman Gad Zeevi. He borrowed hundreds of millions of dollars from Israel's leading banks to buy a 20% stake in the Bezeq phone company from British company Cable & Wireless in 1999. The Bezeq shares serve as collateral for his loans, but have since shrunk considerably in value.
For the nine months Discount lost NIS 180 million, compared with netting NIS 92 million in the parallel. The increase is mainly due to soaring provision for doubtful debts, and early-retirement costs of NIS 108 million, of which NIS 54 million was posted in the third quarter.
Financing income before provision for doubtful debts for the first nine months dropped 2% against the parallel to NIS 2.05 billion.
Provision for doubtful debts for the first nine months rose by 58% against the parallel to NIS 710 million, due to increased specific provisions for debts granted to real estate and hotel companies. In the third quarter Discount also increased provisions for loans granted to communications and computers companies.
Operating revenue and other income came to NIS 1.35 billion in the first nine months, similar to the parallel.
In the third quarter, operating revenue and other income decreased to NIS 426 million, 8% less than for the parallel. This revenue include, among other things, NIS 342 million revenue from operating fees, and NIS 11 million stock-investment gains.
The return on investment rate (annualized) for the first nine months was a negative 4.5%, compared with a positive 2.2% for the parallel.
Shareholders equity for the third quarter was NIS 5.17 billion.
Credit to the general public rose to NIS 71.5 billion as of September 30, 3% more than for as of the end of 2000.
Minimum capital ratio was 9.1% as of September 30, compared with 9.3% at the end of 2000. The ratio rose to 9.3% after the bank in October allocated 5% of its shares to institutional and private investors, which generated it NIS 136.5 million net.
Mercantile Discount Bank, which is fully owned by Discount, posted NIS 11.1 million profit for the first nine months, 73% less than for the parallel.
Israel Credit Cards contributed NIS 9 million profit.
In the third quarter Discount sold 80% of its shares in a life insurance agency to Harel Insurance Investments for NIS 7.2 million. The sale is part of an arrangement between the bank and watchdogs Supervisor of Banks Yitzhak Tal, and the Capital Markets Commissioner Tsippi Samet.