today released an acute profit warning for 2000, and for the fourth quarter. Assuming it does shift to the red, Discount will win the dubious distinction of being the first Israeli bank to post losses in a decade.
Discount announced that while compiling its financial statement for the year, a clear drop in its consolidated profit for 2000 became apparent. The trend points to the bank backsliding to losses in 2000.
For the first nine months of 2000 Discount netted NIS 89 million, indicating that Discount expects its fourth-quarter loss to exceed that figure.
The bank explains that it has been forced to sharply increase its provision for doubtful debts. It also had to increase provision for an early-retirement program for 500 employees.
The bank's credit worries revolve mainly around the real estate and hotel sectors, which have been hit hard by the resumption of fighting in Israel.
Discount adds that it had to make additional provision for doubtful debt on credit granted to the real estate industry during the mid-1990s. The problem is the eroding value of collateral and the deteriorated ability of the borrowers to return the loans because of the slowdown.
The results were also diminished by the bank not registering losses accrued during 2000, and deferred for for tax purposes.
This isn't the bank's first profit warning for 2000. In November the bank warned that its third-quarter profits would disappoint. Ultimately the bbank lost NIS 32 million in the third quarter.
IDB Holdings owns 13% of the bank. MI Holdings, the government company in charge of managing state assets, owns 60%.