First International Bank of Israel

today reported a 6% drop in first quarter earnings to NIS 61 million. In the parallel quarter of 2000, profit came to NIS 65 million. Its results ae in line with the forecasts.

Net return on capital declined to 8.5%, compared with 10% for the same period in 2000.

Excluding the index gap, profit increased to NIS 70 million, 18.6% higher than in the first quarter last year. Excluding the interest-rate gap and net yield on capital, profit grew by 9.8%, compared with 8.9% in the same quarter in 2000.

Profit from financing activities before provision for doubtful debts rose to NIS 305 million, 3.4% more than in the first quarter of last year.

The rise was mainly due to a 5% increase in activities compared with the same period last year. The bank also marginally improved its lender-borrower interest gap.

The gap between the expected consumer price index and the last known CPI, published on the 15th of the preceding month, decreased earnings from financing activities by NIS 11 million, compared with a NIS 6 million increase in the parallel period last year.

The bank notes that the provision for doubtful debts followed its conservative tradition. It provided NIS 30 million, 3.2% less in the first quarter in 2000, when provision for doubtful debts came to NIS 31 million. Although the nominal sum was higher, FIBI said it improved its collection methods.

Provision for doubtful debts against aggregate credit remained unchanged in the first quarter at 0.3% in annualized terms. This is low compared with the banking average. The bank emphasized that the low rate has remained stable over the last year despite the intensified growth in credit.

The slowdown in the capital markets in Israel and overseas slashed revenues from operating fees to NIS 140 million, 24% less than in the first quarter of 2000, when this item came to NIS 185 million.

Other revenues, mostly from management fees and management of provident funds, rose 23% against the parallel to NIS 27 million. The increase is largely attributable to one-time revenues.

Wage costs increased by 3.8%

Wage costs increased to NIS 191 million, up 3.8% compared with NIS 184 million in the first quarter of 2000.

Excluding wage costs in respect of Alpha Card, wage costs increased by 13.4%.

The increase was largely due to losses from severance funds, in the wake of negative yields by provident funds.

Operating and other expenses, excluding wages, dropped to NIS 107 million, 24.6% below the parallel. Excluding Alpha Card, the quarterly rise is estimated at 1.7%.

Credit to the general public increased to NIS 43.8 billion, compared with NIS 42 billion at the end of 2000.

Local FIBI subsidiaries, mainly the First International Mortgage Bank and the Poalei Agudat Israel Bank, contributed NIS 14 million to FIBI's net profit, compared with NIS 2 million for the parallel. In 2000, earnings were dragged down by Alpha Card's losses.