Israel's Mizrahi-Tefahot Bank Q1 profit slips

TEL AVIV Thu May 15, 2014 3:23am EDT

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TEL AVIV May 15 (Reuters) - Mizrahi-Tefahot Bank, Israel's fourth-largest lender, reported a six percent drop in quarterly profit due to lower financing income in the wake of declining interest rates.

Mizrahi-Tefahot, the first of Israel's top banks to report quarterly earnings, said on Thursday it had net profit of 264 million shekels ($76.4 million) in the first quarter, down from 280 million a year earlier but above an average forecast in a Reuters poll of 257 million shekels.

Financing income before credit losses fell 4.9 percent to 794 million shekels while it had a gain in its provision for credit losses of 5 million shekels compared with a charge of 34 million.

Operating and other expenses grew a moderate 1.4 percent in the first three months of the year.

Mizrahi-Tefahot is Israel's largest mortgage lender with an average market share of 36 percent.

Its ratio of Tier I capital to risk elements rose to 8.87 percent from 8.71 percent a year earlier. Banks must reach a 9 percent ratio by the start of 2015.

"Against a backdrop of a decline in demand for credit in the corporate sector, the bank is acting to significantly expand its activities in the small and medium size business sector," said Chief Executive Eldad Fresher.

Israel's top three banks will report quarterly results next week.

($1 = 3.4541 Israeli Shekels) (Reporting by Tova Cohen)