Israel Discount Bank Q1 net profit surges

TEL AVIV, June 1 (Reuters) - Israel Discount Bank (DSCT.TA), Israel's third-largest bank, on Monday reported a 300 percent jump in quarterly net profit, boosted by gains from investment of its severance pay fund and tax credits.

Discount posted a first-quarter net profit of 140 million shekels ($35.6 million), or 0.14 shekels per share, compared with 35 million shekels, or 0.04 shekels a share, a year earlier.

Profitability was boosted by a rise of 71 million shekels in income from investment of its severance pay fund.

The bank had tax credits on operating income of 86 million shekels in the quarter compared with a provision for taxes of 133 million a year earlier.

Like Israel's other large banks, Discount's banking operations were hurt by decreased financing income due to low interest rates and higher loan loss provisions stemming from a weakening economy.

Financing income before a provision for doubtful debts slipped to 940 million shekels from 1.07 billion a year earlier while the doubtful debt provision rose to 252 million shekels from 93 million.

The ratio of capital to risk assets rose to 10.42 percent from 10.27 percent at the end of 2008. Israel's banks are required by the regulator to raise their capital adequacy ratios to 12 percent by the end of 2009. ($1=3.93 shekels) (Reporting by Tova Cohen; editing by Mike Nesbit)