Bank Mizrahi Q3 profit dips, bad debt provision up

JERUSALEM, Nov 30 (Reuters) - Mizrahi Tefahot Bank (MZTF.TA), Israel's fourth-biggest bank, reported a fall in third-quarter net profit on Sunday, as a weakening economy led to a near doubling of its bad debts provision.

Quarterly net profit at Mizrahi totalled 140 million shekels ($36 million), or 0.63 shekel per diluted share, compared with 184 million shekels, or 0.82 shekel a share, a year earlier.

Financing income before provisions for bad debts rose to 598 million shekels, from 523 million a year earlier. The provision for doubtful debts rose to 117 million shekels, from 65 million.

Mizrahi was expected to book a net profit of 150.8 million shekels and net financing income of 548 million shekels, the average forecasts of four analysts polled by Reuters showed.

Last week, three of Israel's top five banks issued quarterly results and recorded weak earnings due to the global financial crisis and slowing Israeli economy.

Hapoalim (POLI.TA), Israel's largest bank in terms of assets, posted an almost 50 percent drop in quarterly profit.

Rival Leumi (LUMI.TA), Israel's largest bank in terms of market value, swung to a loss after a 1.01 billion shekel profit a year ago.

First International Bank of Israel (FIBI) (FTIN5.TA), the fifth-largest lender, said its third-quarter net profit fell by 74 percent.

Israel's economy has started to weaken due to slowing exports and investment, which has weighed on banks' bottom lines. The economy grew at an annualised 2.3 percent rate in the third quarter, after 4.1 percent in the prior three-month period.

Growth is expected at 4.5 percent in 2008 and only 1.5 percent in 2009.

Mizrahi's return on equity was 10 percent in the quarter.

Last week, the bank extended a plan to reach a return on equity target of 18 percent by one year to 2013, citing the financial crisis as a reason.

($1 = 3.92 shekels) (Reporting by Steven Scheer; Editing by Andrew Macdonald)