(Adds details, comments from CEO, analyst)
By Steven Scheer
TEL AVIV, March 7 (Reuters) - Israel Discount Bank reported a 156 percent rise in fourth-quarter net profit, boosted by higher financing income and lower credit loss provisions, and said it would continue job cuts, branch closings and other efficiency measures in 2018.
Israel’s fourth-largest bank by assets said on Wednesday it earned 371 million shekels ($107 million), up from 145 million a year earlier. It had been forecast to earn 280 million shekels, according to a Reuters poll of analysts.
Net interest income rose 11.2 percent to 1.297 billion shekels while credit loss expenses fell to 31 million shekels from 224 million a year earlier.
Chief Executive Lilach Asher-Topilsky said 2018 will be a challenge because consumer credit — a key growth engine — has been slowing and is expected to decelerate in the coming years.
“Part of the growth (in 2018) will come with becoming more efficient and cost cutting,” she said at a news conference.
“We are going to cut a lot of jobs ... We will close branches. We managed to cut our costs across the board and we are going to continue to do it.”
Discount has already closed around 25 percent of its branches as customers embrace digital technologies, she said.
Expenses rose in the fourth quarter but dipped 1.4 percent in 2017, led by a 2.2 percent decline in salary costs.
“The bank is well positioned to reach its 10 percent return on equity target and 60 percent cost-income target ahead of the 2021 timeline,” said Barclays analyst Tavy Rosner.
ROE reached 8.4 percent in 2017 while Discount’s cost to income ratio was about 68.5 percent.
Asher-Topilsky noted that growth in fees is expected to continue this year along with credit growth to consumers, small businesses and mortgages.
Shares of Discount were up 3.4 percent in early afternoon trading in Tel Aviv.
Discount’s tier 1 capital adequacy ratio, which measures equity capital as a percentage of total risk-weighted assets, rose to 10.0 percent from 9.8 percent in 2016.
The bank has said it would start paying quarterly dividends of up to 15 percent of net profit starting in the first quarter, although its larger peers are paying 40 percent. ($1 = 3.4616 shekels) (Additional reporting by Tova Cohen, editing by David Evans)