Israel's Mizrahi Tefahot bank Q3 net profit, financing income jump

A man uses an ATM at Bank Mizrahi-Tefahot in Tel Aviv, Israel November 22, 2021. Picture taken November 22, 2021. REUTERS/Corinna Kern/File Photo

JERUSALEM, Nov 28 (Reuters) - Mizrahi Tefahot (MZTF.TA), Israel's third-largest bank, reported a nearly 40% rise in third-quarter profit, boosted by a jump in financing income amid higher inflation and aggressive Bank of Israel interest rate hikes.

The bank said on Monday it earned 1.18 billion shekels ($343 million) in the July-September period, up from 845 million a year earlier. Net interest income rose to 2.69 billion shekels from 2 billion.

Mizrahi, however, had credit loss provision of 155 million shekels in the quarter, after taking income from the provision of 36 million a year earlier. To protect against defaults, Israeli banks took large loan loss provisions during the COVID pandemic but last year started unwinding them.

Mizrahi said it would pay a quarterly dividend of 353 million shekels, or 30% of net profit.

It reported a 17.1% rise in loans to the public in the third quarter.

To fight inflation, the Bank of Israel in April began to raise its benchmark interest rate, bringing it to 2% in August from 0.1% in April. In the fourth quarter, the central bank has raised the rate further to 3.25%.

Mizrahi's Tier 1 ratio of capital to risk components, a key measure of financial strength, fell to 9.92% from 10.44% a year earlier.

It also said its planned merger with Union Bank would be completed by the end of 2022.

Last week, larger rival Hapoalim (POLI.TA) reported a 48% rise in third-quarter profit.

($1 = 3.4388 shekels)

Reporting by Steven Scheer

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