Israel Discount Bank Q4 profit slips, raises dividend payout

JERUSALEM, March 11 (Reuters) - Israel Discount Bank on Monday reported a 2% dip in fourth-quarter profit but boosted its dividend payout after slashing it in the previous quarter due to the fallout from Israel's war with Palestinian Hamas militants.

Discount's quarterly net profit slipped to 919 million shekels ($256 million) from 939 million a year earlier, while net interest income edged higher by 0.6% to 2.56 billion shekels.

Its credit loss expenses soared 70% to 390 million shekels to "reflect expectations for slowdown in economy due to the war in Gaza", it said.

Discount, Israel's fourth-largest bank, said it would pay a dividend of 184 million shekels, or 20% of fourth-quarter net income, up from 15% the previous quarter.

The bank had cut the dividend from 30% in the first two quarters of 2023 after Israel's banking regulator told banks to remain conservative when issuing dividends, and to provide credit while the country was at war and the economy was set to slow. The war has raged since Oct. 7 after Hamas gunmen attacked Israeli towns near Gaza.

The dividend reflected "the current conditions, our confidence in our capital capacity and to ensure future growth and expected demand for credit in the next quarters", the bank said.

Its shares opened down 0.1%, compared with gains of 0.5% on the broader Tel Aviv exchange. They are down 0.8% so far in 2024.

Discount's Tier-1 capital ratio rose to 10.71% as of end 2023 from 10.25% at the end of 2022.

Discount and its peers will have to pay as much as 2.5 billion shekels in extra taxes over the next two years as lawmakers look for new ways to boost state coffers heavily depleted by war expenses.

Banks will pay an additional 6% of the profit generated from their activities in Israel in 2024 and 2025 under a tax amendment approved by parliament's finance committee after the panel criticised them for making huge profits as interest rates spiked to sharply boost mortgages and other loans. ($1 = 3.5876 shekels) (Reporting by Steven Scheer, editing by Ed Osmond and Bernadette Baum)