Israel Discount Bank Ltd., the country’s third-largest publicly-traded lender by assets, advanced the most in more than a week on expectation a five year-plan to cut costs will raise profit.
The shares climbed 1.4 percent, the most since July 29, to 6.005 shekels at the close in Tel Aviv. They were the best performers on Tel Aviv’s benchmark share gauge today. The TA-25 Index of stocks declined 0.3 percent.
Discount’s board approved a five-year plan that includes cutting more than 1,000 jobs, most of which by 2017, the bank said in a statement today. The lender has an efficiency ratio of 86.9 compared with 62.20 for Bank Hapoalim BM and 67.84 at Bank Leumi Le-Israel Ltd., the country’s two largest banks, according to data compiled by Bloomberg. The ratio measures the effect of expenses on revenue. Discount’s second-quarter profit slumped 27 percent to 192 million shekels ($54.4 million).
“The strategy announcement is good news as it will help the bank become more efficient,” Adi Scop, financial services analyst at Tel Aviv-based I.B.I.-Israel Brokerage & Investments Ltd. said today by phone. “In coming quarters, we should see a gradual drop in salary expenses which will trickle down also to profit.”
Discount’s shares declined 9.4 percent this year, more than double the 2.9 percent drop in the Tel Aviv Banking Index, as the lender sought to cut costs amid falling interest rates and tougher capital requirements.