Bank Leumi, Israel’s largest bank, announced a major write-down of its investment in Valley National Bank in the United States, leading to a significant drop in its net profit for the second quarter of 2024.
Globes reported that the bank notified the Tel Aviv Stock Exchange that due to the decline in the share price of Valley National Bank, it expects a write-off that will reduce its net profits by about 550 million shekels (about 150 million dollars) after calculating the tax implications.
Bank Leumi said it would reassess the need for the write-off before publishing its second-quarter financial results, especially if indicators suggest the decline in value is temporary.
Financial impact
According to Globes, this write-off is expected to reduce Bank Leumi’s net profits for the second quarter by about 25% to 30%.
Despite this significant impact, the bank assured shareholders that the write-down would not materially impact regulatory capital adequacy.
Bank Leumi’s adjusted quarterly profit is expected to be around NIS 1.3 billion (about $354 million) or more.
Bank Leumi acquired shares in Valley National Bank after merging its operations with this American bank in the United States in September 2021.
The merger, which was completed in April 2022, resulted in Leumi receiving 90% of the payment in the form of Valley National Bank shares, and the rest in cash.
The deal made Bank Leumi the largest shareholder in Valley National with a 14.2% stake, although it did not become the controlling shareholder.
The merger initially resulted in a net tax profit of NIS 645 million (about $175,000) for Bank Leumi in 2022.
