Bank Leumi, Israel’s largest bank by assets, announced on Sunday that it expects a 50% decline in its profits for the first quarter of 2023. This comes after news of the decline in the valuation of the bank’s U.S. unit.
Shares in Leumi were up 1.4% in Tel Aviv, reaching 28.81 shekels during the morning session following the announcement. The bank’s forecasted fall in profit is largely expected to be driven by the decline in the value of Valley National Bancorp; where Leumi holds a 14.2% stake.
With Valley’s stock falling 33% so far in 2023 to $7.60, Leumi’s investment in Valley is believed to have declined by 1 billion shekels ($275 million). Now, Valley is valued at $3.9 billion, with analysts cutting their target price for the bank to $10-$13 as a result.
Despite the bank’s fall in value, Leumi continues to reiterate its support for Valley, claiming that its long-term relationship with the bank will help to boost Leumi’s credit portfolio in the United States.
“Valley is a bank with a consistent history of stringent risk management,” Bank Leumi stated.