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Israel's Leumi Q2 profit hit by provision for US tax settlement

JERUSALEM, Aug 21 (Reuters) - Leumi, Israel's second-largest bank, reported a smaller-than-expected decline in quarterly net profit, as the lender's bottom line was hit by a provision to settle a U.S. tax probe.

Leumi said on Thursday it earned 290 million shekels ($82 million) in the second quarter, compared with 474 million a year earlier. That was well above an average forecast of 161 million shekels in a Reuters poll of analysts' estimates.

In June, Leumi said it was close to reaching a deal with the U.S. Department of Justice, which has been investigating possible tax evasion by the bank's American clients.

It set aside another 460 million shekels in the second quarter to bring its total provision for the impending settlement to 950 million shekels.

Excluding the provision, Leumi said its profit in the April-June period was 765 million shekels.

(1 US dollar = 3.5413 Israeli shekel) (Reporting by Steven Scheer; Editing by Kenneth Maxwell)