JERUSALEM, Aug 17 (Reuters) - Israel's third-largest bank, Mizrahi Tefahot, reported on Monday a 38% fall in quarterly profit after it tripled provisions for credit losses due to the coronavirus outbreak and as financing income fell sharply.

Mizrahi said it earned 360 million shekels ($106 million) in the April-June period, down from 576 million a year earlier.

Financing income fell 14.3% to 1.4 billion shekels, while credit loss provisions rose to 270 million shekels from 99 million a year earlier.

CEO Eldad Fresher said disinflation and low interest rates had dampened profit margins and helped to "offset the results of further growth in bank operations".

He said Mizrahi, Israel's largest mortgage lender, was nearing completion of its purchase of smaller rival Union Bank .

In the next few weeks, Mizrahi plans to issue a purchase offer for Union's shares. "The Union bank transaction would enhance the bank's competitive position and would be one of the growth engines that form the basis for our next strategic plan," Fresher said.

The bank has said that its focus on mortgages and businesses, rather than industries more affected by the pandemic such as aviation and tourism, has given Mizrahi an edge in dealing with the coronavirus crisis. Low-risk mortgages account for two-thirds of the bank's credit portfolio. Like its peers, Mizrahi has allowed customers to delay repayments of mortgages and other loans.

It is not paying any dividends during the outbreak to free up funds to provide more credit to households and businesses.

Mizrahi's Tier 1 ratio of capital to risk components, a key measure of financial strength, slipped to 9.96% in the quarter from 10.23% a year earlier. ($1 = 3.4054 shekels) (Reporting by Steven Scheer; Editing by Susan Fenton)