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Bank Hapoalim Q2 profit down 5.3% YOY as loan provisions rise

Bank Hapoalim BM reported second-quarter net profit attributable to shareholders of 871 million Israeli shekels, down from 920 million shekels in the previous year.

Excluding net capital gains of 137 million shekels from the public sale offering of Isracard Ltd. and costs associated with the closure of Bank Hapoalim's international private banking operations, net profit stood at 800 million shekels.

EPS amounted to 65 agorot in the quarter, compared to the year-ago 69 agorot. Return of net profit on equity attributed to shareholders was 9.26%, compared to 10.52% a year earlier.

Net interest income increased year over year to 2.47 billion shekels from 2.30 billion shekels. Total noninterest income came in at 999 million shekels, compared to the reclassified 1.23 billion shekels a year earlier.

Provision for credit losses climbed to 319 million shekels from the year-ago 90 million shekels. Total operating and other expenses reached 1.99 billion shekels, compared to the reclassified 2.03 billion shekels in the second quarter of 2018.

Bank Hapoalim, which is being investigated by U.S. authorities over its alleged involvement in tax evasion by clients, reiterated that it expects the total amount it will pay in connection with the probe to be significantly higher than the amount of its existing provision. The bank has earmarked provisions totaling about $611 million as of 2018-end in relation to the case.

The lender noted that additional exposure in respect of claims filed against it on various matters, as of June 30, that have a "reasonably possible" probability of materialization is approximately 268 million shekels.

For the first half, the Israeli lender's attributable profit increased on a yearly basis to 1.69 billion shekels from 1.55 billion shekels.

First-half EPS was 1.26 shekels, compared to the year-ago 1.16 shekels. Return of net profit on equity attributed to shareholders stood at 9.01% in the period, compared to 8.74% a year earlier.

The bank's common equity Tier 1 ratio stood at 11.97% as of June 30, compared to 11.16% a year ago and at the end of 2018.

As of Aug. 15, US$1 was equivalent to 3.53 Israeli shekels.