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Bank Hapoalim plans share buyback as Q1 profit rises YOY

Bank Hapoalim BM reported first-quarter net profit attributed to shareholders of 821 million Israeli shekels, up from 628 million shekels in the prior-year period.

EPS for the quarter was 61 agorot, compared to 47 agorot in the first quarter of 2018. Return of net profit was 9.0%, up from 7.2% a year earlier.

Net interest income rose year over year to 2.28 billion shekels from 2.09 billion shekels, while total noninterest income fell over the same period to 892 million shekels from 1.08 billion shekels.

The Israeli lender booked a provision for credit losses of 121 million shekels in the quarter, compared to the year-ago 216 million shekels. Total operating and other expenses fell on a yearly basis to 1.88 billion shekels from 1.97 billion shekels.

The bank's ratio of common equity Tier 1 capital to risk components stood at 11.45% at the end of March 31, compared to 11.16% at 2018-end and 11.05% a year ago.

The lender said it plans to buy back shares with proceeds from the sale of its approximately 65.2% stake in credit card unit Isracard, subject to the directives of the law and the banking supervision department of Israel's central bank, as well as to resolution and approval from Hapoalim's board of directors. The bank will book net profit from the stake sale of 210 million shekels for the second quarter.

Bank Hapoalim, which has set aside about $611 million as of 2018-end related to a U.S. investigation into its alleged involvement in tax evasion by clients, said it estimates that the total it will pay in connection with the probe will likely be significantly higher than its existing provisions.

The bank said a resolution on the matter may be in the form of deferred prosecution agreement or plea agreement, noting that a severe resolution could damage its business.

As of May 28, US$1 was equivalent to 3.61 Israeli shekels.