- Return on Equity of 7.2%, Net Profit totaled NIS 628 million -
- Net Profit, excluding provisions in respect of US Investigation, totaled NIS 688 million and Return on Equity would have been 7.9% -
- The Bank's credit portfolio grew by 2% -
- Dividend payment in respect of first quarter profits totaled NIS 251 million -
TEL AVIV, Israel, May 24, 2018 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE:POLI) (ADR:BKHYY), Israel's leading financial group, today announced its financial results for the first quarter ended March 31, 2018.
Key highlights:
- Net Profit - totaled NIS 628 million, compared with a net profit of NIS 767 million in the corresponding quarter of 2017. Excluding provision in connection with the investigation of the Bank Group’s business with American clients in the amount of NIS 60 million, net profit in the first quarter totaled NIS 688 million.
- Return on Equity - reached 7.2%, compared with 9.2% in the corresponding quarter of 2017. Excluding the provision in connection with the investigation of the Bank Group’s business with American clients, Return on Equity in the first quarter of 2018 stood at 7.9%.
- Total income from regular financing activity totaled NIS 2,289 million, compared with NIS 2,121 million in the corresponding quarter of 2017, an increase of 7.9%.
- Credit growth: total credit portfolio grew by 2.0% in the first quarter of 2018.
- Improvement in asset quality: NPL ratio (impaired credit to the public not accruing interest income) as a percentage of total credit stood at only 0.70%. The Bank manages a diversified credit portfolio with a high diversification of credit segments (individuals, mortgages, small businesses, commercial and corporate).
- Retail Deposit base in Israel increased by 1.7%.
- Tier 1 capital ratio: The Bank exceeded the capital adequacy targets required by the Bank of Israel and the Bank's Capital Plan. Tier 1 Capital Ratio stood at 11.05% as at March 31, 2018.
- Dividend payments: Total dividend payment in respect of first quarter profits totaled NIS 251 million, representing a 40% payout ratio.
Key developments in the financial statements for the first quarter of 2018:
- Profit from regular financing activity totaled NIS 2,289 million in the first quarter of 2018 compared with NIS 2,121 million in in the same period last year, an increase of 7.9%. The increase is mainly attributed to the growth in the Bank's business activity as part of its strategic framework.
- Fees and other income in Israel – totaled NIS 1,276 million in the first quarter of 2018 compared with NIS 1,282 million in the same period last year.
- Net provision for credit losses totaled NIS 250 million in the first quarter of 2018, 0.35% of the average credit to the public, compared with NIS 107 million, 0.16% of the average credit to the public, in the same period last year. The increase is related to the significant increase in the collective provision, mainly as a result of increase in balances of corporate credit in the quarter.
- Gross provision for credit losses, before recoveries, stood at 0.71% in the first quarter of 2018, compared with 0.52% in the same period last year.
- Operating and other expenses, totaled NIS 2,353 million in the first quarter of 2018, compared with NIS 2,217 million in same period last year.
- Social responsibility - The Bank continues to lead in contribution to the community in the form of financial donations, especially in the field of education, culture and welfare, which totaled NIS 13 million the first quarter of 2018.
Key developments in Balance Sheet items for the first quarter of 2018:
- Consolidated balance sheet as at March 31, 2018 totaled NIS 448.2 billion, compared with NIS 454.4 billion at the end of 2017, a decrease of 1.4%.
- Net Credit to the public totaled NIS 284.1 billion, compared with NIS 278.7 billion at the end of 2017, an increase of 2.0%, caused mainly by the increase in corporate lending, commercial customers and housing loans.
- Consumer credit in Israel totaled NIS 40.0 billion compared with NIS 40.3 billion at the end of 2017, a decrease of 0.7%.
- Housing loans in Israel totaled NIS 75.6 billion compared with NIS 74.1 billion at the end of 2017, an increase of 2.0%.
- Credit to small businesses in Israel totaled NIS 30.9 billion compared with NIS 31.2 billion at the end of 2017, a decrease of 1.0%.
- Credit to the commercial segment in Israel totaled NIS 34.8 billion compared with NIS 33.9 billion at the end of 2017, an increase of 2.9%.
- Credit to the corporate segment in Israel totaled NIS 68.6 billion compared with NIS 65.5 billion at the end of 2017, an increase of 4.8%.
- Deposits from the public totaled NIS 344.8 billion compared with NIS 347.4 billion at the end of 2017, a decrease of 0.7%.
- Retail Deposits in Israel totaled NIS 174.5 billion compared with NIS 171.5 billion at the end of 2017, an increase of 1.7%.
- Small businesses Deposits in Israel totaled NIS 38.8 billion compared with NIS 38.2 billion at the end of 2017, an increase of 1.6%.
- Shareholders' equity totaled NIS 36.1 billion as at March 31, 2018, compared with NIS 35.9 billion at the end of 2017, an increase of 0.6%.
- Total capital ratio stood at 14.06% as at March 31, 2018, compared with 14.64% as at December 31, 2017.
- Leverage ratio representing the ratio of the capital measurement (Tier 1 capital) to the exposure measurement (total balance sheet exposures, derivatives exposures and securities financing transactions, and off-balance sheet items), stood at 7.38% at the end of the first quarter of 2018.
- Liquidity coverage ratio representing the ratio between the supply of "high-quality liquid assets” to the net expected outgoing cash flow in a stress scenario, stood at 119% at the end of the first quarter of 2018.
Conference Call Information
Bank Hapoalim will host a conference call today at 4:00 p.m. Israel Time/ 09:00 a.m. Eastern Time to discuss the results. The call will be accompanied by a slide presentation.
In order to participate, please dial the following numbers (at least ten minutes ahead of the scheduled start time): United States 1-888-281-1167; United Kingdom 0-800-051-8913; International (972) 3-9180685. No password is required.
The slide presentation, earnings release and the first quarter 2018 financial statements will be available on the Bank's website, www.bankhapoalim.com, under Investor Relations - Financial Information.
Following the conclusion of the call, a replay of the call will be available by audio playback on Bank Hapoalim's website. The replay can be accessed until May 31, 2018 by calling (972) 3-9255918 (international).
Please note: The conference call does not replace the need to peruse the immediate reports and the Financial Statements of the Bank, including all the forward-looking information included therein in accordance with Section 32A of the Securities Law, 1968.
Contact:
Karen Mazor, SVP
Head of Investor Relations
Bank Hapoalim
T: +972 54 228 8039
E: Karen.mazor@poalim.co.il
| Condensed financial information | |||||||||||||||
| Condensed financial information and principal performance indicators over time | |||||||||||||||
| For the three months ended | For the year ended | ||||||||||||||
| December 31 | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | |||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| Main performance indicators | |||||||||||||||
| Return of net profit on equity attributed | |||||||||||||||
| to shareholders of the Bank(1) | 7.16 | % | 6.96 | % | 5.31 | % | 9.51 | % | 9.22 | % | 7.50 | % | 7.72 | % | |
| Return of net profit on equity attributed | |||||||||||||||
| to shareholders of the Bank excluding | |||||||||||||||
| extraordinary items(1)(2) | 7.86 | % | 10.45 | % | 9.91 | % | 9.51 | % | 9.22 | % | 9.44 | % | *10.04 | % | |
| Return on average assets(1) | 0.56 | % | 0.54 | % | 0.41 | % | 0.72 | % | 0.69 | % | 0.59 | % | 0.60 | % | |
| Efficiency ratio - cost-income ratio | 63.75 | % | 70.42 | % | 71.62 | % | 59.28 | % | 61.55 | % | 65.73 | % | 64.47 | % | |
| Efficiency ratio - cost-income ratio | |||||||||||||||
| excluding extraordinary items(2) | 62.12 | % | 62.43 | % | 60.85 | % | 59.28 | % | 61.55 | % | 61.03 | % | 60.95 | % | |
| Financing margin from regular activity(1)(3) | 2.21 | % | 2.21 | % | 2.20 | % | 2.24 | % | 2.07 | % | 2.16 | % | 2.09 | % | |
| Liquidity coverage ratio(4) | 119 | % | 122 | % | 123 | % | 127 | % | 128 | % | 122 | % | 124 | % | |
| As at | As at December 31 | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | |||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| Ratio of common equity Tier 1 capital | |||||||||||||||
| to risk components(5) | 11.05 | % | 11.26 | % | 11.26 | % | 11.35 | % | 11.21 | % | 11.26 | % | 11.01 | % | |
| Ratio of total capital to risk components(5) | 14.06 | % | 14.64 | % | 14.85 | % | 14.99 | % | 14.90 | % | 14.64 | % | 15.11 | % | |
| Leverage ratio(5) | 7.38 | % | 7.37 | % | 7.37 | % | 7.36 | % | 7.30 | % | 7.37 | % | 7.25 | % | |
| For the three months ended | For the year ended December 31 | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | |||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| Main credit quality indicators | |||||||||||||||
| Allowance for credit losses as a | |||||||||||||||
| percentage of credit to the public | 1.38 | % | 1.36 | % | 1.39 | % | 1.40 | % | 1.45 | % | 1.36 | % | 1.49 | % | |
| Impaired debts and debts in arrears of 90 | |||||||||||||||
| days or more as a percentage of credit to | |||||||||||||||
| the public | 1.23 | % | 1.27 | % | 1.29 | % | 1.48 | % | 1.55 | % | 1.27 | % | 1.76 | % | |
| Net charge-offs as a percentage of | |||||||||||||||
| average credit to the public(1) | 0.14 | % | 0.13 | % | 0.06 | % | 0.36 | % | 0.39 | % | 0.23 | % | 0.19 | % | |
| Provision for credit losses as a percentage | |||||||||||||||
| of average credit to the public(1) | 0.35 | % | 0.03 | % | 0.04 | % | 0.24 | % | 0.16 | % | 0.12 | % | 0.10 | % | |
* Restated for inclusion of the effects of the reduction of corporate tax as part of profit excluding extraordinary items in 2016. In the Periodic Report for 2017 (and the subsequently published presentation for 2017), net profit and return on equity for 2016 and 2017 were presented excluding expenses in respect of the update of the provision in connection with the investigation of the Bank Group's business with American clients and the discontinuation of activity in Switzerland only. In 2016, net profit and return on equity for 2016 were presented also excluding the effects of the reduction of corporate tax (in addition to the exclusion of the update of the provisions in respect of the investigation, as noted). Within the process of preparation for filing a shelf prospectus of Hapoalim Hanpakot Ltd. (the issuance arm of the Bank, which is a company under full ownership), the Israel Securities Authority requested that the Bank present these data for 2016 in a manner that consistently applies the aforesaid excluded components.
(1) Calculated on an annualized basis
(2) Does not include expenses in respect of the update of the provision in connection with the Bank Group’s business with American clients, and costs in respect of the discontinuation of activity in Switzerland.
(3) Financing profit from regular activity (see the Report of the Board of Directors and Board of Management, in the section “Material developments in income, expenses, and other comprehensive income”) divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(4) For additional information, see the section “Liquidity and refinancing risk,” in the Consolidated Financial Statements.
(5) For additional information, see the section “Capital, capital adequacy, and leverage,” in the Consolidated Financial Statements.
| Condensed financial information and principal performance indicators over time (continued) | ||||||||
| For the three months ended | For the year ended | |||||||
| December 31 | ||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | ||
| 2018 | 2017 | 2017 | 2017 | 2017 | ||||
| NIS millions | ||||||||
| Main profit and loss data | ||||||||
| Net profit attributed to shareholders | ||||||||
| of the Bank | 628 | 612 | 469 | 812 | 767 | 2,660 | 2,628 | |
| Net profit attributed to shareholders of the Bank excluding extraordinary items(2) | 688 | 908 | 861 | 812 | 767 | 3,348 | ***3,417 | |
| Net interest income | 2,158 | 2,228 | 2,163 | 2,233 | 2,073 | 8,697 | 8,193 | |
| Provision (income) for credit losses | 250 | 24 | 25 | 167 | 107 | 323 | 269 | |
| Net financing profit** | 2,384 | 2,395 | 2,315 | 2,369 | 2,255 | 9,334 | 9,345 | |
| Non-interest income | 1,533 | 1,474 | 1,477 | 1,453 | 1,529 | 5,933 | 6,528 | |
| Of which: fees | 1,280 | 1,271 | 1,284 | 1,254 | 1,302 | 5,111 | 5,216 | |
| Operating and other expenses | 2,353 | 2,607 | 2,607 | 2,185 | 2,217 | 9,616 | 9,490 | |
| Of which: salaries and related expenses | 1,130 | *1,115 | *1,126 | *1,132 | *1,182 | *4,555 | *4,571 | |
| Total income | 3,691 | 3,702 | 3,640 | 3,686 | 3,602 | 14,630 | 14,721 | |
| Net earnings per ordinary share | ||||||||
| (in NIS) | ||||||||
| Basic net earnings per share in NIS | ||||||||
| attributed to shareholders of the Bank | 0.47 | 0.46 | 0.36 | 0.60 | 0.58 | 2.00 | 1.98 | |
* Reclassification of certain actuarial cost components of employee benefits from salary expenses to other expenses. For further details, see Note 1C(3) to the Condensed Financial Statements.
** Net financing profit includes net interest income and non-interest financing income (expenses).
*** Restated for inclusion of the effects of the reduction of corporate tax as part of profit excluding extraordinary items in 2016. In the Periodic Report for 2017 (and the subsequently published presentation for 2017), net profit and return on equity for 2016 and 2017 were presented excluding expenses in respect of the update of the provision in connection with the investigation of the Bank Group's business with American clients and the discontinuation of activity in Switzerland only. In 2016, net profit and return on equity for 2016 were presented also excluding the effects of the reduction of corporate tax (in addition to the exclusion of the update of the provisions in respect of the investigation, as noted). Within the process of preparation for filing a shelf prospectus of Hapoalim Hanpakot Ltd. (the issuance arm of the Bank, which is a company under full ownership), the Israel Securities Authority requested that the Bank present these data for 2016 in a manner that consistently applies the aforesaid excluded components.
(6) Calculated on an annualized basis.
(7) Not include expenses in respect of the update of the provision in connection with the Bank Group’s business with American clients, and costs in respect of the discontinuation of activity in Switzerland.
| Condensed financial information and principal performance indicators over time (continued) | |||||||||||||||
| As at | As at December 31 | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | |||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| NIS millions | |||||||||||||||
| Main balance sheet data | |||||||||||||||
| Total assets | 448,195 | 454,424 | 449,815 | 449,734 | 445,847 | 454,424 | 448,105 | ||||||||
| Of which: Cash and deposits with banks | 78,148 | 86,114 | 85,606 | 81,959 | 77,088 | 86,114 | 80,378 | ||||||||
| Securities | 61,538 | 65,442 | 64,196 | 70,499 | 74,894 | 65,442 | 71,449 | ||||||||
| Net credit to the public | 284,103 | 278,663 | 275,505 | 272,949 | 269,982 | 278,663 | 271,957 | ||||||||
| Net problematic credit risk | 7,249 | 7,092 | 7,430 | 7,469 | 8,018 | 7,092 | 7,600 | ||||||||
| Net impaired balance sheet debts | 2,056 | 2,121 | 2,283 | 2,522 | 2,749 | 2,121 | 3,110 | ||||||||
| Total liabilities | 411,979 | 418,420 | 414,070 | 414,105 | 410,769 | 418,420 | 413,880 | ||||||||
| Of which: Deposits from the public | 344,810 | 347,351 | 342,747 | 340,768 | 337,518 | 347,351 | 338,502 | ||||||||
| Deposits from banks | 3,602 | 4,149 | 3,544 | 4,329 | 4,199 | 4,149 | 4,377 | ||||||||
| Bonds and subordinated notes | 26,214 | 29,058 | 29,411 | 30,736 | 31,171 | 29,058 | 33,560 | ||||||||
| Shareholders’ equity | 36,084 | 35,863 | 35,591 | 35,458 | 34,909 | 35,863 | 34,047 | ||||||||
| Nonperforming asset balances (NPL) | 2,015 | 2,110 | 2,209 | 2,601 | 2,997 | 2,110 | 3,507 | ||||||||
| Additional data | |||||||||||||||
| Share price at end of period (in NIS) | 24.0 | 25.6 | 24.7 | 23.5 | 22.1 | 25.6 | 22.9 | ||||||||
| For the three months ended | For the year ended December 31 | ||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | 2017 | 2016 | |||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| Total dividend per share | 18.35 | 14.08 | 24.37 | 22.98 | 3.1 | 64.53 | 51.44 | ||||||||
| (in agorot)* | |||||||||||||||
| Ratio of fees to average assets | 0.28 | % | 0.28 | % | 0.28 | % | 0.28 | % | 0.29 | % | 1.14 | % | 1.18 | % | |
* According to the date of declaration.