- Net Profit totaled NIS 950 million; Return on Equity of 10.7% -
- The Bank's credit portfolio grew by 3.7% compared with year end 2017 -
TEL AVIV, Israel, Nov. 15, 2018 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE: POLI) (ADR: BKHYY), Israel's leading financial group, today announced its financial results for the third quarter ended September 30, 2018.
Key highlights:
- Total net profit – reached NIS 950 million, compared with a net profit of NIS 469 million in the corresponding quarter of 2017*.
- Return on equity (ROE) - reached 10.7%, compared with 5.3% in the corresponding quarter*.
- Credit growth - total credit portfolio grew by 3.7% totaling NIS 275.8 billion compared with NIS 265.9 billion at the end of 2017.
- Retail deposit base in Israel - increased by 3.7% totaling NIS 217.4 billion compared with NIS 209.7 billion at the end of 2017.
- Income from regular financing activity - totaled NIS 2,356 million compared with NIS 2,209 million in the corresponding quarter of 2017, an increase of 6.7%.
- Efficiency ratio – cost-income ratio totaled 57.6% for the third quarter of 2018, compared with 72.2% in the same quarter last year*.
- Common Equity Tier 1 capital ratio - stood at 11.32% as at September 30, 2018, surpassing both regulatory and internal capital targets.
- The Bank made no further provisions in the quarter with respect to the investigation of the Bank Group’s business with American clients.
- The Bank did not declare a distribution of dividend from third quarter 2018 net profits.
*Excluding costs associated with the discontinuation of the Bank's activity in Switzerland, third quarter 2018 net profit would have totaled NIS 980 million (11.0% ROE), and cost income ratio would have stood at 56.8%.
Excluding provisions in connection with the investigation of the Bank Group’s business with American clients and costs associated with the discontinuation of the Bank’s activity in Switzerland, third quarter 2017 net profit would have totaled NIS 861 million (9.9% ROE), and cost income ratio would have stood at 59.7%.
Key developments in the financial statements for the third quarter of 2018:
- Total income from regular financing activity, totaled NIS 2,356 million in the third quarter of 2018 compared with NIS 2,209 million in the same period last year. The increase is attributed to the growth in business activity in Israel across all segments.
- Fees and other income, totaled NIS 869 million in the third quarter of 2018 compared with NIS 905 million in the same period last year.
- Net provision for credit losses, totaled NIS 118 million in the third quarter of 2018, 0.17% of the average credit to the public, compared with an income of NIS 8 million, 0.01% of the average credit to the public, in the same period last year.
- Operating and other expenses, totaled NIS 2,018 million in the third quarter of 2018, compared with NIS 2,275 million in same period last year.
Key developments in Balance Sheet items for the third quarter of 2018:
- Consolidated balance sheet, as at September 30, 2018 totaled NIS 447.9 billion, compared with NIS 454.4 billion at the end of 2017, a decrease of 1.4%.
- Net credit to the public, totaled NIS 275.8 billion, compared with NIS 265.9 billion at the end of 2017, an increase of 3.7%, caused mainly by the increase in corporate lending, commercial customers and housing loans.
- Consumer credit in Israel, totaled NIS 44.1 billion compared with NIS 45.9 billion at the end of 2017, a decrease of 3.9%.
- Housing loans in Israel, totaled NIS 79.0 billion compared with NIS 74.1 billion at the end of 2017, an increase of 6.6%.
- Credit to small businesses in Israel, totaled NIS 32.3 billion compared with NIS 32.4 billion at the end of 2017, a decrease of 0.2%.
- Credit to the commercial segment in Israel, totaled NIS 36.5 billion compared with NIS 33.9 billion at the end of 2017, an increase of 7.7%.
- Credit to the corporate segment in Israel, totaled NIS 69.6 billion compared with NIS 65.5 billion at the end of 2017, an increase of 6.2%.
- Deposits from the public, totaled NIS 341.8 billion compared with NIS 347.3 billion at the end of 2017, a decrease of 1.6%.
- Retail deposits in Israel, totaled NIS 176.7 billion compared with NIS 171.5 billion at the end of 2017, an increase of 3.0%.
- Small businesses deposits in Israel, totaled NIS 40.8 billion compared with NIS 38.2 billion at the end of 2017, an increase of 6.6%.
- Shareholders' equity, totaled NIS 37.6 billion as at September 30, 2018, compared with NIS 35.9 billion at the end of 2017, an increase of 4.9%.
- Total capital ratio, stood at 14.77% as at September 30, 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 7.63% at the end of the third 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 122% at the end of the third quarter of 2018.
Conference Call Information
Bank Hapoalim will host a conference call today to discuss the results at 5:00 p.m. Israel time/ 3:00 p.m. UK time/ 10:00 a.m. Eastern time. To access the conference call, please dial: 1-888-281-1167 toll free from the United States; 0-800-051-8913 toll free from the United Kingdom; or 972-3-9180685 internationally. No password is required.
The call will be accompanied by a slide presentation, which, together with the financial statements, will be available on the Bank's website at www.bankhapoalim.com, under Investor Relations, Financial Information.
An archive of the call will be available on the Bank's website at the above address a few hours following the completion of the call.
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 Israeli Securities Law, 1968.
About Bank Hapoalim:
Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group operates 230 full-service retail branches, 12 regional business centers and specialized industry relationship managers for major corporate customers. The Bank Hapoalim Group includes Isracard Ltd, Israel's leading credit card company as well as financial companies involved in investment banking, trust services and portfolio management. Internationally, commercial banking services are provided in North America by the New York branch and in Europe credit facilities are provided through Bank Hapoalim Luxemburg and Bank Positif in Turkey. Bank Hapoalim is listed on the Tel Aviv Stock Exchange. In addition, a Level-1 ADR is traded "over-the-counter" in New York. For more information about Bank Hapoalim, please visit us online at www.bankhapoalim.com.
Contact:
Karen Mazor, SVP
Head of Investor Relations
Bank Hapoalim
T: +972 54 228 8039
E: Karen.mazor@poalim.co.il
| Condensed financial information and principal performance indicators over time(1) | ||||||||||||||
| For the three months ended | For the nine months ended | For the year ended December 31 | ||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | 2017 | 2016 | |||||||||
| Main performance indicators | ||||||||||||||
| Return of net profit on equity attributed to shareholders of the Bank(2) | 10.67 | % | 5.31 | % | 9.23 | % | 7.82 | % | 7.50 | % | 7.72 | % | ||
| Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(2)(3) | 11.02 | % | 9.91 | % | 9.56 | % | 9.33 | % | 9.44 | % | *10.04 | % | ||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank(2)(7) | 9.41 | % | 4.27 | % | 8.18 | % | 6.79 | % | 6.61 | % | 6.92 | % | ||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(2)(3)(7) | 9.75 | % | 8.84 | % | 8.52 | % | 8.30 | % | 8.55 | % | 9.23 | % | ||
| Return on average assets(2) | 0.84 | % | 0.41 | % | 0.74 | % | 0.61 | % | 0.59 | % | 0.60 | % | ||
| Efficiency ratio - cost-income ratio from continued operations | 57.61 | % | 72.18 | % | 59.28 | % | 63.49 | % | 64.96 | % | 63.42 | % | ||
| Efficiency ratio - cost-income ratio excluding extraordinary items from continued operations(3) | 56.75 | % | 59.74 | % | 58.41 | % | 59.36 | % | 59.55 | % | 59.42 | % | ||
| Financing margin from regular activity(2)(4) | 2.29 | % | 2.16 | % | 2.27 | % | 2.12 | % | 2.13 | % | 2.05 | % | ||
| Liquidity coverage ratio(5) | 122 | % | 123 | % | 122 | % | 124 | % | ||||||
| As at | December 31 | |||||||||||||
| September 30, 2018 | September 30, 2017 | 2017 | 2016 | |||||||||||
| Ratio of common equity Tier 1 capital to risk components(6) | 11.32 | % | 11.26 | % | 11.26 | % | 11.01 | % | ||||||
| Ratio of total capital to risk components(6) | 14.77 | % | 14.85 | % | 14.64 | % | 15.11 | % | ||||||
| Leverage ratio(6) | 7.63 | % | 7.37 | % | 7.37 | % | 7.25 | % | ||||||
| * | 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) | Comparative figures, including credit of the Isracard Group, were restated in order to present a discontinued operation separately from continued operations. For further details, see Note 1E to the Condensed Financial Statements | |
| (2) | Calculated on an annualized basis. | |
| (3) | 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 | |
| (4) | 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. | |
| (5) | For additional information, see the section "Liquidity and refinancing risk," in the Condensed Financial Statements. | |
| (6) | For additional information, see the section "Capital, capital adequacy, and leverage," in the Condensed Financial Statements. | |
| (7) | The return of net profit from continued operations, after separation from Isracard, may be influenced by processes of adjustment of capital in respect of the subtraction of risk-adjusted assets in the amount of approximately NIS 12 billion, as a result of the separation, and additional adjustments. | |
| Condensed financial information and principal performance indicators over time(1) (continued) | ||||||||||||||
| For the three months ended | For the six months ended | For the year ended December 31 | ||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | 2017 | 2016 | |||||||||
| Main credit quality indicators | ||||||||||||||
| Allowance for credit losses as a percentage of credit to the public(1) | 1.33 | % | 1.39 | % | 1.33 | % | 1.39 | % | 1.36 | % | 1.50 | % | ||
| Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public(1) | 1.30 | % | 1.34 | % | 1.30 | % | 1.34 | % | 1.31 | % | 1.83 | % | ||
| Net charge-offs as a percentage of average credit to the public(1) 2) | 0.15 | % | 0.03 | % | 0.17 | % | 0.25 | % | 0.21 | % | 0.18 | % | ||
| Provision for credit losses as a percentage of average credit to the public(1) 2) | 0.17 | % | (0.01 | %) | 0.21 | % | 0.11 | % | 0.08 | % | 0.07 | % | ||
| Main profit and loss data | ||||||||||||||
| NIS million | ||||||||||||||
| Net profit attributed to shareholders of the Bank | 950 | 469 | 2,498 | 2,048 | 2,660 | 2,628 | ||||||||
| Net profit attributed to shareholders of the Bank excluding extraordinary items(3) | 980 | 861 | 2,588 | 2,440 | 3,348 | *3,417 | ||||||||
| Net profit from continued operations attributed to shareholders of the Bank | 841 | 379 | 2,219 | 1,781 | 2,346 | 2,354 | ||||||||
| Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(3) | 871 | 771 | 2,309 | 2,173 | 3,034 | 3,143 | ||||||||
| Net interest income | 2,228 | 2,091 | 6,616 | 6,263 | 8,424 | 7,958 | ||||||||
| Provision for credit losses | 118 | (8 | ) | 424 | 213 | 202 | 179 | |||||||
| Net financing profit*** | 2,634 | 2,247 | 7,611 | 6,743 | 9,076 | 9,121 | ||||||||
| Non-interest income | 1,275 | 1,061 | 3,650 | 3,231 | 4,292 | 4,982 | ||||||||
| Of which: fees | 856 | 869 | 2,595 | 2,617 | 3,477 | 3,682 | ||||||||
| Operating and other expenses | 2,018 | 2,275 | 6,086 | 6,028 | 8,260 | 8,207 | ||||||||
| Of which: salaries and related expenses | 1,020 | **1,037 | 3,126 | **3,184 | **4,209 | **4,239 | ||||||||
| Total income | 3,503 | 3,152 | 10,266 | 9,494 | 12,716 | 12,940 | ||||||||
| Net earnings per ordinary share (in NIS) | ||||||||||||||
| Basic net earnings per share in NIS attributed to shareholders of the Bank from continued operations | 0.63 | 0.29 | 1.66 | 1.34 | 1.76 | 1.76 | ||||||||
| * | 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. | |
| ** | 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). | |
| (1) | Comparative figures, including credit of the Isracard Group, were restated in order to present a discontinued operation separately from continued operations. For further details, see Note 1E to the Condensed Financial Statements | |
| (2) | Calculated on an annualized basis. | |
| (3) | 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. | |
| Condensed financial information and principal performance indicators over time(1) (continued) | ||||||||||||||
| As at | For the year ended December 31 | |||||||||||||
| September 30, 2018 | September 30, 2017 | 2017 | 2016 | |||||||||||
| NIS million | ||||||||||||||
| Main balance sheet data | ||||||||||||||
| Total assets | 447,921 | 449,815 | 454,424 | 448,105 | ||||||||||
| Of which: cash and deposits with banks | 77,622 | 85,596 | 86,093 | 80,367 | ||||||||||
| Securities | 57,943 | 64,173 | 65,416 | 71,429 | ||||||||||
| Net credit to the public | 275,806 | 262,356 | 265,853 | 258,691 | ||||||||||
| Net problematic credit risk | 7,026 | 7,180 | 6,822 | 7,358 | ||||||||||
| Net impaired balance sheet debts | 2,238 | 2,261 | 2,097 | 3,094 | ||||||||||
| Total liabilities | 410,203 | 414,070 | 418,420 | 413,880 | ||||||||||
| Of which: deposits from the public | 341,775 | 342,740 | 347,344 | 338,494 | ||||||||||
| Deposits from banks | 4,357 | 3,044 | 3,649 | 4,077 | ||||||||||
| Bonds and subordinated notes | 28,647 | 29,411 | 29,058 | 33,560 | ||||||||||
| Shareholders’ equity | 37,613 | 35,591 | 35,863 | 34,047 | ||||||||||
| Impaired credit to the public not accruing interest income (NPL) | 2,218 | 2,179 | 2,073 | 3,480 | ||||||||||
| Additional data | ||||||||||||||
| Share price at end of period (in NIS) | 26.6 | 24.7 | 25.6 | 22.9 | ||||||||||
| For the three months ended | For the nine months ended | For the year ended December 31 | ||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | 2017 | 2016 | |||||||||
| Total dividend per share (in agorot)* | - | 24.37 | 37.17 | 26.08 | 64.53 | 51.44 | ||||||||
| Ratio of fees to average assets | 0.19 | % | 0.28 | % | 0.57 | % | 0.58 | % | 1.14 | % | 1.18 | % | ||
| * | According to the date of declaration. | |
| (1) | Comparative figures, including credit of the Isracard Group, were restated in order to present a discontinued operation separately from continued operations. For further details, see Note 1E to the Condensed Financial Statements. |