TEL AVIV, Israel, March 18, 2019 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE: POLI) (ADR: BKHYY), Israel's leading financial group, today announced its financial results for the fourth quarter and full year ended December 31, 2018.
Key highlights:
- A year of continued leadership in ongoing business activity.
- The Bank's credit portfolio grew by 6.3%.
- Income from regular financing activity grew by 8.9%.
- Net profit totaled NIS 2,595 million (7.1% ROE). Excluding provision in connection with the US investigation, net profit totaled NIS 3,579 million (9.7% ROE).
Key financial items:
- Total net profit in 2018 reached NIS 2,595 million compared with a net profit of NIS 2,660 million in 2017. Return on equity (ROE) stood at 7.1% in 2018, compared with 7.5% in 2017.
- Total net profit in 2018, excluding provision in connection with the investigations by the US authorities*, reached NIS 3,579 million, representing ROE of 9.7%.
- Credit growth: the Bank's total credit portfolio grew by 6.3% in 2018, totaling NIS 282.5 billion compared with NIS 265.9 billion at the end of 2017.
- The Bank continued to grow according to its strategic framework delivering 10.7% increase in commercial credit, 9.8% increase in corporate lending, and 9.9% increase in housing loans.
- The retail deposit base in Israel increased by 9.4% in 2018, totaling NIS 229.6 billion compared with NIS 209.7 billion at the end of 2017.
- Income from regular financing activity increased by 8.9%, totaling NIS 9,575 million in 2018, compared with NIS 8,795 million in 2017.
- Efficiency: The Bank continued to implement ongoing efficiency measures and in 2018 reduced over 500 employee positions. The Bank's cost-income ratio, excluding provision in connection with the investigations by the US authorities*, totaled 57.8% compared with 59.1% in 2017. Wage costs decreased by 2.7%.
- The Bank's Common equity Tier 1 capital ratio stood at 11.16% as at December 31, 2018, surpassing both regulatory requirements and internal capital targets.
* Expenses in respect of the provision in connection with the investigations of the US authorities totaling NIS 982 million and net expenses in respect of the discontinuation of the Bank's activity in Switzerland in the amount of NIS 2 million.
Key developments in the financial statements for the full year 2018:
- Total income from regular financing activity, totaled NIS 9,575 million in 2018 compared with NIS 8,795 million in 2017. The increase is attributable to the growth in business activity in Israel across all segments.
- Fees and other income in Israel, totaled NIS 3,287 million in 2018 compared with NIS 3,267 million in 2017.
- Net provision for credit losses, totaled NIS 613 million in 2018, 0.22% of the average credit to the public, compared with NIS 202 million, 0.08% of the average credit to the public in 2017.
- Gross provision for credit losses, before recoveries, stood at 0.58% in 2018, compared with 0.55% in 2017.
- Operating and other expenses, totaled NIS 8,960 million in 2018, compared with NIS 8,121 million in 2017. The increase in expenses primarily resulted from an increase in the provision in connection with the investigations of the US authorities and related expenses. Excluding these effects, operating expenses decreased.
- Salary expenses, totaled NIS 4,097 million in 2018, compared with NIS 4,209 million in 2017. The decrease in salary expenses resulted from continued cost savings due to ongoing efficiency measures.
- Social responsibility - The Bank continues to lead in contribution to the community in the form of financial donations, which totaled approximately NIS 36 million in 2018, especially in assisting the periphery and encouraging social mobility in the field of education, culture and welfare.
Key developments in Balance Sheet items:
- Consolidated balance sheet, as at December 31, 2018 totaled NIS 460.9 billion, compared with NIS 454.4 billion at the end of 2017, an increase of 1.4%.
- Net Credit to the public, totaled NIS 282.5 billion, compared with NIS 265.9 billion at the end of 2017, a significant increase of 6.3%, resulting mainly from the increase in commercial credit, corporate lending and housing loans.
- Housing loans in Israel, totaled NIS 81.5 billion compared with NIS 74.1 billion at the end of 2017, an increase of 9.9%, this while increasing the Bank's market share in this segment.
- Credit to small businesses in Israel, totaled NIS 32.6 billion compared with NIS 32.4 billion at the end of 2017, an increase of 0.5%.
- Consumer credit in Israel, totaled NIS 44.1 billion compared with NIS 45.9 billion at the end of 2017, a decrease of 3.8%.
- Credit to the commercial segment in Israel, totaled NIS 37.5 billion compared with NIS 33.9 billion at the end of 2017, a sharp increase of 10.7%, continuing the growth trend experienced in recent years.
- Credit to the corporate segment, in Israel totaled NIS 71.9 billion compared with NIS 65.5 billion at the end of 2017, a significant increase of 9.8%.
- Deposits from the public, totaled NIS 352.3 billion compared with NIS 347.3 billion at the end of 2017, an increase of 1.4%.
- Retail deposits in Israel, totaled NIS 229.6 billion compared with NIS 209.7 billion at the end of 2017, an increase of 9.4%.
- Shareholders' equity, totaled NIS 37.5 billion as at December 31, 2018, compared with NIS 35.9 billion at the end of 2017, an increase of 4.7%.
- Total capital ratio stood at 14.39% as at December 31, 2018, compared with 14.64% as at December 31, 2017.
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/ 11:00 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: This press release and the conference call do not replace the need to refer to 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.
The press release was prepared for convenience only. In case of any discrepancy, the Bank's reported financial statements in Hebrew will prevail.
About Bank Hapoalim:
Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group operates 225 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. Bank Hapoalim is listed on the Tel Aviv Stock Exchange (TASE: POLI) and holds a Level-1 ADR program. 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 (5) | ||||||||||
| For the year ended December 31 | ||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | ||||||
| Main performance indicators | ||||||||||
| Return of net profit on equity attributed to shareholders of the Bank | 7.06% | 7.50% | 7.72% | 9.61% | 9.10% | |||||
| Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(1) | 9.74% | 9.44% | *10.04% | 9.61% | 10.90% | |||||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank(6) | 6.07% | 6.61% | 6.92% | 8.74% | 7.98% | |||||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(1)(6) | 8.75% | 8.55% | 9.23% | 8.74% | 9.82% | |||||
| Return on average assets | 0.57% | 0.59% | 0.60% | 0.73% | 0.71% | |||||
| Ratio of income to average assets | 2.29% | 1.99% | 2.07% | 2.13% | 2.28% | |||||
| Efficiency ratio – cost-income ratio from continued operations | 65.05% | **64.57% | **63.24% | 59.63% | 64.91% | |||||
| Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations(1) | 57.82% | **59.10% | **59.22% | 59.63% | 60.48% | |||||
| Financing margin from regular activity(2) | 2.31% | 2.13% | 2.05% | 2.05% | 2.24% | |||||
| Liquidity coverage ratio(3) | 120% | 122% | 124% | 99% | - | |||||
| December 31 | ||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | ||||||
| Ratio of common equity Tier 1 capital to risk components(4) | 11.16% | 11.26% | 11.01% | 9.63% | 9.29% | |||||
| Ratio of total capital to risk components(4) | 14.39% | 14.64% | 15.11% | 14.36% | 14.60% | |||||
| Leverage ratio(4) | 7.51% | 7.37% | 7.25% | 7.10% | - | |||||
| * | 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 customers 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. |
| ** | Reclassified. Expenses in respect of insurance for Sale Law guarantees are stated as a reduction of income from financing transaction fees, instead of being recorded within the “other expenses” item. |
| (1) | Does not include expenses in respect of the efficiency plan, the update of the provision in connection with the investigation of the Bank Group’s business with American customers, and income and costs in respect of the discontinuation of activity in Switzerland. |
| (2) | 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. |
| (3) | For additional information, see the section “Liquidity and refinancing risk,” in the Condensed Financial Statements. The Bank has applied the liquidity coverage ratio directive as of April 1, 2015. |
| (4) | For additional information, see the section “Capital, capital adequacy, and leverage,” in the Condensed Financial Statements. The Bank has applied the Basel 3 directives as of January 1, 2014, and the leverage ratio directives as of April 28, 2015. |
| (5) | Does not include the data of the Isracard Group, which constitutes a discontinued operation. Comparative figures have been restated accordingly. For details, see Note 1G to the Financial Statements. |
| (6) | 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 12.5 billion, as a result of the separation, and additional adjustments. |
| Condensed financial information and principal performance indicators over time (2) (continued) | ||||||||||
| For the year ended December 31 | ||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | ||||||
| Main credit quality indicators | ||||||||||
| Allowance for credit losses as a percentage of credit to the public | 1.31% | 1.36% | 1.50% | 1.58% | 1.58% | |||||
| Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public | 1.23% | 1.31% | 1.83% | 2.27% | 2.80% | |||||
| Net charge-offs as a percentage of average credit to the public | 0.20% | 0.21% | 0.18% | 0.08% | 0.06% | |||||
| Provision for credit losses as a percentage of average credit to the public | 0.22% | 0.08% | 0.07% | 0.17% | 0.16% | |||||
| NIS millions | ||||||||||
| Main profit and loss data | ||||||||||
| Net profit attributed to shareholders of the Bank | 2,595 | 2,660 | 2,628 | 3,082 | 2,713 | |||||
| Net profit attributed to shareholders of the Bank excluding extraordinary items(1) | 3,579 | 3,348 | 3,417 | 3,082 | 3,264 | |||||
| Net profit from continued operations attributed to shareholders of the Bank | 2,231 | 2,346 | 2,354 | 2,802 | 2,386 | |||||
| Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(1) | 3,215 | 3,034 | 3,143 | 2,802 | 2,937 | |||||
| Net interest income | 8,906 | 8,424 | 7,958 | 7,710 | 7,621 | |||||
| Provision (income) for credit losses | 613 | 202 | 179 | 437 | 405 | |||||
| Net financing profit*** | 10,351 | 9,076 | 9,121 | 8,744 | 8,495 | |||||
| Non-interest income | 4,868 | *4,153 | *4,917 | 4,996 | 4,800 | |||||
| Of which: fees | 3,318 | *3,338 | *3,617 | 3,838 | 3,814 | |||||
| Operating and other expenses | 8,960 | *8,121 | *8,142 | 7,577 | 8,063 | |||||
| Of which: salaries and related expenses | 4,097 | **4,209 | **4,239 | **4,467 | **4,926 | |||||
| Total income | 13,774 | *12,577 | *12,875 | 12,706 | 12,421 | |||||
| Net earnings per ordinary share (in NIS) | ||||||||||
| Basic net earnings per share in NIS attributed to shareholders of the Bank from continued operations | 1.68 | 1.76 | 1.77 | 2.11 | 1.80 | |||||
| * | Reclassified. Expenses in respect of insurance for Sale Law guarantees are stated as a reduction of income from financing transaction fees, instead of being recorded within the “other expenses” item. |
| ** | Pursuant to the directives of the Bank of Israel, certain actuarial cost components of employee benefits were reclassified from salary expenses to other expenses. For further details, see Note 1D(3) to the Financial Statements. |
| *** | Net financing profit includes net interest income and non-interest financing income (expenses). |
| (1) | Does not include expenses in respect of the efficiency plan, the update of the provision in connection with the investigation of the Bank Group's business with American customers, and income and costs in respect of the discontinuation of activity in Switzerland. |
| (2) | Does not include the data of the Isracard Group, which constitutes a discontinued operation. Comparative figures have been restated accordingly. For details, see Note 1G to the Financial Statements. |
| Condensed financial information and principal performance indicators over time (1) (continued) | ||||||||||
| December 31 | ||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | ||||||
| NIS millions | ||||||||||
| Main balance sheet data | ||||||||||
| Total assets | 460,926 | 454,424 | 448,105 | 431,638 | 407,794 | |||||
| Of which: Cash and deposits with banks | 84,459 | 86,093 | 80,367 | 64,964 | 54,961 | |||||
| Securities | 56,116 | 65,416 | 71,429 | 62,865 | 58,758 | |||||
| Net credit to the public | 282,507 | 265,853 | 259,878 | 267,480 | 254,107 | |||||
| Net problematic credit risk | 6,944 | 6,822 | 7,358 | 9,171 | 12,648 | |||||
| Net impaired balance sheet debts | 2,158 | 2,121 | 3,094 | 4,257 | 5,384 | |||||
| Total liabilities | 423,270 | 418,420 | 413,880 | 398,419 | 376,183 | |||||
| Of which: Deposits from the public | 352,260 | 347,344 | 338,494 | 321,718 | 297,221 | |||||
| Deposits from banks | 4,528 | 3,649 | 4,077 | 4,542 | 4,322 | |||||
| Bonds and subordinated notes | 30,024 | 29,058 | 33,560 | 34,475 | 33,671 | |||||
| Shareholders’ equity | 37,544 | 35,863 | 34,047 | 33,032 | 31,361 | |||||
| Credit to the public not accruing interest income (NPL) | 2,178 | 2,073 | 3,480 | 4,928 | 5,845 | |||||
| Additional data | ||||||||||
| Share price at end of year (in NIS) | 23.7 | 25.6 | 22.9 | 20.1 | 18.4 | |||||
| For the year ended December 31 | ||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | ||||||
| Total dividend per share (in agorot)** | 37.17 | 64.53 | 51.44 | 42.87 | 33.83 | |||||
| Average number of employee positions(1) | 9,723 | 10,228 | 10,556 | 11,025 | 11,560 | |||||
| Ratio of net interest income to average assets | 1.97% | 1.87% | 1.80% | 1.88% | 2.04% | |||||
| Ratio of fees to average assets | 0.73% | *0.74% | *0.82% | 1.26% | 1.37% | |||||
| * | Reclassified. Expenses in respect of insurance for Sale Law guarantees are stated as a reduction of income from financing transaction fees, instead of being recorded within the "other expenses" item. |
| ** | According to the date of declaration. |
| (1) | Does not include the data of the Isracard Group, which constitutes a discontinued operation. Comparative figures have been restated accordingly. For details, see Note 1G to the Financial Statements. |