- Net profit for the quarter totaled NIS 821 million, an increase of 31% compared with corresponding quarter, return on equity of 9.0% -
- Income from regular financing activity grew by 7.8% -
TEL AVIV, Israel, May 29, 2019 (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, 2019.
Key financial highlights:
- Total net profit - reached NIS 821 million, compared with a net profit of NIS 628 million in the corresponding quarter of 2018, an increase of 31% (excluding provision in connection with the investigations by the US authorities, net profit in the corresponding period totaled NIS 688 million).
- Return on equity (ROE) - reached 9.0%, compared with 7.2 % in the corresponding quarter of 2018 (excluding provision in connection with the investigations by the US authorities, ROE in the corresponding quarter stood at 7.9%).
- Income from regular financing activity - totaled NIS 2,396 million compared with NIS 2,222 million in the corresponding quarter of 2018, an increase of 7.8%.
- Cost income ratio - totaled 59.2% for the first quarter of 2019, compared with 62.1% in the corresponding quarter of 2018 (excluding provision in connection with the investigations by the US authorities, cost income ratio in the corresponding quarter of 2018 totaled 60.3%).
- Housing loans totaled NIS 83.1 billion compared with NIS 81.5 billion at the end of 2018, an increase of 2.1%.
- Commercial credit totaled NIS 38.2 billion compared with NIS 37.5 billion at the end of 2018, an increase of 1.9%.
- Net credit to the public, totaled NIS 283.0 billion, compared with NIS 282.5 billion at the end of 2018, an increase of 0.2%.
- Gross provision for credit losses, stood at 0.45% in the first quarter of 2019, compared with 0.69% in the corresponding quarter of 2018.
- Common Equity Tier 1 capital ratio - stood at 11.45% as at March 31, 2019, surpassing both regulatory and Board of Director's capital targets.
Latest developments:
- On April 15, 2019, the CEO of the Bank, Mr. Ari Pinto, advised the Board of Directors of his decision not to renew his employment contract as Chief Executive Officer for another term, and of his intention to retire from this position on December 31, 2019, at the end of his employment contract. On May 5, 2019, the Board of Directors appointed a search committee for his replacement.
- On April 8, 2019 the Bank completed a public sale offering of 65.2% of Isracard Ltd., for a total (gross) consideration of NIS 1.76 billion, reflecting a value of NIS 2.7 billion for the company. As a result of the transaction, the Bank will record a net profit of NIS 210 million in its financial statements for the second quarter of 2019. The Bank continues to hold 33% of Isracard share capital.
- As a result of the sale of Isracard the Bank accumulated additional capital surplus in the amount of approximately NIS 1.3 billion. Further to the coordination with the Banking Supervision Department, the Board of Directors of the Bank instructed the Board of Management to formulate a plan for a buyback of shares of the Bank against this capital surplus, to be executed over a period of time, subject to the directives of the law and of the Banking Supervision Department on this matter. The implementation, volume, and terms of the plan are subject to resolution and approval by the Board of Directors of the Bank.
Key developments in the financial statements for the first quarter of 2019:
- Total income from regular financing activity, totaled NIS 2,396 million in the first quarter of 2019, compared with NIS 2,222 million in the same period last year. The increase is attributed to the growth in business activity according of the Bank's strategic directive.
- Fees and other income, totaled NIS 787 million in the first quarter of 2019, compared with NIS 817 million in the same period last year, a decline of 3.7%.
- Net provision for credit losses, totaled NIS 121 million in the first quarter of 2019, 0.17% of the average credit to the public, compared with NIS 216 million, 0.32% of the average credit to the public.
- Gross provision for credit losses, stood at 0.45% in the first quarter of 2019, compared with 0.69% in the same period last year.
- Operating and other expenses, totaled NIS 1,877 million in the first quarter of 2019, compared with NIS 1,965 million in same period last year, a decline of 4.5%, due in part to the provision made in the first quarter of 2018 in relation to the investigations by the US authorities.
Key developments in Balance Sheet items for the first quarter of 2019:
- Consolidated balance sheet, as at March 31, 2019 totaled NIS 465.8 billion, compared with NIS 460.9 billion at the end of 2018, an increase of 1.1%.
- Net credit to the public, totaled NIS 283.0 billion, compared with NIS 282.5 billion at the end of 2018, an increase of 0.2%, led mainly by the increase in commercial credit and housing loans and mainly offset by the decline in consumer and small business credit.
- Consumer credit in Israel, totaled NIS 43.4 billion compared with NIS 44.1 billion at the end of 2018, a decline of 1.5%.
- Housing loans in Israel, totaled NIS 83.1 billion compared with NIS 81.5 billion at the end of 2018, an increase of 2.1%.
- Credit to small business in Israel, totaled NIS 32.1 billion compared with NIS 32.6 billion at the end of 2018, a decline of 1.4%.
- Credit to the commercial segment in Israel, totaled NIS 38.2 billion compared with NIS 37.5 billion at the end of 2018, an increase of 1.9%.
- Credit to the corporate segment in Israel, totaled NIS 72.0 billion compared with NIS 71.9 billion at the end of 2018, an increase of 0.1%.
- Deposits from the public, totaled NIS 354.2 billion compared with NIS 352.3 billion at the end of 2018, an increase of 0.6%.
- Deposits from consumers in Israel, totaled NIS 187.8 billion compared with NIS 187.1 billion at the end of 2018, an increase of 0.4%.
- Deposits from small businesses in Israel, totaled NIS 42.9 billion compared with NIS 42.4 billion at the end of 2018, an increase of 1.0%.
- Shareholders' equity, totaled NIS 38.5 billion, compared with NIS 37.5 billion at the end of 2018, an increase of 2.5%.
- Total capital ratio, stood at 14.45% as at March 31, 2019 compared with 14.39% as at December 31, 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 operates 225 full-service retail branches, 12 regional business centers and specialized industry relationship managers for major corporate customers. The Bank Hapoalim Group includes holdings in 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
Table 1-1: Condensed financial information and principal performance indicators over time(1)
| For the three months ended March 31 | For the year ended December 31 | |||||||
| 2019 | 2018 | 2018 | ||||||
| Main performance indicators | ||||||||
| Return of net profit on equity attributed to shareholders of the Bank(2) | 8.97% | 7.16% | 7.06% | |||||
| Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(2)(3) | 8.97% | 7.86% | 9.74% | |||||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank(2)(7) | 7.94% | 6.26% | 6.07% | |||||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(2)(3)(7) | 7.94% | 6.96% | 8.75% | |||||
| Return on average assets(2) | 0.71% | 0.56% | 0.57% | |||||
| Ratio of income to average assets | 0.51% | 0.51% | 2.29% | |||||
| Efficiency ratio – cost-income ratio from continued operations | 59.23% | *62.14% | 65.05% | |||||
| Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations(3) | 59.23% | *60.25% | 57.70% | |||||
| Financing margin from regular activity(2)(4) | 2.24% | 2.17% | 2.31% | |||||
| Liquidity coverage ratio(5) | 125% | 120% | 120% | |||||
| As at March 31 | As at December 31 | |||||||
| 2019 | 2018 | 2018 | ||||||
| Ratio of common equity Tier 1 capital to risk components(6) | 11.45% | 11.05% | 11.16% | |||||
| Ratio of total capital to risk components(6) | 14.45% | 14.06% | 14.39% | |||||
| Leverage ratio(6) | 7.58% | 7.38% | 7.51% | |||||
| * 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 the data of the Isracard Group, which constitutes a discontinued operation. | ||||||||
| (2) Calculated on an annualized basis. | ||||||||
| (3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers, 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 12.5 billion, as a result of the separation, and additional adjustments. | ||||||||
Table 1-1: Condensed financial information and principal performance indicators over time(1) (continued)
| For the three months ended March 31 | For the year ended December 31 | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Main credit quality indicators | |||||||||
| Allowance for credit losses as a percentage of credit to the public(1) | 1.33% | 1.37% | 1.31% | ||||||
| Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public(1) | 1.35% | 1.27% | 1.23% | ||||||
| Net charge-offs as a percentage of average credit to the public(1)(2) | 0.17% | 0.11% | 0.20% | ||||||
| Provision for credit losses as a percentage of average credit to the public(1)(2) | 0.17% | 0.32% | 0.22% | ||||||
| Main profit and loss data | |||||||||
| NIS millions | |||||||||
| Net profit attributed to shareholders of the Bank | 821 | 628 | 2,595 | ||||||
| Net profit attributed to shareholders of the Bank excluding extraordinary items(3) | 821 | 688 | 3,579 | ||||||
| Net profit from continued operations attributed to shareholders of the Bank | 730 | 551 | 2,231 | ||||||
| Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(3) | 730 | 611 | 3,215 | ||||||
| Net interest income | 2,277 | 2,086 | 8,906 | ||||||
| Provision for credit losses | 121 | 216 | 613 | ||||||
| Net financing profit** | 2,366 | 2,314 | 10,351 | ||||||
| Non-interest income | 892 | *1,076 | 4,868 | ||||||
| Of which: fees | 785 | *826 | 3,318 | ||||||
| Operating and other expenses | 1,877 | *1,965 | 8,960 | ||||||
| Of which: salaries and related expenses | 1,043 | 1,044 | 4,097 | ||||||
| Total income | 3,169 | *3,162 | 13,774 | ||||||
| Net earnings per ordinary share (in NIS) | |||||||||
| Net profit attributed to shareholders of the Bank | 0.62 | 0.47 | 1.95 | ||||||
| * 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. | |||||||||
| ** Net financing profit includes net interest income and non-interest financing income (expenses). | |||||||||
| (1) Does not include the data of the Isracard Group, which constitutes a discontinued operation. | |||||||||
| (2) Calculated on an annualized basis. | |||||||||
| (3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers, and costs in respect of the discontinuation of activity in Switzerland. | |||||||||
Table 1-1: Condensed financial information and principal performance indicators over time(1) (continued)
| As at March 31 | As at December 31 | |||||||
| 2019 | 2018 | 2018 | ||||||
| NIS millions | ||||||||
| Main balance sheet data | ||||||||
| Total assets | 465,778 | 448,195 | 460,926 | |||||
| Of which: Cash and deposits with banks | 78,332 | 78,125 | 84,459 | |||||
| Securities | 66,259 | 61,508 | 56,116 | |||||
| Net credit to the public | 283,048 | 270,793 | 282,507 | |||||
| Net problematic credit risk | 7,256 | 6,992 | 6,944 | |||||
| Net impaired balance sheet debts | 2,344 | 2,030 | 2,158 | |||||
| Credit to the public not accruing interest income (NPL) | 2,476 | 1,973 | 2,178 | |||||
| Total liabilities | 427,207 | 411,979 | 423,270 | |||||
| Of which: Deposits from the public | 354,232 | 344,703 | 352,260 | |||||
| Deposits from banks | 3,328 | 3,102 | 4,528 | |||||
| Bonds and subordinated notes | 29,695 | 26,214 | 30,024 | |||||
| Shareholders’ equity | 38,481 | 36,084 | 37,544 | |||||
| Additional data | ||||||||
| Share price at end of period (in NIS) | 24.2 | 24.0 | 23.7 | |||||
| For the three months ended March 31 | For the year ended December 31 | |||||||
| 2019 | 2018 | 2018 | ||||||
| Total dividend per share (in agorot)** | - | 18.35 | 37.17 | |||||
| Ratio of fees to average assets | 0.17% | *0.18% | 0.73% | |||||
| * 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. | ||||||||