TEL AVIV, Israel, Aug. 15, 2019 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE: POLI) (ADR: BKHYY), Israel's leading financial group, today announced its financial results for the second quarter ended June 30, 2019.
Key financial highlights:
- Net profit - totaled NIS 871 million, compared with a net profit of NIS 920 million in the corresponding quarter of 2018, a decline of approximately 5.3%.
- Return on equity (ROE) - totaled 9.3%, compared with 10.5% in the corresponding quarter of 2018.
Excluding net capital gains in the amount of NIS 137 million from the public sale offering of Isracard*, and costs associated with the closure of the Bank’s international private banking operations, net profit for the reported quarter totaled NIS 800 million (ROE of 8.5%). - Income from regular financing activity - totaled NIS 2,572 million compared with NIS 2,470 million in the corresponding quarter of 2018, an increase of 4.1%.
- Cost income ratio - totaled 57.5% for the second quarter of 2019, (excluding costs associated with the closure of the Bank’s international private banking operations, cost income ratio stood at 55.5%) compared with 57.6% in the corresponding quarter of 2018.
- Net credit to the public - totaled NIS 288.6 billion, compared with NIS 282.5 billion at the end of 2018, an increase of 2.2%, of which:
Housing loans, totaled NIS 85.8 billion, compared with NIS 81.5 billion at the end of 2018, an increase of 5.3%.
Commercial credit, totaled NIS 38.7 billion, compared with NIS 37.5 billion at the end of 2018, an increase of 3.2%. - Common Equity Tier 1 capital ratio - stood at 11.97% as at June 30, 2019, surpassing both regulatory and internal capital targets.
* Net capital gains from the public sale offering of Isracard in the amount of approximately NIS 137 million represents capital gains in the amount of approximately NIS 210 million in respect of the part of the investment that has been sold, and in respect of revaluation of the remaining balance of the investment according to the value of the shares at the issuance date, net of a reduction to market price at the balance sheet date in the amount of approximately NIS 73 million.
Recent mentions:
- On July 15, 2019, the Board of Directors resolved, at the recommendation of its search committee, to appoint Mr. Dov Kotler as the next CEO of the bank, replacing Mr. Ari Pinto. Mr. Kotler will take office as CEO on October 1, 2019, subject to the approval of the Supervisor of Banks.
- A general meeting of shareholders convened on July 18, 2019, approving, amongst other agenda items, the reappointment of Mr. Oded Eran (Chairman of the Board) as a director who is not an external director of the bank, and the reappointment and appointment of several other directors.
- The international rating agencies S&P and Fitch upgraded their ratings of the bank in July 2019.
- The Bank published its Corporate and Social Responsibility Report for 2018. The report included an independent study examining the Bank's impact on the Israeli economy. The report and the independent study are available on the Bank's website. Coinciding with the publication of the report, the Bank was rated at the top of the local Maala ESG index for 2019, earning a Platinum Plus rating.
- The bank continued to expand its digital offering this quarter with the launch of Israel's first, fully- digital onboarding service (Poalim OPEN), allowing customers to open a new bank account remotely, in under seven minutes. Bit, the Bank's payment app, recently reached two million downloads, significantly ahead of other payment applications, gaining recognition as the brand leader in this important category.
Key developments in the financial statements for the second quarter of 2019:
- Total income from regular financing activity, totaled NIS 2,572 million in the second quarter of 2019, compared with NIS 2,470 million in the same period last year, an increase of 4.1%.
- Fees and other income in Israel, totaled NIS 815 million in the second quarter of 2019, compared with NIS 842 million in the same period last year, a decline of 3.2%.
- Net provision for credit losses, totaled NIS 319 million in the second quarter of 2019, 0.44% of the average credit to the public, compared with NIS 90 million in the same period last year, 0.13% of the average credit to the public.
Gross provision for credit losses, stood at 0.79% in the second quarter of 2019, compared with 0.46% in the same period last year. - Operating and other expenses, totaled NIS 1,992 million in the second quarter of 2019, compared with NIS 2,034 million in same period last year, a decline of 2.1%. The decline was mainly due to a decline in salary expenses associated with the Bank's ongoing efficiency measures.
Key developments in Balance Sheet items for the second quarter of 2019:
- Consolidated balance sheet, as at June 30, 2019 totaled NIS 454.2 billion, compared with NIS 460.9 billion at the end of 2018, a decline of 1.4%.
- Net credit to the public, totaled NIS 288.6 billion, compared with NIS 282.5 billion at the end of 2018, an increase of 2.2%, of which:
Consumer credit in Israel, totaled NIS 42.9 billion, compared with NIS 44.1 billion at the end of 2018, a decline of 2.8%.
Housing loans in Israel, totaled NIS 85.8 billion, compared with NIS 81.5 billion at the end of 2018, an increase of 5.3%.
Credit to small business in Israel, totaled NIS 31.6 billion, compared with NIS 32.6 billion at the end of 2018, a decline of 3.0%.
Credit to the commercial segment in Israel, totaled NIS 38.7 billion, compared with NIS 37.5 billion at the end of 2018, an increase of 3.2%.
Credit to the corporate segment in Israel, totaled NIS 75.7 billion, compared with NIS 71.9 billion at the end of 2018, an increase of 5.3%. The balance of credit in the second quarter of 2019 includes previously consolidated loans granted to the Isracard Group of approximately NIS 3.6 billion. - Deposits from the public, totaled NIS 352.1 billion, compared with NIS 352.3 billion at the end of 2018, of which:
Deposits from consumers in Israel, totaled NIS 188.0 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 44.1 billion, compared with NIS 42.4 billion at the end of 2018, an increase of 4.0%. - Shareholders' equity, totaled NIS 39.5 billion in the second quarter of 2019, compared with NIS 37.5 billion at the end of 2018, an increase of 5.2%.
- Total capital ratio, stood at 15.27% as at June 30, 2019, compared with 14.39% as at December 31, 2018.
Conference Call Information
Bank Hapoalim will host a conference call today to discuss its quarterly financial 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 prior to the call on the Bank's website at www.bankhapoalim.com, under Investor Relations, Financial Information.
A recording of the call will be available on the Bank's website at the above address one business day 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 222 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
Karen.mazor@poalim.co.il
| Table 1-1: Condensed financial information and principal performance indicators over time | |||||||||||
| For the three months ended June 30 | For the six months ended June 30 | For the year ended December 31 | |||||||||
| 2019 | 2018 | 2019 | 2018 | 2018 | |||||||
| Main performance indicators | |||||||||||
| Return of net profit on equity attributed to shareholders of the Bank(1) | 9.26 | % | 10.52 | % | 9.01 | % | 8.74 | % | 7.06 | % | |
| Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(1)(2) | 8.48 | % | 10.52 | % | 8.63 | % | 9.09 | % | 9.74 | % | |
| Return of net profit from continued operations on equity attributed to shareholders of the Bank(1)(6) | 7.61 | % | 9.42 | % | 7.70 | % | 7.76 | % | 6.07 | % | |
| Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(1)(2)(6) | 8.33 | % | 9.42 | % | 8.06 | % | 8.11 | % | 8.75 | % | |
| Return on average assets(1) | 0.77 | % | 0.81 | % | 0.74 | % | 0.69 | % | 0.57 | % | |
| Ratio of income to average assets | 1.09 | % | 1.10 | % | 2.29 | % | |||||
| Efficiency ratio – cost-income ratio from continued operations | 57.49 | % | *57.59 | % | 58.32 | % | *59.74 | % | 65.05 | % | |
| Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations(2) | 55.46 | % | *57.59 | % | 57.26 | % | *58.84 | % | 57.70 | % | |
| Financing margin from regular activity(1)(3) | 2.39 | % | 2.40 | % | 2.31 | % | 2.28 | % | 2.31 | % | |
| Liquidity coverage ratio(4) | 127 | % | 123 | % | 127 | % | 123 | % | 120 | % | |
| As at | December 31 | ||||||||||
| June 30, 2019 | June 30, 2018 | 2018 | |||||||||
| Ratio of common equity Tier 1 capital to risk components(5) | 11.97 | % | 11.16 | % | 11.16 | % | |||||
| Ratio of total capital to risk components(5) | 15.27 | % | 14.64 | % | 14.39 | % | |||||
| Leverage ratio(5) | 7.94 | % | 7.39 | % | 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) Calculated on an annualized basis.
(2) 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, costs in respect of the closure of the private-banking activity overseas,
and net profit from the sale of Isracard.
(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,” below.
(5) For additional information, see the section “Capital, capital adequacy, and leverage,” below.
(6) The return of net profit from continued operations is mainly influenced by the sale of approximately 65% of the
shares of Isracard, which generated additional capital surplus in the amount of approximately NIS 1.3 billion (of which
approximately NIS 0.3 billion in respect of a decrease in the operational risk of Isracard, which will be recognized
gradually, over a period of three years).
| Table 1-1: Condensed financial information and principal performance indicators over time (continued) | |||||||||||
| For the three months ended June 30 | For the six months ended June 30 | For the year ended December 31 | |||||||||
| 2019 | 2018 | 2019 | 2018 | 2018 | |||||||
| Main credit quality indicators | |||||||||||
| Allowance for credit losses as a percentage of credit to the public | 1.37 | % | 1.34 | % | 1.37 | % | 1.34 | % | 1.31 | % | |
| Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public | 1.30 | % | 1.41 | % | 1.30 | % | 1.41 | % | 1.23 | % | |
| Net charge-offs as a percentage of average credit to the public(1) | 0.13 | % | 0.25 | % | 0.15 | % | 0.18 | % | 0.20 | % | |
| Provision for credit losses as a percentage of average credit to the public(1) | 0.44 | % | 0.13 | % | 0.30 | % | 0.22 | % | 0.22 | % | |
| NIS millions | |||||||||||
| Main profit and loss data | |||||||||||
| Net profit attributed to shareholders of the Bank | 871 | 920 | 1,692 | 1,548 | 2,595 | ||||||
| Net profit attributed to shareholders of the Bank excluding extraordinary items(2) | 800 | 920 | 1,621 | 1,608 | 3,579 | ||||||
| Net profit from continued operations attributed to shareholders of the Bank | 720 | 827 | 1,450 | 1,378 | 2,231 | ||||||
| Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(3) | 786 | 827 | 1,516 | 1,438 | 3,215 | ||||||
| Net interest income | 2,466 | 2,302 | 4,743 | 4,388 | 8,906 | ||||||
| Provision (income) for credit losses | 319 | 90 | 440 | 306 | 613 | ||||||
| Net financing profit** | 2,632 | 2,663 | 4,998 | 4,977 | 10,351 | ||||||
| Non-interest income | 999 | *1,230 | 1,891 | *2,306 | 4,868 | ||||||
| Of which: fees | 804 | *844 | 1,589 | *1,670 | 3,318 | ||||||
| Operating and other expenses | 1,992 | *2,034 | 3,869 | *3,999 | 8,960 | ||||||
| Of which: salaries and related expenses | 1,018 | 1,062 | 2,061 | 2,106 | 4,097 | ||||||
| Total income | 3,465 | *3,532 | 6,634 | *6,694 | 13,774 | ||||||
| Net earnings per ordinary share (in NIS) | |||||||||||
| Net profit attributed to shareholders of the Bank | 0.65 | 0.69 | 1.27 | 1.16 | 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) Calculated on an annualized basis.
(2) 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, costs in respect of the closure of the private-banking activity overseas,
and net profit from the sale of Isracard.
(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 closure of the private-banking activity
overseas.
| Table 1-1: Condensed financial information and principal performance indicators over time (continued) | |||||||||||
| June 30 | December 31 | ||||||||||
| 2019 | 2018 | 2018 | |||||||||
| NIS millions | |||||||||||
| Main balance sheet data | |||||||||||
| Total assets | 454,247 | 451,366 | 460,926 | ||||||||
| Of which: Cash and deposits with banks | 72,913 | 83,261 | 84,459 | ||||||||
| Securities | 71,116 | 59,616 | 56,116 | ||||||||
| Net credit to the public | 288,623 | 272,458 | 282,507 | ||||||||
| Net problematic credit risk | 7,549 | 6,900 | 6,944 | ||||||||
| Net impaired balance sheet debts | 2,205 | 2,388 | 2,158 | ||||||||
| Credit to the public not accruing interest income (NPL) | 2,376 | 2,269 | 2,178 | ||||||||
| Total liabilities | 414,698 | 414,586 | 423,270 | ||||||||
| Of which: Deposits from the public | 352,112 | 345,717 | 352,260 | ||||||||
| Deposits from banks | 3,034 | 3,846 | 4,528 | ||||||||
| Bonds and subordinated notes | 30,080 | 29,949 | 30,024 | ||||||||
| Shareholders’ equity | 39,503 | 36,654 | 37,544 | ||||||||
| Additional data | |||||||||||
| Share price at end of year (in NIS) | 26.4 | 24.8 | 23.7 | ||||||||
| For the three months ended June 30 | For the six months ended June 30 | For the year ended December 31 | |||||||||
| 2019 | 2018 | 2019 | 2018 | 2018 | |||||||
| Total dividend per share (in agorot)** | - | 18.83 | - | 37.17 | 37.17 | ||||||
| Ratio of fees to average assets | 0.18 | % | *0.19% | 0.35 | % | *0.37% | 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.