- Q1 net profit NIS 1.35 billion; return on equity 14.2%
- Credit portfolio grows by 1.4% for the quarter, mainly in the commercial and housing-loan segments
- Positive impacts on net profit: strong underlying business performance, improved macroeconomic indicators, increased financial-market activity
- Significant capital surplus – CET-1 capital ratio 11.67%
TEL AVIV, Israel, May 13, 2021 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE: POLI) (ADR: BKHYY), today announced its financial results for the first quarter ended March 31, 2021.
Key highlights:
- Net profit in the first quarter of 2021, totaled NIS 1,354 million, compared with NIS 192 million in same quarter last year. The results were supported by strong underlying business performance, an improvement in economic indicators, which led to a reduction of the collective provision for credit losses and increased activity in the financial markets.
- Return on equity (ROE) for the quarter stood at 14.2%, compared with 2.0% in the same quarter last year.
- Shareholders equity grew by 2.4% in the quarter to NIS 40.8 billion.
- The Common Equity Tier 1 (CET1) capital ratio as at March 31, 2021, stood at 11.67%, well above both regulatory (9.23%) and internal (9.5%) capital targets, indicating that dividend distribution may be resumed, subject to the required approvals, among other matters.
Balance sheet
- Net credit to the public, totaled NIS 306.1 billion, compared with NIS 301.8 billion at the end of 2020, an increase of 1.4%. Notably, the Bank grew its commercial middle market credit by 3.6% and its housing loans by 1.9%.
- Total deposits increased by 4.6% from the end of 2020 and 17.2% year-on-year, totaling NIS 455.4 billion. Retail deposits increased by 2.5% during the quarter.
Income statement
- Income from regular financing activity totaled NIS 2,338 million in the first quarter of 2021, an increase of 2.6% compared to the preceding quarter, driven by credit portfolio growth and strong capital markets activity. Income from regular financing activity was down by 6.0% compared to the first quarter of 2020, due to lower interest rates and higher COVID-19-related capital market activity in the corresponding quarter.
- Fee income totaled NIS 817 million, a 3.3% increase compared with the last quarter and continuing the positive momentum of recent quarters. The increase was mainly due to an increase in capital markets activity. Fees were down 5.3% year-on-year.
- Total expenses stayed almost flat, compared with the same quarter last year, totaling NIS 1,919 million in the first quarter of 2021. Salary and related expenses increased in the first quarter, compared to both the previous and corresponding quarters, due to an increase in the provision for bonuses, in line with the sharp increase in the bank's profitability. The underlying salary expenses reflect the further cost savings resulting from our efficiency programs. The cost income ratio for the first quarter of 2021 stood at 53.6%, compared with 56.6% in the same quarter last year.
- Net provision for credit losses recorded a net income of NIS 508 million in the quarter, or -0.66% of the average total credit to the public (annualized), compared with a net provision for credit losses of NIS 809 million in the first quarter of 2020, constituting 1.07% of the average total credit to the public (annualized). The main reason for the year-on-year change was the reduction in the collective allowance for credit losses, supported by an improved macroeconomic environment, compared with an increase in the reserve in the corresponding quarter last year.
- Poalim Capital Markets, which serves as the non-financial investment arm of the Bank, contributed quarterly profit of NIS 109 million to the results of operations of the Bank, compared with profit of approximately NIS 12 million in the same period last year.
Recent developments:
- COVID-19: The bank remains committed to supporting its employees, customers, and the community through the COVID-19 crisis. Among its many initiatives:
- Deferral of loan payments: The bank has continued to expand measures for its customers who are affected by COVID-19. Among other efforts, the bank is allowing customers to defer loan and mortgage payments, in order to provide cash-flow relief. Payment deferrals have been applied to loan balances of NIS 40.0 billion, in aggregate. The balance of loans in payment deferral has decreased substantially since the beginning of the crisis, falling to approximately NIS 5.1 billion by March 31, 2021, or 1.6% of total credit to the public.
- Participation in government guarantee program: The bank continues to offer loans to businesses under the program. As at end of March 2021, the bank has provided loans to its customers in an amount of approximately NIS 6.0 billion, approximately NIS 4.6 billion (77%) of which have been granted to small businesses and microbusinesses, and the balance to mid-sized and large businesses.
- Digital wallet: In February 2021, the bank entered the digital wallet universe with its launch of Bit Wallet, an advanced payment platform open to customers of all banks (for smartphones running Android operating systems), and the Bitcard, a credit card offering special benefits. Bit customers can now pay for purchases directly from their mobile devices, without the need to present a credit card at the point of sale. This completes the Bit revolution, which now encompasses all forms of payment: person-to-person transfers, rebates, online shopping, and contactless payment at any EMV-enabled point of sale in Israel or overseas.
Conference call information:
Bank Hapoalim will host a conference call today to discuss the results. The call will take place at 5:00 p.m. Israel time / 3:00 p.m. UK time / 10:00 a.m. US Eastern time. To access the conference call, please dial: +1-888-281-1167 toll-free from the United States, +0-800-917-5108 toll-free from the United Kingdom, or +972-3-918-0610 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 Hapoalim website at www.bankhapoalim.com, under Investor Relations > Financial Information. A recording of the conference 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 of 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, Bank Hapoalim operates 184 full-service retail branches, regional business centers and specialized industry relationship managers for major corporate customers. The Bank Hapoalim Group includes holdings in financial companies engaged 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
Please note: This press release was prepared for convenience only. In case of any discrepancy, the bank's reported financial statements in Hebrew will prevail.
Contact
Tamar Koblenz
Head of Investor Relations
T: +972 3 5673440
E: Tamar.koblenz@poalim.co.il
Table 1-1: Condensed financial information and principal performance indicators over time
| For the three months ended March 31 | For the year ended December 31 | ||||
| 2021 | 2020 | 2020 | |||
| Main performance indicators | |||||
| Return of net profit on equity attributed to shareholders of the Bank(1) | 14.2% | 2.0% | 5.3% | ||
| Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(1)(2) | 14.2% | 3.3% | 5.7% | ||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank(1) | 14.2% | 3.2% | 5.6% | ||
| Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(1)(3) | 14.2% | 3.3% | 5.7% | ||
| Return on average assets(1) | 1.0% | 0.2% | 0.4% | ||
| Ratio of income to average assets(1) | 1.97% | 2.16% | 1.99% | ||
| Ratio of fees to average assets(1) | 0.60% | 0.75% | 0.63% | ||
| Efficiency ratio – cost-income ratio from continued operations | 53.6% | 56.6% | 56.9% | ||
| Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations(3) | 53.6% | 56.3% | 56.7% | ||
| Financing margin from regular activity(1)(4) | 1.80% | 2.27% | 1.98% | ||
| Liquidity coverage ratio(5) | 139% | 126% | 140% | ||
| As at March 31 | December 31 | ||||
| 2021 | 2020 | 2020 | |||
| Ratio of common equity Tier 1 capital to risk components(6) | 11.67% | 11.21% | 11.52% | ||
| Ratio of total capital to risk components(6) | 14.65% | 14.16% | 14.60% | ||
| Leverage ratio(6) | 6.65% | 7.14% | 6.78% | ||
| (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 and FIFA, the effect of the closure of the private-banking activity overseas, loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif. | |||||
| (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 FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif. | |||||
| (4) Financing profit from regular activity (see the Report of the Board of Directors and Board of Management, Section 2.2, “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 Report of the Board of Directors and Board of Management. | |||||
| (6) For additional information, see the section "Capital, capital adequacy, and leverage," in the Report of the Board of Directors and Board of Management. | |||||
Condensed financial information and principal performance indicators over time (continued)
| For the three months ended March 31 | For the year ended December 31 | ||||
| 2021 | 2020 | 2020 | |||
| Main credit quality indicators | |||||
| Allowance for credit losses as a percentage of credit to the public | 1.82% | 1.73% | 2.00% | ||
| Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public | 1.53% | 1.68% | 1.52% | ||
| Net charge-offs as a percentage of average credit to the public(1) | 0.03% | 0.25% | 0.09% | ||
| Provision (income) for credit losses as a percentage of average credit to the public(1) | (0.66%) | 1.07% | 0.64% | ||
| Main profit and loss data | |||||
| NIS millions | |||||
| Net profit attributed to shareholders of the Bank | 1,354 | 192 | 2,056 | ||
| Net profit attributed to shareholders of the Bank excluding extraordinary items(2) | 1,354 | 313 | 2,205 | ||
| Net profit from continued operations attributed to shareholders of the Bank | 1,354 | 301 | 2,165 | ||
| Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(3) | 1,354 | 313 | 2,205 | ||
| Net interest income | 2,233 | 2,192 | 8,797 | ||
| Provision (income) for credit losses | (508) | 809 | 1,943 | ||
| Net financing profit* | 2,682 | 2,498 | 9,885 | ||
| Non-interest income | 1,348 | 1,191 | 4,379 | ||
| Of which: fees | 817 | 863 | 3,155 | ||
| Operating and other expenses | 1,919 | 1,916 | 7,501 | ||
| Of which: salaries and related expenses | 1,096 | 962 | 3,836 | ||
| Total income | 3,581 | 3,383 | 13,176 | ||
| Additional data | |||||
| Net profit per share attributed to shareholders of the Bank (in NIS) | 1.01 | 0.14 | 1.62 | ||
| Total dividend per share (in agorot)(4) | - | 53.94(5) | 53.94(5) | ||
| * 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 and FIFA, the effect of the closure of the private-banking activity overseas, loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif. | |||||
| (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 FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif. | |||||
| (4) According to the date of declaration. | |||||
| (5) Paid as a dividend in kind, in shares; calculated based on the Isracard share price on March 8, 2020 (NIS 10.91). | |||||
Condensed financial information and principal performance indicators over time (continued)
| March 31 | December 31 | ||||
| 2021 | 2020 | 2020 | |||
| NIS millions | |||||
| Main balance sheet data | |||||
| Total assets | 554,398 | 491,459 | 539,602 | ||
| Of which: Cash and deposits with banks | 159,943 | 89,475 | 138,711 | ||
| Securities | 64,798 | 74,500 | 71,885 | ||
| Net credit to the public | 306,117 | 299,548 | 301,828 | ||
| Net problematic credit risk | 9,349 | 8,468 | 9,754 | ||
| Net impaired balance sheet debts | 2,599 | 2,718 | 2,517 | ||
| Credit to the public not accruing interest income (NPL) | 3,282 | 3,650 | 3,208 | ||
| Total liabilities | 513,540 | 453,792 | 499,703 | ||
| Of which: Deposits from the public | 455,394 | 388,566 | 435,217 | ||
| Deposits from banks | 6,942 | 3,980 | 6,591 | ||
| Bonds and subordinated notes | 21,415 | 24,491 | 23,490 | ||
| Shareholders’ equity | 40,835 | 37,632 | 39,873 | ||
| Additional data | |||||
| Share price at end of period (in NIS) | 26.0 | 21.3 | 22.0 | ||