Bank Hapoalim (TASE: POLI) is to resume paying dividends. Sources inform "Globes" that, last week, the bank received special approval from Supervisor of Banks David Zaken to distribute a dividend. The bank intends to announce the dividend officially in the next two weeks.
The bank's board will meet next week to approve payment of the dividend, and to set the bank's dividend policy. Hapoalim is expected to revert to it previous policy of distributing 50% of profits as a dividend, subject to maintaining a capital adequacy ratio of 7.5%. Since the bank's core capital adequacy ratio at the end of 2010 was 7.88%, there should be no obstacle to a 50% distribution.
Assuming that Bank Hapoalim maintains a return on equity of at least 10%, it will distribute of one billion shekels annually. However, the board is expected to decide that dividends should be paid half-yearly, and not quarterly as in the past.
Special permission was required from the Bank of Israel because Bank Hapoalim made a loss in 2008, and so, under Bank of Israel rules, it may not distribute a dividend for three years, unless specifically permitted to do so.
Bank Hapoalim is due to release its first quarter financials on Tuesday. A source familiar with the matter estimated that the first quarter results would be very good, with a profit of over NIS 800 million and a return on equity of 15%. Analysts expect Bank Hapoalim to report the highest first quarter profit of all the banks, and to overtake Bank Leumi for the first time since 2007.
Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2011
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