Bank Hapoalim (TASE: POLI) published its second quarter financials today, and reported a net quarterly profit of NIS 1.9 billion, 43% higher than in the corresponding quarter of 2022, and similar to the profit for the first quarter of this year, which was NIS 2 billion.
The NIS 3.9 billion profit for the first half year is compares with NIS 3 billion for the first half of 2022.
In the second quarter of 2023, the bank’s return on equity was an annualized 15.8%, which compares with 17% in the first quarter and 12.3% in the second quarter of 2022.
The bank said that the results reflected continued implementation of its strategy, which stresses responsible growth in its core business, and the impact of the interest rate and inflation environment, which has led to a lower demand for credit in the whole banking system. Bank Hapoalim’s credit portfolio grew by 2.9% in the first half of this year. The bank says that this growth was achieved while maintaining the balance between risk elements, profitability, and growth, and high credit quality metrics that match its appetite for risk. At the end of the second quarter, net credit to the public totaled NIS 400 billion, which compares with NIS 389 billion at the end of 2022.
In recent weeks, the banks have mostly extended credit to large businesses, while demand for credit from small businesses has shrunk. Bank Hapoalim reports a 3.6% decline in credit to small businesses to NIS 33.8 billion. The housing loan portfolio totaled NIS 129.3 billion at the end of the quarter, up 1.3% in comparison with the end of 2022.
Interest income for the second quarter totaled NIS 4.3 billion, some NIS 250 million more than in the first quarter and 34% more than in the corresponding quarter of 2022.
At the same time, the bank raised its credit loss provisions significantly. "Because of the continued economic uncertainty (and possible indications of a rise in economic risk), the bank continued to build additional reserves for credit losses in the current quarter," Bank Hapoalim states. The credit loss provision expense was NIS 579 million in the second quarter, which compares with NIS 185 million in the first quarter and NIS 91 million in the corresponding quarter of 2022.
Bank Hapoalim will distribute a dividend to shareholders totaling NIS 769 million, representing 40% of the net second quarter profit.
The bank’s efficiency ratio (operating expenses as a proportion of total revenue) continues to improve: it was 38.1% in the second quarter of this year, down from 48.8% in the corresponding quarter of 2022.
Published by Globes, Israel business news - en.globes.co.il - on August 14, 2023.
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