Bank Hapoalim, managed by Yadin Antebi, today reported a net profit of NIS 7.6 billion for the full year 2024. Net profit grew by 3.7% in comparison with the previous year, and was negatively affected by expenses recorded for the voluntary retirement plan that the bank announced at the end of last year. These swelled the "other expenses" item by NIS 600 million. As a result of the plan, net profit in the fourth quarter of the year fell by 12% to NIS 1.56 billion.
There is also a novelty in the reports published by Bank Hapoalim this morning (Monday). For the first time in years in the banking system, the bank presents measurable targets for the next two years. According to the bank's plans, it will post a net profit of NIS 8.5-9.5 billion in each of the years 2025 and 2026. It is also expected to record a return on capital of 14-15% (which compares with 13.8% in 2024, and 15% and 14.8% in the previous two years).
Another point of interest is that the bank plans to distribute half of its profits in each of the next two years, but this is of course subject to the agreement of the Bank of Israel, since currently the maximum distribution permitted by the Supervisor of Banks is 40% of the bank's profits. If the Supervisor, Daniel Hahiashvili, allows such a distribution, this will mean a dividend of about NIS 18 billion in the next two years.
Net interest income NIS 17 billion
Net interest income grew by 5.4% in 2024 to NIS 17 billion. Among the reasons cited by the bank for this increase in income were the rise in the Consumer Price Index, to which a portion of its loans are linked. The bank’s own activity in the capital market also boosted its profit. Share purchases and the bank's buyback of its own bonds generated gains of NIS 260 million for the year.
Hapoalim's credit loss expense fell to NIS 693 million, representing a sharp decrease of 63% in comparison with 2023. However, it should be emphasized that, in the final quarter of that year, the banks made heavy general provisions at the behest of the Supervisor, because of serious concerns about the consequences of the war that broke out at that time. The credit loss expense as a percentage of total credit to the public was relatively low, at 0.16%, down from 0.46% a year earlier.
Governor of the Bank of Israel Amir Yaron and many other senior figures in the economy have expressed concern about growing risk in the housing market. Bank Hapoalim addresses the issue briefly. In the Construction and Real Estate section it explains that the disruption caused by the war led to a shortage of manpower, which extended average construction time and slowed down new building starts. However, it describes "a degree of recovery" in the industry during 2024, noting that "during the year there was a significant increase in the rate of sales" thanks to financing promotions "that developers use to promote sales (subsidizing of financing costs by developers and/or substantial postponement of payments to the delivery date)."
These promotions, better known as 20/80 or 10/90 promotions, in which the customer pays a small portion of the cost of the apartment at the beginning and takes out a mortgage to cover the balance when it is handed over to him, may, according to various estimates, be a source of systemic risk that is still very difficult to quantify. Hapoalim notes that the high level of interest rates is also a potential threat to the level of risk in the industry, as is the continuing rise in construction costs, along with a shortage of workers and erosion of the purchasing power of households.
The bank says that it is increasing provisions and monitoring developments. The report states that the bank "is working to identify direct effects on the borrower portfolio, through ongoing monitoring and, if necessary, re-rating and/or classifying loans as problem debt, taking account of borrowers' current situation." It also adds that the bank "made adjustments to the calculation of the group provision, which led to an increase in the rate of provisions in this sector, to reflect the potential impact of these trends on credit risk in it."
No relief on fees
From the consumer’s point of view, there was no good news in the fees item. It amounted to NIS 4.05 billion, but at least this figure is similar to that for the previous year, and hardly grew relative to the bank's other income and expense items. Among the items that increased were the fees charged for securities activities, up 16% to NIS 783 million in 2024. On the other hand, account management fees charged by the bank fell by 3.7% to NIS 856 million.
As stated, at the end of last year Bank Hapoalim announced an efficiency program based on voluntary retirement for the years 2025 to 2028. This is a program that the banks says is intended to improve operational efficiency and procedures as part of the bank's preparation for the changes taking place in the banking world. It involves reducing the bank's workforce by 770 employees. According to the 2024 results published today, the bank's workforce stood at 8,354 employees at the end of the past year, which compares with 8,104 at the end of the previous year.
Published by Globes, Israel business news - en.globes.co.il - on March 3, 2025.
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