Bank Hapoalim to distribute 40% of NIS 1.94b Q1 profit

Bank Hapoalim CEO Dov Kotler credit: Cadya Levy
Bank Hapoalim CEO Dov Kotler credit: Cadya Levy

The high dividend was agreed with the Bank of Israel, despite the regulator's instruction to the banks to consider more conservative dividends.

Bank Hapoalim (TASE: POLI) posted a net profit of NIS 1.94 billion in the first quarter of 2024, similar to the profit for the first quarter of 2023 (NIS 2 billion). The profit for the fourth quarter of 2023 was NIS 1.76 billion.

The bank’s return on equity was 14.6% in the first quarter of this year, which compares with 14.0% in the previous quarter and 17.0% in the corresponding quarter of 2023. The decline in comparison with the corresponding quarter was because of growth in the bank’s capital and a switch of customers’ balances from current accounts to deposits.

The bank’s board of directors has declared a dividend of NIS 775 million, or 40% of the quarterly net profit. The high dividend was made in consultation with the Bank of Israel, and comes despite the fact that, only last week, Supervisor of Banks Daniel Hahiashvili instructed the banks to consider a more conservative distribution because of the uncertainty caused by the war. Bank Hapoalim received the Bank of Israel’s consent to its dividend because of its large surplus capital.

The bank’s first quarter financials come two weeks after CEO Dov Kotler notified the board that he would be stepping down after five years in the post. The date of his departure will be determined in accordance with progress in appointing a successor.

Fall in revenue and deposits

Bank Hapoalim reported a 5% decline in revenue in the first quarter of this year in comparison with the corresponding quarter of 2023, to NIS 5 billion. The bank attributes the decline to a switch by customers from current accounts to interest bearing deposit accounts during the past year, and to a fall in income from index-linkage. Interest income totaled NIS 3.8 billion, down from NIS 4 billion in the corresponding quarter of 2023, but higher than in the final quarter of that year.

Deposits from the public totaled NIS 540 billion at the end of the quarter, 2.6% less than at the end of 2023. Deposits from private customers increased by 1.3%, but deposits from business customers fell.

The credit portfolio totaled NIS 411,3 billion at the end of the first quarter, representing growth of NIS 4 billion during the quarter. Credit to private customers in Israel totaled NIS 38 billion, representing a 0.9% rise. The housing loan portfolio grew by 0.7% to NIS 132 billion.

In credit to businesses, the trend was mixed. Credit to small businesses grew by 1.9% to NIS 33.3 billion, and commercial credit grew by 1.5% to NIS 60.2 billion. On the other hand, corporate credit, i.e., credit to large businesses, fell by 0.4%, to NIS 123.4 billion.

The bank posted income of NIS 14 million on its provision for credit losses, i.e., it reduced the provision, which compares with an expense of NIS 185 million in the corresponding quarter. The banks said that this was thanks to the quality of its credit portfolio, and a build-up of provisions in previous quarters.

Fees totaled NIS 970 million in the first quarter, almost the same as in the corresponding quarter.

"Financing income and fees were affected in the first quarter of the year too by benefits to customers to make it easier for them to deal with the consequences of the war," the bank said.

At the date of the publication of the financial statements, the value of benefits granted was NIS 240 million. If fully exploited, the benefits would total NIS 543 million.

Published by Globes, Israel business news - - on May 20, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Bank Hapoalim CEO Dov Kotler credit: Cadya Levy
Bank Hapoalim CEO Dov Kotler credit: Cadya Levy
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