Restored credit losses boost Hapoalim Q2 profit to NIS 1.42b

Dov Kotler  credit: Eyal Izhar
Dov Kotler credit: Eyal Izhar

The bank's credit portfolio grew 5.8% in the quarter.

Bank Hapoalim (TASE: POLI), headed by Dov Kotler, posted a net profit of NIS 1.419 billion in the second quarter of 2021, the bank's quarterly financials released this morning show. This compares with a net profit of NIS 133 million in the second quarter of 2020. The bank's annualized return on equity was 14.5% in the second quarter of this year, which compares with 1.4% in the corresponding quarter of 2020. Net profit for the first half of 2021 was NIS 2.773 billion, and the annualized return on equity was 14.1%.

Alongside the growth in its business, the increase in Bank Hapoalim's profit stems from improvement in economic indicators that led to a reduction in the provision for credit losses arising from the coronavirus pandemic. This, together with recovery of loans against which specific provisions had been made, led to net income of NIS 647 million in the credit losses item in the quarter, which compares with a net expense of NIS 1.128 billion in the second quarter of 2020.

Another factor that contributed to the growth in revenue was the Consumer Price Index, which rose 1.3% in the second quarter of this year, leading to income from changes in the index applying to index-linked loans of NIS 190 million, compared with an expense of NIS 36 million in the second quarter of 2020, when the Consumer Price Index fell.

Credit to the public totaled NIS 323.8 billion at the end of the second quarter of this year, up 5.8% from NIS 306.1 billion at the end of March 2021, and 7.3% from the end of 2020.

Business credit led the growth trend, rising 10.4% in the second quarter. The bank extended housing credit of NIS 4.3 billion, representing growth of 4.3% in the quarter. At the end of the second quarter, housing loans totaled NIS 104.9 billion, up 6.3% from NIS 98.7 billion at the end of 2020.

Fee income in the second quarter of 2021 was NIS 802 million, which compares with NIS 746 million in the second quarter of 2020, when Covid-19 restrictions were in place.

Operating and other expenses totaled NIS 1,980 billion in the second quarter, up 8.4% from NIS 1.826 billion in the corresponding quarter, mainly because of growth in employee compensation arising from variable pay reflecting the improved profitability, alongside a reduction in other expenses that partially offset the rise in pay.

Shareholders' equity was NIS 42.3 billion at the end of the second quarter, which compares with NIS 39.9 billion at the end of 2020, representing a rise of 6.1%. The bank's liquidity coverage ratio continued to be high, at 140% at the end of the second quarter of 2021.

Published by Globes, Israel business news - en.globes.co.il - on August 16, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Dov Kotler  credit: Eyal Izhar
Dov Kotler credit: Eyal Izhar
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