US tax probe provision again depresses Hapoalim earnings

Arik Pinto  photo: Tamar Matsafi

Bank Hapoalim posted a profit of NIS 2.66 billion for 2017, giving ROE of just 7.5%.

Hapoalim posted a profit of NIS 2.66 billion for 2017, similar to its profit for 2016. 2017 is the second successive year in which Bank Hapoalim's bottom line has taken a hit from the investigation into allegations that it helped US customers evade taxes. The bank made a provision of NIS 700 million against the outcome of the investigation last year, as a result of which its return on equity was just 7.5%. In a normal year, the bank makes a return on equity of 9-10%.

Were it not for the provision on account of the investigation, 2017 could have been a strong year for Bank Hapoalim, with a profit of NIS 3.3 billion. The bank benefitted from fairly low provisions for credit losses last year, amounting to NIS 323 million, or 0.12% of its credit portfolio. Total provisions were low despite provisions of NIS 451 million against household credit. These were offset by recoveries on business lending amounting to NIS 824 million.

Financing income grew 6% last year to NIS 8.37 billion, and the bank's credit portfolio grew by 2.5% to NIS 279 billion.

In the fourth quarter of 2017, Bank Hapoalim made a profit of NIS 605 million. In this period too, the bank's results were depressed by provisions against the US investigation. So far, the bank has provided over NIS 1 billion for the investigation, and it is estimated that the fine it will eventually be required to pay will be even higher.

The bank, controlled by Shari Arison, distributed a dividend of NIS 1.06 billion on its 2017 profits.

The compensation of Bank Hapoalim CEO Arik Pinto and chairman Oded Eran is limited by law, and amounted to NIS 2.5 million each last year. The law does not apply to subsidiary companies, and Bank Hapoalim Switzerland CEO Orit Lerer had a salary cost of NIS 5.77 million last year, while the salary cost of her deputy Moshe Allouche was NIS 4.55 million. Bank Hapoalim Switzerland is in the process of closure.

Published by Globes [online], Israel business news - - on March 26, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Arik Pinto  photo: Tamar Matsafi
Arik Pinto photo: Tamar Matsafi
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