Virus provision, tax probe push Hapoalim to Q4 loss

Dov Kotler / Photo: Gadi Dagon, ira prohorov

Bank Hapoalim's net profit in 2019 totaled NIS 1.799 billion, compared with NIS 2.595 billion in 2018, a 30.7% decrease.

Bank Hapoalim (TASE: POLI) reported its financial results today. In addition to an NIS 897 million shekel provision for settling the tax investigations against the bank in the US, which was reported yesterday, the bank is also revealing the extent of its damage from the coronavirus.

The effect of the virus in the fourth quarter of 2019 is an increase in expenses for credit losses, which lowered Bank Hapoalim's net profit by NIS 450 million. Consequently, Hapoalim reported a fourth quarter net loss of NIS 629 million shekels ($167 million) compared with a profit of $97 million in the corresponding quarter of 2018. "The events in recent weeks are liable to have a significant negative impact on the bank's results for 2020, but its full extent cannot be assessed at this point," Bank Hapoalim wrote in its report.

Bank Hapoalim's net profit totaled NIS 1.799 billion in 2019, compared with NIS 2.595 billion in 2018, a 30.7% decrease. Most of the difference was in the fourth quarter. Excluding the bank's expenses for the US investigation, its adjusted net profit in 2019 was 2.77 billion, down 22%, compared with its NIS 3.579 billion adjusted net profit in 2018. The bank's return on equity in 2019 was 4.6%, compared with 7.1% in 2018.

Bank Hapoalim chairman Oded Eran said, "The reports are being published at a time of significant economic developments caused by the spread of the coronavirus. As the largest financial concern in the system, Bank Hapoalim's function is more important than ever at this time. Although we have been through a difficult year, during which we directed great efforts to ending the US tax affair and reaching settlements with the US authorities, we continued to progress in our strategic plans, resulting in both growth and improvement in our credit portfolio, development of new technological products, and consolidation of Bank Hapoalim's leading position in the Israeli banking system.

"The provisions for the investigations by the US authorities had a significant effect on the bank's financial results in this year, but will enable us to continue forward with redoubled force, and to expand our investments in developing and adapting Bank Hapoalim to the banking of the future and tomorrow's challenges, while dealing with the new current challenges, whose effects on the business sector in Israel are already being felt."

Bank Hapoalim CEO Dov Kotler said, "We are entering a period of economic uncertainty, which will affect the global economy and constitute a significant factor in shaping the future challenges in the financial sector and the entire business sector. I call on the state to cooperate with the financial sector in safeguarding the economy's soundness. In accordance with the focuses defined in the work plan, Bank Hapoalim continued its progress towards its business targets, headed by growth in its portfolio of credit to the public, with an emphasis on credit for housing, which grew 10.2%, and growth in commercial credit, which rose 7.1%, while the quality of the portfolio was improved."

Published by Globes, Israel business news - en.globes.co.il - on March 19, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Dov Kotler / Photo: Gadi Dagon, ira prohorov
Dov Kotler / Photo: Gadi Dagon, ira prohorov
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