Hapoalim bank profit soars as it cancels loss provisions

JERUSALEM, Aug.16 (Reuters) – Bank Hapoalim (POLI.TA) reported a higher-than-expected jump in quarterly net income, aided by a continued pick-up in provisions to protect against defaults during the pandemic.

Hapoalim, one of Israel’s two largest lenders, said on Monday it earned 1.42 billion shekels ($ 442 million) in the April-June period, up from 133 million a year earlier and with a forecast average of 1.03 billion in a Reuters survey of analysts. .

Profit was boosted by the NIS 647million credit loss income statement, up from NIS 508million in the first quarter when a successful vaccination campaign helped Israel begin to emerge from lockdowns, and from spending by second quarter 2020 credit loss of 1.13 billion.

“The income from credit losses for both quarters was supported by improving economic indicators, which led to a reduction in the collective allowance for bad debts, as well as a reversal of individual allowance,” Hapoalim said.

Driven by growth in the credit portfolio and rising inflation, net interest income rose to NIS 2.51 billion from NIS 2.17 billion a year earlier.

Business credit in the quarter grew 14.4% over the past year, while mortgages increased 11.8% on strong demand in the housing market.

Hapoalim said the deferred loan balance fell sharply to NIS 3.5 billion, or 1.1 percent of total loans to the public. He had authorized postponements at the start of the pandemic last year.

The bank will pay out a split special of NIS 617 million this week, or about 30% of 2020 net profit. Israel’s banking regulator had banned regular dividends from March 2020 through September, but allowed one-off payments of up to 30% of net profit. It has not yet decided whether or not to extend its control over dividends.

Earlier this month, Hapoalim’s chief financial officer told Reuters the bank was ready to resume regular quarterly dividends of at least 40% once it received the green light. Read more

Hapoalim’s Tier 1 capital ratio rose to 11.61% from 11.23% a year earlier. Its shares were down 1.5% in morning trading.

Main rival Leumi (LUMI.TA) last week reported a huge jump in second quarter net profit. Read more

($ 1 = NIS 3.2150)

Reporting by Steven Scheer Editing by Shounak Dasgupta and David Holmes

Our Standards: Thomson Reuters Trust Principles.