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MarketScreener Homepage  >  Equities  >  TEL AVIV STOCK EXCHANGE  >  Bank Hapoalim B.M.    POLI   IL0006625771

BANK HAPOALIM B.M.

(POLI)
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Bank Hapoalim Announces First Quarter 2020 Financial Results

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05/14/2020 | 05:13am EDT

TEL AVIV, Israel, May 14, 2020 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE: POLI) (ADR: BKHYY), today announced its financial results for the first quarter ended March 31, 2020.

Key financial highlights: 

  • Net profit totaled NIS 192 million in the first quarter of 2020, compared with NIS 821 million in the same quarter last year.
    - Net profit in the quarter was negatively impacted mainly as a result of NIS 809 million of provision for credit losses, of which NIS 603 million were added to the bank's collective allowance as an advance measure in confronting the effects of the COVID-19 crisis.
    - Net profit was also affected by the previously announced loss of NIS 109 million resultant from the separation of Isracard.
  • Net profit from continued operations, which excludes the effects of Isracard, totaled NIS 301 million, compared with NIS 730 million in the same quarter last year.
  • Return on equity (ROE) for the quarter stood at 2.0%, compared with 9.0% in the same quarter last year. ROE from continued operations was 3.2%.
  • Growth in credit portfolio: Net credit to the public totaled NIS 299.5 billion in the first quarter, compared with NIS 292.9 billion at the end of 2019, an increase of 2.3%.
  • Increase in deposits from the public: Deposits from the public totaled NIS 388.6 billion, compared with NIS 361.6 billion at the end of 2019, an increase of 7.4%.
  • Increase in financing income: Income from regular financing activity totaled NIS 2,486 million in the first quarter of 2020, compared with NIS 2,396 million in the same quarter last year, an increase of 3.8%.
  • Improvement in efficiency ratio: Cost income ratio for the quarter was 56.6%, compared with 59.2% in the same quarter last year.
  • Strong capital resilience continues: The bank's Common Equity Tier 1 capital ratio as at March 31, 2020, was 11.21%, well above both regulatory and internal targets.

Recent mentions:

  • The bank signed final resolutions with the United States authorities regarding the tax investigations and investigation of the FIFA affair.
  • COVID-19:
    • During the month of March 2020, the bank announced that events arising from the COVID-19 outbreak might have a material negative effect on the results of the bank for 2020, but that it was too early to estimate the extent of this effect. Over the last few months, the Board of Directors of the Bank and its committees have held frequent discussions with respect to the spread of COVID-19 and the various aspects of its impact on the bank and on the markets, including the business continuity of the bank, the bank’s preparedness for various scenarios and for “the day after". The bank has established a designated committee headed by the CEO to formulate ways of addressing the crisis. The committee regularly reviews various scenarios for the development of this event and its financial effects on the bank; the effects of the event on credit risks and counterparty credit risks in respect of customers, banks, and others; and its effects on liquidity and on the proprietary portfolio, and guides the bank's actions in these areas.
    • Suspension of loan payments – The bank has continued to expand the measures initiated for its customers who are suffering the effects of the COVID-19. Among other things, the bank is allowing customers to suspend loan and mortgage payments, in order to provide cash-flow relief.
    • Establishment of a designated loan fund for self-employed individuals – In April 2020, the bank and the organization Lahav announced a NIS 0.5 billion loan fund targeted to assist self-employed individuals, with interest rates similar to those offered in government-backed loans.
    • Participation in government guarantee scheme – The bank offered loans to businesses under the scheme. In the short period of time since its initiation, the bank processed over 9000 loan requests, two thirds of which were approved.
    • Assistance to the elderly – The bank has established a call center dedicated to the elderly population (over the age of 70). In addition, the activity of the mobile branches has been expanded, with three branches delivering banking services to at-risk individuals in assisted living facilities and at other locations who are currently unable to visit regular branches and ATMs. Since the outbreak of COVID-19, the mobile branches have traveled to over sixty points of service across Israel.
    • Expansion of digital activity – Since the onset of COVID-19 the bank carried out a series of measures aimed at helping customers continue their banking activities remotely, while offering new services to provide relief to customers during this time. These measures include assistance for customers who do not habitually use digital banking channels, encompassing the option to defer mortgage payments directly through the bank's website, defer existing loan payments using digital services (without contacting a branch or call center), and pay into deposits adapted to this period through the bank's website; production of a guide for the public with instructions on performing the main transactions available on the website and application, aimed at encouraging change in customers’ banking services consumption habits, enabling them to avoid visiting branches during the crisis, and also raising awareness of the wide range of digital tools available to them; an option for business owners to suspend loan payments for several months using digital channels; and access to all important information for senior-citizen customers in a designated area of the bank’s website, including the details of the call center for these customers. The outbreak of the crisis was accompanied by a significant increase in the quantity and scope of customers’ activity through digital channels, particularly a substantial increase in customers’ digital capital-market activity, digital opening of banks accounts using the Poalim Open application, and accelerated growth of the use of the payment application Bit, with an expanding advantage over competitors. In order to allow social distancing, the bank recently went out with a national campaign for by- appointment service in its branches.
    • Commitment to the community – The bank is deeply committed to active involvement in Israeli society, through support and assistance for various community groups and the promotion of national causes, more so during this challenging period. Since the outbreak of COVID-19, the bank has donated NIS 2.5 million to medical institutions and social organizations. The bank's community engagement in the first quarter totaled NIS 4.6 million.
    • Flexible employment – Since the beginning of the crisis, Bank Hapoalim has allowed its employees to work remotely, with flexible hours, while splitting unit personnel and doubling work shifts with the aim of protecting the health of the bank’s employees and customers in accordance with the instructions of the Ministry of Health and the Banking Supervision Department.

Key developments in the financial statements for the first quarter of 2020:

  • Total income from regular financing activity, totaled NIS 2,486 million in the first quarter of 2020, compared with NIS 2,396 million in the same quarter last year, an increase of 3.8%.
  • Net provision for credit losses totaled NIS 809 million in the first quarter of 2020, or 1.07% of the average total credit to the public (annualized), compared with a net provision for credit losses in the amount of NIS 121 million in the same quarter last year, or 0.17% of the average total credit to the public (annualized).
    Net provision for the reported quarter includes provisions for COVID-19 in the amount of NIS 757 million, of which NIS 603 million were added to the bank's collective allowance as an advance measure in confronting the effects of the crisis, and NIS 154 million of individual allowance in respect of adversely affected borrowers.
  • Operating and other expenses, totaled NIS 1,916 million in the first quarter of 2020, compared with NIS 1,877 million in the same quarter last year, an increase of 2.1%.
  • Cost income ratio was 56.6% in the first quarter, compared with 59.2% in the same quarter last year.

Key developments in balance sheet items:

  • Consolidated balance sheet, totaled NIS 491.5 billion as at March 31, 2020, compared with NIS 463.7 billion at the end of 2019, an increase of 6.0%. 
  • Net credit to the public, totaled NIS 299.5 billion, compared with NIS 292.9 billion at the end of 2019, an increase of 2.3%.
  • Consumer credit in Israel, totaled NIS 39.4 billion, compared with NIS 41.5 billion at the end of 2019, a decrease of 4.9%.
  • Housing loans in Israel, totaled NIS 92.1 billion, compared with NIS 89.3 billion at the end of 2019, an increase of 3.1%.
  • Credit to small businesses in Israel, totaled NIS 30.2 billion, compared with NIS 31.0 billion at the end of 2019, a decrease of 2.8%.
  • Credit to the commercial segment in Israel, totaled NIS 40.6 billion, compared with NIS 40.1 billion at the end of 2019, an increase of 1.1%.
  • Credit to the corporate segment in Israel, totaled NIS 81.0 billion, compared with NIS 75.7 billion at the end of 2019, an increase of 7.0%.
  • Deposits from the public, totaled NIS 388.6 billion, compared with NIS 361.6 billion at the end of 2019, an increase of 7.4%.
  • Deposits from consumers in Israel, totaled NIS 210.1 billion, compared with NIS 188.8 billion at the end of 2019, an increase of 11.3%.
  • Deposits from small businesses in Israel, totaled NIS 50.1 billion, compared with NIS 46.0 billion at the end of 2019, an increase of 9.1%. 
  • Shareholders' equity, totaled NIS 37.6 billion, compared with NIS 38.2 billion at the end of 2019, a decrease of 1.4%, mainly as a result of the distribution of dividend in kind as part of the completion of the separation from Isracard.
  • Total capital ratio, as at March 31, 2020 was 14.16%, compared with 14.64% as at December 31, 2019, above the capital thresholds required by the Bank of Israel.

Conference Call Information:

Bank Hapoalim will host a conference call today to discuss its first quarter 2020 financial results at 5:00 p.m. (Israel); 3:00 p.m. (UK); 10:00 a.m. (ET). To access the conference call, please dial: 1-888-281-1167 toll free from the United States; 0-800-051-8913 toll free from the United Kingdom; or 972-3-9180685 internationally. No password is required.

The call will be accompanied by a slide presentation, which, together with the financial statements, will be available on the Bank's website at www.bankhapoalim.com, under Investor Relations, Financial Information.

A recording of the conference call will be available on the Bank's website at the above address one business day following the completion of the call.

Please note: The conference call does not replace the need to peruse the immediate reports and the Financial Statements of the Bank, including all the forward-looking information included therein in accordance with Section 32A of the Israeli Securities Law, 1968.

About Bank Hapoalim:

Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim operates 208 full-service retail branches, regional business centers and specialized industry relationship managers for major corporate customers. The Bank Hapoalim Group includes holdings in financial companies involved in investment banking, trust services and portfolio management. Internationally, commercial banking services are provided in North America by the New York branch. Bank Hapoalim is listed on the Tel Aviv Stock Exchange (TASE: POLI) and holds a Level-1 ADR program. For more information about Bank Hapoalim, please visit us online at www.bankhapoalim.com

Please note: This press release was prepared for convenience only. In case of any discrepancy, the Bank's reported financial statements in Hebrew will prevail.

Contact:

Karen Mazor, SVP
Head of Investor Relations
Bank Hapoalim
T: +972 3 5673440
E: Karen.mazor@poalim.co.il


Condensed financial information and principal performance indicators over time

  For the three months
 ended March 31

 For the
year ended December 31
  2020  2019  2019 
Main performance indicators      
Return of net profit (loss) on equity attributed to shareholders of the Bank(1)2.03%  8.97%  4.62% 
Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items(1)(2)3.32%  8.97%  7.13% 
Return of net profit (loss) from continued operations on equity attributed to shareholders of the Bank(1)3.19%  7.94%  3.86% 
Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items(1)(3)3.32%  7.94%  6.72% 
Return on average assets(1)0.17%  0.71%  0.39% 
Ratio of income to average assets0.54%  0.51%  2.17% 
Efficiency ratio – cost-income ratio from continued operations56.64%  59.23%  66.44% 
Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations(3)56.26%  59.23%  58.13% 
Financing margin from regular activity(1)(4)2.27%  2.24%  2.26% 
Liquidity coverage ratio(5)126%  125%  121% 
       
  As at March 31 December 31
  2020  2019  2019 
Ratio of common equity Tier 1 capital to risk components(6)11.21%  11.45%  11.53% 
Ratio of total capital to risk components(6)14.16%  14.45%  14.64% 
Leverage ratio(6)7.14%  7.58%  7.61% 
(1) Calculated on an annualized basis.
(2) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, net profit or loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif. 
(4) Financing profit from regular activity (see the Report of the Board of Directors and Board of Management, in the section “Material developments in income, expenses, and other comprehensive income”) divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(5) For additional information, see the section "Liquidity and refinancing risk," in the financial statements.
(6) For additional information, see the section "Capital, capital adequacy, and leverage," in the financial statements.
 


Condensed financial information and principal performance indicators over time (continued)

    For the three months
ended March 31
 For the year
ended
December 31
    2020  2019  2019  
Main credit quality indicators         
Allowance for credit losses as a percentage of credit to the public  1.73% 1.33% 1.58% 
Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public  1.68% 1.35% 1.80% 
Net charge-offs as a percentage of average credit to the public(1)  0.25% 0.17% 0.12% 
Provision for credit losses as a percentage of average credit to the public(1)  1.07% 0.17% 0.44% 
          
Main profit and loss data         
   NIS millions
Net profit (loss) attributed to shareholders of the Bank  192  821  1,799  
Net profit attributed to shareholders of the Bank excluding extraordinary items(2)  313  821  2,778  
Net profit (loss) from continued operations attributed to shareholders of the Bank  301  730  1,503  
Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items(3)  313  730  2,619  
Net interest income  2,192  2,277  9,319  
Provision (income) for credit losses  809  121  1,276  
Net financing profit*  2,498  2,366  9,878  
Non-interest income  1,191  892  3,889  
Of which: fees  863  785  3,240  
Operating and other expenses  1,916  1,877  8,776  
Of which: salaries and related expenses  962  1,051**  4,108**  
Total income  3,383  3,169  13,208  
          
Net earnings per ordinary share (in NIS)         
Net profit attributed to shareholders of the Bank  0.14  0.62  1.13  
* Net financing profit includes net interest income and non-interest financing income (expenses).
** Reclassified.
(1) Calculated on an annualized basis.
(2) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, net profit or loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
 


Condensed financial information and principal performance indicators over time (continued)

    March 31 December 31
    2020  2019  2019 
    NIS millions
Main balance sheet data        
Total assets   491,459  465,778  463,688 
Of which: Cash and deposits with banks   89,475  78,332  88,122 
Securities   74,500  66,259  59,486 
Net credit to the public   299,548  283,048  292,940 
Net problematic credit risk   8,468  7,256  8,787 
Net impaired balance sheet debts   2,718  2,344  3,034 
Credit to the public not accruing interest income (NPL)   3,650  2,476  3,867 
Total liabilities   453,792  427,207  425,467 
Of which: Deposits from the public   388,566  354,232  361,645 
Deposits from banks   3,980  3,328  3,520 
Bonds and subordinated notes   24,491  29,695  26,853 
Shareholders’ equity   37,632  38,481  38,181 
         
Additional data        
Share price at end of period (in NIS)   21.3  24.2  28.7 
         
    For the three months
ended March 31
 For the
year ended
December 31
    2020  2019  2019 
Total dividend per share (in agorot)*   53.94**  -     74.90 
Ratio of fees to average assets   0.19%  0.17%  0.71% 
* According to the date of declaration.
* Paid as a dividend in kind, in shares; calculated based on the value of Isracard shares on March 8, 2020 (NIS 10.91).
© GlobeNewswire 2020

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Sales 2020 12 012 M 3 549 M 3 549 M
Net income 2020 844 M 249 M 249 M
Net Debt 2020 - - -
P/E ratio 2020 31,3x
Yield 2020 1,37%
Capitalization 26 304 M 7 779 M 7 772 M
Capi. / Sales 2020 2,19x
Capi. / Sales 2021 2,08x
Nbr of Employees 8 964
Free-Float 84,1%
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Mean consensus OUTPERFORM
Number of Analysts 5
Average target price 23,42 ILS
Last Close Price 19,69 ILS
Spread / Highest target 32,0%
Spread / Average Target 18,9%
Spread / Lowest Target -3,00%
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Managers
NameTitle
Dov Kotler Chief Executive Officer
Oded Eran Chairman
Erez Yosef Chief Operating Officer, Head-Strategy
Ofer Koren Chief Financial Officer
Eti Ben-Zeev Chief Information Officer & Head-IT
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