Hapoalim delivers forecast-beating profit
Israel's biggest bank post second-quarter net profit of NIS 655 million, defying low interest rate environment and government crackdown on banking fees. Bank Leumi posts net profit of NIS 474 million, short of NIS 497 million expected by analysts
Hapoalim, like rival Leumi, has reduced its exposure to large corporate debtors and increased lending to households and small businesses to bolster its bottom line.
Second-quarter net profit rose to NIS 655 million ($179 million) from NIS 607 million ($168 million) a year earlier, beating the consensus forecast of NIS 597 million ($166 million) in a Reuters poll of analysts.
The bank's loan loss provisions dipped to NIS 301 million ($84 million) from NIS 344 million ($95 million), but this was higher than the NIS 258 million ($72 million) expected by analysts.
DS Brokerage analyst Meir Slater said he expects loan provisions to drop further this year.
Hapoalim made a NIS 214 million ($59 million) gain from exercising some of its bond holdings and improved its Tier 1 capital ratio to risk-weighted assets to 9.2% from 8.9% at the end of 2012.
In Basel III terms the ratio is about 8.8%, just short of the 9% Israel's banking regulator requires banks to hold by 2015 as part of the global drive to strengthen the industry and prevent a repeat of the 2008 crisis. Hapoalim is expected to reach 9% by the end of the year.
The bank declared a second-quarter dividend of NIS 0.07 ($0.02) per share, having pledged last month to reinstate regular quarterly payments.
Leumi, Israel's second-biggest bank, posted net profit of NIS 474 million (132 million) in the second quarter, up from NIS 280 million ($78 million) a year earlier but short of the NIS 497 million ($138 million) expected by analysts in a Reuters poll.
Net interest income dipped 4.4% to NIS 1.84 billion ($510 million), while non-interest income jumped 25% to NIS 1.25 billion ($350 million). Its bottom line was boosted by an NIS 86 million ($24 million) gain from the sale of shares in quartz surface maker Caesarstone.
Loan loss provisions fell nearly 75% to NIS 84 million ($23 million).
Leumi's core Tier I capital to risk-weighted assets rose to 9.03% from 8.55% at the end of 2012.
