Israel's Bank Hapoalim beats profit expectations, resumes dividends

A branch of Bank Hapoalim is seen in Tel Aviv, Israel November 22, 2021. Picture taken November 22, 2021. REUTERS/Corinna Kern

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JERUSALEM, Aug 15 (Reuters) – Bank Hapoalim (POLI.TA) reported a smaller-than-expected fall in quarterly profit while returning to dividend payouts and loan default provisions.

One of Israel’s two largest lenders, Hapoalim reported a net profit of 1.34 billion shekels ($414 million) for the April-June quarter, beating the 1.26 billion forecast by analysts in a Reuters poll but down from 1.42 billion a year earlier.

Net interest income rose 27% to 3.19 billion shekels helped by higher inflation levels and Bank of Israel interest rate increases.

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With inflation rising above 4%, the central bank in April began to raise its benchmark interest rate, bringing it to 1.25% in July from 0.1% in April.

The Bank of Israel is set to decide on rates again next Monday.

“We see the banks well positioned to capitalise on the upcoming waves of rate hikes,” said Barclays analyst Tavy Rosner, who sees 30% upside for Hapoalim’s shares.

The bank incurred a credit loss provision of 91 million shekels in the second quarter – or 0.1% of total credit – after taking income from the provision of 647 million a year earlier.

Like its peers, Hapoalim had large loan loss provisions during the COVID pandemic but last year started unwinding them.

Hapoalim said corporate credit increased by 2.6% and housing loans grew by 3.2% during the quarter, although consumer credit fell slightly. Non-performing loans fell to 0.87%.

Hapoalim said it would resume ongoing dividends in the second quarter with a payout of 403 million shekels, or 30% of quarterly net profit.

Hapoalim had opted against a dividend distribution in the prior two quarters, citing the need for caution given the economic environment.

($1 = 3.2350 shekels)

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Reporting by Steven Scheer; editing by Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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