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Bank Hapoalim Announces 2012 Financial Results

It is noteworthy to mention the recognition Bank Hapoalim received as the leading financial institution in Israel. Especially from prestigious industry publications such as The Banker, Euromoney and Global Finance, who selected Bank Hapoalim as the Best Bank in Israel for 2012.

Mr. Zion Kenan, Chief Executive Officer of Bank Hapoalim, said:

The Bank's financial results for 2012, which was a challenging year for the global economy, the Israeli economy and Israeli banking sector, indicate above all that Bank Hapoalim continues to lead the Israeli banking system.

I am proud to say today that we met all our targets in the three-year strategic plan we introduced in late 2009. As part of our successful conclusion to 2012, the Board of Directors approved a new three-year Strategic Plan covering the years 2013 through 2015.

The new three-year plan is based on a thorough analysis of the economic, regulatory as well as business environment and incorporates a sound vision of the changes in the competitive environment in which the Bank operates.

In the face of lingering challenges in the global economy, government debt markets and international financial system, we anticipate that this program will provide the Bank a solid platform upon which to continue to move along a path of steady growth. We will look to achieve this growth while providing a proper return on long-term capital and further consolidating the leadership position of Bank Hapoalim in the Israeli banking system.

Main developments in the Annual Report for the year 2012:

During this period, the Bank successfully culminated the implementation of its three-year strategic plan. Impressive business results and double-digit return on shareholders' equity were achieved, in line with stated goals.

Profit from regular financing activity (excluding one-off and other extraordinary items) in 2012 totaled NIS 7,733 million, compared with NIS 7,542 million in 2011, an increase of 2.5%, mainly as a result of an increase in the volume of activity.

The financial margin from regular activity decreased to 2.22% in 2012, compared with 2.39% in 2011, mainly due to the prevailing low interest rate.

The provision for credit losses totaled NIS 987 million in 2012 compared with NIS 1,202 million in 2011. The rate of provision as a percentage of credit to the public reached 0.39% at the end of 2012 compared with 0.50% at the end of 2011. The decrease resulted from a decline in the provision for debt examined on a collective basis.

Fees and other income totaled NIS 5,222 million in 2012, compared with NIS 5,204 million in 2011, an increase of 0.3%.

Operating and other expenses totaled NIS 8,825 million in 2012, compared with NIS 8,365 million in 2011, an increase of 5.5%, mainly related to higher salary expenses and from an increase in maintenance and depreciation expenses.

Corporate social involvement and contribution to the community - The Bank continues to lead in a varied and extensive range of community-oriented activities that take the form of social involvement, employee-volunteer activities and monetary donations, especially in the areas of education, culture and social welfare. The Bank Group's corporate social activity in 2012 totaled a financial value of approximately NIS 48 million.

Developments in Balance Sheet Items

The consolidated balance sheet as at December 31, 2012 totaled NIS 376.4 billion, compared with NIS 356.7 billion at the end of 2011, an increase of 5.5%.

Net credit to the public totaled NIS 249.2 billion compared with NIS 246.5 billion at the end of 2011, an increase of 1.1%, driven primarily by increases in the retail and commercial segments.

Credit to small businesses totaled NIS 24.3 billion compared with NIS 22.8 billion at the end of 2011, an increase of 6.4%.

Deposits from the public totaled NIS 271.4 billion compared with NIS 256.4 billion at the end of 2011, an increase of 5.8%, primarily related to an increase in core deposits from the retail and commercial segments.

Shareholders' equity totaled NIS 26,755 million as at December 31, 2012, compared with NIS 23,819 million at the end of 2011, an increase of 12.3% mainly stemming from retained earnings.  

Core Tier 1 capital stood at 8.9% at the end of 2012 compared with 7.9% at the end of 2011.

Total capital adequacy ratio was 15.7% at the end of 2012 compared with 14.1% at the end of 2011.  

About Bank Hapoalim

Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group has over 280 branches, eight regional business centers, a growing network of business branches and specialized industry relationship managers for major corporate customers.

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