Bank Hapoalim Announces Second Quarter 2013 Financial Results

Return on Equity of 9.9%

Net Profit totaled NIS 655 million

Core Tier 1 Capital rose to 9.2%

Bank to payout a cash dividend of 15% of net profit

TEL AVIV, Israel, Aug. 29, 2013 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE:POLI) (ADR:BKHYY), Israel's leading financial group, today announced financial results for the second quarter ended June 30, 2013.

Second Quarter 2013 Financial Highlights:
  • Return on equity reached 9.9%, on an annualized basis, up from 9.5% in the first quarter of 2013.  
  • Net profit totaled NIS 655 million up from a profit of NIS 621 million in the first quarter of 2013.  
  • Profit from regular financing activity totaled NIS 1,864 million, up from NIS 1,773 million in the first quarter of 2013.  
  • Operating and other expenses totaled NIS 2,135 million similar to the first quarter of 2013.  
  • Shareholders' Equity totaled NIS 27,808 million as at June 30, 2013, up from NIS 26,755 million at the end of 2012.  
  • Core Tier 1 Capital ratio continued its trend of improvement and rose to 9.2% compared with 8.9% at the end of 2012.  
  • Quarterly Dividend - The Bank's Board of Directors approved the continuation of the quarterly cash dividend distribution, at a rate of approximately 15% of net profit, from its second quarter 2013 earnings in the amount of NIS 92 million. Since the beginning of the year, the Bank paid out NIS 184 million.

Main developments in the financial statements for the second quarter of 2013:

Profit from regular financing activity totaled NIS 1,864 million in the second quarter of 2013, up from a profit of NIS 1,773 million in the sequential first quarter of 2013. The financial margin from regular activity increased to 2.16% in the second quarter of 2013, compared with 2.07% in the sequential first quarter of 2013.

Provision for credit losses in the second quarter of 2013 totaled NIS 301 million, compared with NIS 257 million in the sequential first quarter of 2013. The rate of provision as a percentage of credit to the public reached 0.48% at the end of the second quarter compared with 0.41% in the previous quarter. The increase reflects a cautious approach towards the current state of the Israeli economy.

Fees and other income totaled NIS 1,282 million in the second quarter of 2013 compared with NIS 1,287 million in the sequential first quarter of 2013, mainly as a result of the implementation of the recommendations of Bank of Israel's Committee on Competitiveness.           

Operating and other expenses totaled NIS 2,135 million in the second quarter of 2013 similar to the first quarter of 2013. The decline in operating and other expenses was primarily related to operational efficiencies and cost management which has become a key focus in the Bank's strategy, including a reduction in headcount which contributed to lower wage expense.  

Dividend Declared - The Bank's Board of Directors approved the continuation of the quarterly cash dividend distribution and declared a dividend with respect to the second quarter 2013 profits, of approximately NIS 92 million, which amounts to 7 agorot per share . The record date is September 12, 2013 and the date of payment is September 30, 2013. This in addition to the dividend paid with respect to the first quarter 2013 profits in the amount of NIS 92 million.

Contribution to the community - The Bank's employees are involved in a varied and extensive range of community-oriented activities that take the form of social involvement, monetary donations, and large-scale volunteer activities. Bank Hapoalim's community-oriented activity during the first half of 2013 was expressed in a financial value of approximately NIS 25 million.

Developments in Balance Sheet Items:

The consolidated balance sheet as at June 30, 2013 totaled NIS 378.5 billion, compared with NIS 376.4 billion at the end of 2012, an increase of 0.6%.

Net Credit to the public totaled NIS 247.1 billion, compared with NIS 249.2 billion at the end of 2012, a decrease of 0.8% mainly as a result of a decrease in corporate credit, partially offset by an increase in retail, small business, and commercial credit.

Deposits from the public totaled NIS 274.6 billion compared with NIS 271.4 billion at the end of 2012, an increase of 1.2%, mainly a result of an increase in corporate deposits.

Shareholders' Equity totaled NIS 27,808 million as at June 30, 2013, compared with NIS 26,755 million at the end of 2012, an increase of 3.9%, mainly stemming from retained earnings during the first half of the year.  

Core Tier 1 Capital Ratio stood at 9.2% at the end of the second quarter of 2013, compared to 8.9% at the end of 2012.

Total Capital Adequacy Ratio stood at 15.7% at the end of the second quarter of 2013 similar to the end of 2012.

Conference Call Information

Bank Hapoalim will host a conference call as well as a slide presentation webcast today to review the second quarter 2013 financial results at 9:00 a.m. U.S. Eastern Time / 2:00 p.m. UK Time / 4:00 p.m. Israel Time.

To access the call, please dial: 1-888-281-1167 in the U.S. and 1-866-485-2399 in Canada or (972)-3-9180685 for international participants. No password is required. The presentation slides, earnings release and the second quarter 2013 financial statements are available at the Bank's website, www.bankhapoalim.com, under Investor Relations, Financial Information.

A replay of the conference call will be available beginning at approximately 1:00 p.m. U.S. Eastern Time / 6:00 p.m. UK Time / 8:00 p.m. Israel Time on Thursday, August 29th, through 1:00 p.m. Eastern Time / 6:00 p.m. UK Time / 8:00 p.m. Israel Time on Thursday Sept. 5, 2013, by telephone at (972) 3-9255900 (international).

The webcast replay will also be available by audio playback on the Bank Hapoalim website at www.bankhapoalim.com, under Investor Relations, Financial Information.

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 network of business branches and specialized industry relationship managers for major corporate customers.

The Bank Hapoalim Group includes Isracard Ltd, Israel's leading credit card company as well as financial companies involved in investment banking, trust services and portfolio management.

Internationally, Bank Hapoalim operates through branches, subsidiaries and representative offices, in North and Latin America, Europe, the Far East, and Turkey. In these markets, the Bank is engaged in trade, corporate finance, private banking and retail banking.

Bank Hapoalim is the only Israeli Bank listed on both the Tel Aviv and London Stock Exchange. In addition, a Level-1 ADR is traded "over-the-counter" in New York.

For more information about Bank Hapoalim, please visit us online at www.bankhapoalim.com.
Principal Data of the Bank Hapoalim Group (NIS millions)
           
 Profit and Profitability   For the three months ended
  June 30, 2013 March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012
Net financing income* 2,176 2,057 2,111 2,115 2,041
Fees and other income 1,282 1,287 1,314 1,335 1,266
Total income  3,458 3,344 3,425 3,450 3,307
Provision for credit losses 301 257 54 286 344
Operating and other expenses 2,135 2,135 2,354 2,249 2,118
Net profit attributed to shareholders of the Bank 655 621 652 625 607
           
 Balance Sheet – Principal Data       
  June 30, 2013 March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012
           
Total balance sheet 378,483 370,317 376,388 367,365 362,105
Net credit to the public 247,120 247,782 249,182 249,904 248,614
Securities 61,137 59,461 52,070 53,076 40,728
Deposits from the public 274,601 265,297 271,411 264,490 259,668
Bonds and subordinated notes 35,874 36,222 35,677 36,051 35,679
Shareholders' equity 27,808 27,279 26,755 25,759 24,907
Net total problematic credit risk** 13,264 13,561 13,284 14,187 13,398
Of which:  7,030 6,856 6,701 6,493 6,685
net impaired balance sheet debts**          
           
 Main Financial Ratios           
  June 30, 2013 March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012
 Net loan to deposit ratio  90.0% 93.4% 91.8% 94.5% 95.7%
Net loan to deposit ratio including bonds and subordinated notes 79.6% 82.2% 81.1% 83.2% 84.2%
 Shareholders' equity to total assets  7.3% 7.4% 7.1% 7.0% 6.9%
 Core Tier 1 capital to  9.2% 9.1% 8.9% 8.5% 8.3%
risk-adjusted assets           
 Total capital to risk-adjusted assets  15.7% 15.6% 15.7% 15.1% 14.8%
 Financing margin from regular activity (1) (2)  2.16% 2.07% 2.06% 2.37% 2.47%
 Cost-income ratio  61.7% 63.8% 68.7% 65.2% 64.0%
Total assets to income (3) 3.7% 3.7% 3.8% 3.8% 3.8%
Total assets to expenses (4) 2.3% 2.3% 2.6% 2.5% 2.4%
Provision for credit losses as a percentage of the average recorded balance of credit to the public (1)  0.48% 0.41% 0.09% 0.45% 0.55%
 Net return of profit attributed to shareholders of the Bank on equity (1)  9.9% 9.5% 10.3% 10.2% 10.2%
 Basic net earnings per share in NIS attributed to shareholders of the Bank  0.50 0.47 0.49 0.47 0.46
           
* Net financing income includes net interest income and non-interest income (expenses).
** Net of the individual allowance, the allowance according to the extent of arrears, and the collective allowance for problematic credit risk.
 
(1) Calculated on an annualized basis.
(2) Financing profit from regular activity (see the Board of Directors' report, in the section Profit and Profitability – Development of Financing Profit) is divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(3) Total financing and operating income, divided by the balance of total average assets.
(4) Total operating and other expenses, divided by the balance of total average assets. 
CONTACT: For further information please contact:         Press: Ofra Preuss, Bank's Spokesperson         Tel: +972-3-567-3635; Fax: +972-3-567-3500         spokesperson@mailpoalim.co.il                  Investors: Effie Werber, Head of Investor Relations         Tel. +972-3-567-3440; Fax: +972-3-5673470         effie.werber@mailpoalim.co.il

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