Bank Hapoalim, Israel’s largest bank, returned excellent results for 2018 — despite setting aside over NIS 1 billion for yet to be settled investigations by the US Justice Department, regarding the bank’s assistance to customers who sought to avoid paying US taxes. Hapoalim’s net profit, even after taking account for the considerable set aside, was only slightly down from 2017.
Bank Hapoalim reported:
Net profit in 2018 reached NIS 2,595 million compared with a net profit of NIS 2,660 million in 2017. Return on equity (ROE) stood at 7.1% in 2018, compared with 7.5% in 2017.
Total net profit in 2018, excluding provision in connection with the investigations by the US authorities*, reached NIS 3,579 million, representing ROE of 9.7%.
Credit growth: the Bank’s total credit portfolio grew by 6.3% in 2018, totaling NIS 282.5 billion compared with NIS 265.9 billion at the end of 2017.
The Bank continued to grow according to its strategic framework delivering 10.7% increase in commercial credit, 9.8% increase in corporate lending, and 9.9% increase in housing loans.
The retail deposit base in Israel increased by 9.4% in 2018, totaling NIS 229.6 billion compared with NIS 209.7 billion at the end of 2017.
Income from regular financing activity increased by 8.9%, totaling NIS 9,575 million in 2018, compared with NIS 8,795 million in 2017.
Efficiency: The Bank continued to implement ongoing efficiency measures and in 2018 reduced over 500 employee positions. The Bank’s cost-income ratio, excluding provision in connection with the investigations by the US authorities*, totaled 57.8% compared with 59.1% in 2017. Wage costs decreased by 2.7%.
The Bank’s Common equity Tier 1 capital ratio stood at 11.16% as at December 31, 2018, surpassing both regulatory requirements and internal capital targets.
Total income from regular financing activity, totaled NIS 9,575 million in 2018 compared with NIS 8,795 million in 2017. The increase is attributable to the growth in business activity in Israel across all segments.
Fees and other income in Israel, totaled NIS 3,287 million in 2018 compared with NIS 3,267 million in 2017.
Net provision for credit losses, totaled NIS 613 million in 2018, 0.22% of the average credit to the public, compared with NIS 202 million, 0.08% of the average credit to the public in 2017.
Gross provision for credit losses, before recoveries, stood at 0.58% in 2018, compared with 0.55% in 2017.
Operating and other expenses, totaled NIS 8,960 million in 2018, compared with NIS 8,121 million in 2017. The increase in expenses primarily resulted from an increase in the provision in connection with the investigations of the US authorities and related expenses. Excluding these effects, operating expenses decreased.
Salary expenses, totaled NIS 4,097 million in 2018, compared with NIS 4,209 million in 2017. The decrease in salary expenses resulted from continued cost savings due to ongoing efficiency measures.
Consolidated balance sheet, as at December 31, 2018, totaled NIS 460.9 billion, compared with NIS 454.4 billion at the end of 2017, an increase of 1.4%.
Net Credit to the public, totaled NIS 282.5 billion, compared with NIS 265.9 billion at the end of 2017, a significant increase of 6.3%, resulting mainly from the increase in commercial credit, corporate lending and housing loans.
Housing loans in Israel, totaled NIS 81.5 billion compared with NIS 74.1 billion at the end of 2017, an increase of 9.9%, this while increasing the Bank’s market share in this segment.
Credit to small businesses in Israel, totaled NIS 32.6 billion compared with NIS 32.4 billion at the end of 2017, an increase of 0.5%.
Consumer credit in Israel, totaled NIS 44.1 billion compared with NIS 45.9 billion at the end of 2017, a decrease of 3.8%.
Credit to the commercial segment in Israel, totaled NIS 37.5 billion compared with NIS 33.9 billion at the end of 2017, a sharp increase of 10.7%, continuing the growth trend experienced in recent years.
Credit to the corporate segment, in Israel totaled NIS 71.9 billion compared with NIS 65.5 billion at the end of 2017, a significant increase of 9.8%.
Deposits from the public, totaled NIS 352.3 billion compared with NIS 347.3 billion at the end of 2017, an increase of 1.4%.
Retail deposits in Israel, totaled NIS 229.6 billion compared with NIS 209.7 billion at the end of 2017, an increase of 9.4%.
Shareholders’ equity, totaled NIS 37.5 billion as at December 31, 2018, compared with NIS 35.9 billion at the end of 2017, an increase of 4.7%.
Total capital ratio stood at 14.39% as at December 31, 2018, compared with 14.64% as at December 31, 2017.
