Bank Hapoalim Reports 3rd Quarter

• Net profit totaled NIS 816 million, compared with NIS 736 million in the corresponding quarter of 2019. 
• Return on equity – totaled 8.8%, compared with 7.6% in the corresponding quarter of 2019. 
• The Bank continued to demonstrate strong capital and liquidity resilience:   Common Equity Tier 1 (CET1) capital ratio stood at 11.53%, well above both regulatory and internal capital targets. Liquidity Coverage Ratio (LCR) stood at 132% as at the end of the reporting period. 
• Provision for credit losses – following high reserve build in the first half of 2020, the bank recorded a materially lower net provision for credit losses of NIS 193 million, or 0.26%.   
• Loan book  – reflective of the subdued credit demand and risk appetite during the period, net credit to the public at the end of the third quarter totaled NIS 293 billion, of which housing loans totaled NIS 96.4 billioncompared with NIS 89.3 billion at the end of 2019, an increase of 7.9%. 
• Retail deposits increased 16.3% since year-end and totaled NIS 273 billion. 
• Operating and other expenses declined by 6.0%, totaling NIS 1,851 million, compared with NIS 1,970 million in the same quarter last year 
• Cost income ratio was 56.1% compared with 62.2% in the same quarter last year. The bank continues to implement various cost efficiency measures, amongst them the acceleration of its fifth efficiency program calling for the early retirement of approximately 10% of its workforce by end 2022. 

Recent mentions:

COVID-19: The Bank continues its commitment to support its employees, customers and the community through the COVID-19 crisis. Among its many initiatives: Deferral of loan payments: The bank has continued to expand measures for its customers who are suffering the effects of COVID-19. Among other efforts, the bank is allowing customers to defer loan and mortgage payments, in order to provide cash-flow relief. The total cumulative balance of loans in respect of which payments were deferred is NIS 43.3 billion as at the end of the third quarter of 2020, of which loans in the amount of NIS 21.4 billion remain in deferral. The cumulative balance of mortgage loans in respect of which payments were deferred is NIS 20.8 billion, of which loans in the amount of 7.4 billion remain in deferral, representing a 64% reduction. Near the date of publication of the report, the credit balance in respect of which payments have been deferred totaled approximately NIS 19.1 billion.Participation in government guarantee scheme: The bank continues to offer loans to businesses under the scheme. As at the end of the third quarter, the bank has provided loans to its customers in the amount of approximately NIS 4.85 billion through the scheme. Approximately 77% of which have been granted to small businesses and microbusinesses, and an additional 23% to mid-sized and large businesses. Scheduled appointments at the branches of the bank: The bank has accelerated the drive towards scheduled appointments with bankers at its branches, in line with common practice at advanced organizations around the world. Scheduled appointments as a percentage of total meetings rose from approximately 20% at the beginning of this year to approximately 83% at the end of October, allowing improvement of the customer experience and better operational efficiency at the branches. Designated loan fund for self-employed individuals: The bank and the Lahav announced a NIS 0.5 billion loan fund targeted to assist self-employed individuals, with interest rates similar to those offered in government-backed loans. 

Business collaborations in the United Arab Emirates: Following the historic signing of the Abraham Accord, the bank has taken a leadership role in advancing the economic ties between Israel and the UAE, establishing corresponding relations with two of the national largest banks and instating trade financing activities. 

Key developments in the financial statements for the third quarter of 2020:

• Income from regular financing activity totaled NIS 2,336 million in the third quarter of 2020, compared with NIS 2,387 million in the same quarter last year. The decline mainly reflects the negative impact of lower FED and local interest rates on deposit margins and from a decline in consumer credit balances.   
• Net provision for credit losses totaled NIS 193 million in the second quarter of 2020, or 0.26% of the average total credit to the public (annualized), compared with a net Income for credit losses in the amount of NIS 40 million in the same quarter last year. 
• Fees and other income, totaled NIS 766 million in the third quarter of 2020, compared with NIS 826 million in the same quarter last year, a decrease of 7.3%, mainly as a result of decline in income from credit cards and account-management fees.  
• Operating and other expenses, totaled NIS 1,851 million in the third quarter of 2020, compared with NIS 1,970 million in the same quarter last year, a decrease of 6.0%. 
• Salary expenses, totaled NIS 988 million in the third quarter of 2020, compared with NIS 1,033 million in the same quarter last year, a decrease of 4.4%. 
• Cost income ratio was 56.1% in the third quarter of 2020, compared with 62.2% in the same quarter last year. 

Key developments in balance sheet items:

• Consolidated balance sheet, totaled NIS 513.7 billion as at September 30, 2020, compared with NIS 463.7 billion at the end of 2019, an increase of 10.8%.  
• Net credit to the public, totaled NIS 292.8 billion, compared with NIS 292.9 billion at the end of 2019. 
• Consumer credit in Israel, totaled NIS 37.3 billion, compared with NIS 41.5 billion at the end of 2019, a decrease of 10.1%. 
• Housing loans in Israel, totaled NIS 96.4 billion, compared with NIS 89.3 billion at the end of 2019, an increase of 7.9%. 
• Credit to small businesses in Israel, totaled NIS 30.7 billion, compared with NIS 31.0 billion at the end of 2019, a decrease of 0.9%.   
• Credit to the commercial segment in Israel, totaled NIS 41.3 billion, compared with NIS 40.1 billion at the end of 2019, an increase of 2.8%. 
• Credit to the corporate segment in Israel, totaled NIS 72.7 billion, compared with NIS 76.6 billion at the end of 2019, a decrease of 5.1%. 
• Deposits from the public, totaled NIS 417.0 billion, compared with NIS 361.6 billion at the end of 2019, an increase of 15.3%.  
• Deposits from consumers in Israel, totaled NIS 217.2 billion, compared with NIS 188.8 billion at the end of 2019, an increase of 15.1%.  
• Deposits from small businesses in Israel, totaled NIS 55.9 billion, compared with NIS 46.0 billion at the end of 2019, an increase of 21.5%.  
• Shareholders’ equity, totaled NIS 39.0 billion, compared with NIS 38.2 billion at the end of 2019, an increase of 2.1%.  
• The bank continues to maintaining a very high liquidity and stability indices – Liquidity coverage ratio stood at 132% in the third quarter of 2020 compared with 124% in the same quarter last year.  
• Common Equity Tier 1 capital ratio as at September 30, 2020, stood at 11.53%, well above both regulatory and internal targets.  
• Total capital ratio , as at September 30, 2020 stood at 14.74%, above the capital thresholds required by the Bank of Israel.