Bank Hapoalim (POLI) Q1 2022 earnings summary

Executive summary

• Net profit was NIS 1.654bn, up 22.2% YoY, with annualized ROE of 15.6%.

• Credit grew 3.3% QoQ to NIS 364.3bn; asset quality remained resilient, with a 0.92% NPL ratio.

• CET1 reached 11.17%; strong capital and deposit fundamentals supported potential dividend resumption from Q2, subject to conditions.

Financial highlights

• Total income rose 7.5% YoY to NIS 3.848bn; net financing profit was NIS 2.864bn, up 6.8%.

• Net interest income rose 21.6% to NIS 2.716bn; adjusted financing profit was NIS 2.910bn, up 24.5%, including CPI-linked income of NIS 301m versus NIS 12m.

• Fees and other income rose 9.5% to NIS 984m; operating expenses increased 2.0% to NIS 1.958bn.

• Credit-loss provision was a NIS 600m release, versus a NIS 508m release in Q1 2021; profit before tax rose 14.7% to NIS 2.490bn.

• Regular financing income excluding CPI grew 12.2% YoY; Q1 expenses rose almost 3% QoQ, mainly due to performance-bonus and vacation provisions.

Outlook and guidance

• A parallel 1% rate increase was estimated to add NIS 1.5bn to annual financing income; the estimate includes deposit-shifting assumptions.

• Strong retail deposits and a high share of non-interest-bearing deposits were identified as potential advantages in a rising-rate environment.

• Credit-loss rates were expected to move toward pre-COVID levels of 0.2%–0.25%, depending on macroeconomic conditions; loan growth was expected to moderate versus 2021.

• Potential dividend resumption from Q2 2022 was subject to results, market and macroeconomic conditions, regulatory directives, and legal tests; policy permits distributions of up to 40%.

• The 2022–2024 strategy prioritizes retail, commercial and corporate banking growth, digital channels, data analytics, and core-system modernization.