Bank Hapoalim (POLI) Q1 2023 earnings summary

Executive summary

• Q1 net profit was NIS 2,008 million, up 21.4% YoY; ROE reached 17.0%.

• Total income rose 39.3% YoY to NIS 5,359 million; the cost-income ratio improved to 39.1% from 50.9%.

• Higher rates, credit growth and CPI supported financing income; credit-loss provisioning shifted to an expense from income in Q1 2022.

• Strong capital, liquidity and credit buffers supported a higher 40% payout ratio.

Financial highlights

• Net financing profit was NIS 4,377 million, up 52.8% YoY; net interest income was NIS 4,037 million, up 48.6%.

• Operating and other expenses rose 6.9% YoY to NIS 2,094 million, maintaining positive jaws against 36.5% total-income growth.

• Profit before tax was NIS 3,080 million, up 23.7% YoY; basic EPS was NIS 1.50 versus NIS 1.24.

• Credit-loss provision was NIS 185 million versus NIS 600 million of provision income in Q1 2022.

• Financial margin from regular activity was 2.77%; Q1 CPI contribution to income was NIS 266 million.

Outlook and guidance

• Tighter monetary conditions and slowing growth are expected to challenge credit demand; credit growth pace was described as aligned with changing conditions.

• Higher rates may continue to support margins, though deposit migration and lower CPI could offset some benefit.

• Credit losses are expected to normalize; historic levels were 20–25 bps as collective allowances continued to build against macroeconomic uncertainty.

• The 2023–2026 strategy targets responsible growth, customer service, productivity, digital capabilities and differentiated innovation.

• Near- and mid-term funding needs were covered by deposits; no near-term bond or Tier 2 issuance need was identified.