Bank Hapoalim (POLI) Q2 2022 earnings summary

Executive summary

• Q2 net profit was NIS 1,343 million with 12.3% ROE; H1 net profit was NIS 2,997 million with 13.9% ROE.

• Income growth and higher financing margins supported results; credit expanded 5.5% in H1 as lending growth was moderated amid economic uncertainty.

Financial highlights

• Q2 total income was NIS 4,088 million, up 15.7% YoY; net financing profit was NIS 3,168 million and profit before provisions and taxes was NIS 2,092 million.

• Q2 regular-activity financing income rose 35.1% YoY to NIS 3,432 million; fees increased 12.6% to NIS 903 million.

• H1 total income was NIS 7,936 million, up 11.6%; net interest income increased 24.5% to NIS 5,903 million, and regular-activity financing profit rose 30.0% to NIS 6,342 million.

• H1 fees and other income rose 10.5% to NIS 1,904 million; operating and other expenses increased 1.4% to NIS 3,954 million.

• H1 credit-loss provision was income of NIS 509 million versus NIS 1,155 million a year earlier; Q2 recorded a NIS 91 million expense versus NIS 647 million income.

Outlook and guidance

• A parallel 1% rate increase was estimated to affect annual financing income by NIS 1.2 billion; market-implied Bank of Israel rate was 2.5% for the 12-month horizon as of August 12.

• The 2022–2024 strategy targets growth in retail, commercial and corporate banking, digital distribution and payments, data analytics, and modernization of core systems.

• Credit growth was 5.5% in H1; management said the pace could be adjusted as uncertainty and credit demand evolve, without giving near-term credit-loss guidance.