Bank Hapoalim (POLI) Q2 2023 earnings summary

Executive summary

• Q2 net profit was NIS 1,922 million, up 43.1% YoY and below NIS 2,008 million in Q1; ROE was 15.8% and the cost-income ratio was 38.1%.

• Total income rose 40.0% YoY to NIS 5,725 million, supported by higher net interest income and non-interest financing income.

• Net credit grew 7.6% YoY to NIS 400.1 billion; capital, liquidity and allowance buffers remained substantial.

Financial highlights

• Q2 net interest income rose 34.8% YoY to NIS 4,295 million; net financing profit increased 48.6% to NIS 4,709 million.

• Q2 fees and other income totaled NIS 1,016 million, up 10.4% YoY; operating and other expenses rose 9.3% to NIS 2,181 million.

• Credit-loss provisions were NIS 579 million in Q2 and NIS 764 million in H1; Q2 profit before taxes was NIS 2,965 million.

• H1 net profit reached NIS 3,930 million, up 31.1% YoY; total income rose 39.7% to NIS 11,084 million.

Outlook and guidance

• Supportive effects from rising rates and inflation were expected to approach exhaustion; markets implied gradual rate declines in 2024.

• Deposit-spread gains from higher rates may reverse and weigh on net interest income; results depend on rates, inflation, activity volumes and customer preferences.

• The 2023–2026 Poalim 2026 strategy targets responsible growth, improved service and productivity, modernization, digitization and innovation.

• Strong capital generation and buffers support continuation of a 40% dividend payout ratio.