Bank Hapoalim (POLI) Q3 2022 earnings summary

Executive summary

• Q3 net profit was NIS 1.785bn and ROE was 15.9%; 9M net profit reached NIS 4.782bn, up 20.2% YoY, with ROE of 14.6%.

• Strong financing income, fee growth, disciplined expenses and low credit losses supported profitability and capital generation.

Financial highlights

• Q3 total income was NIS 4.753bn, including net financing profit of NIS 3.751bn; net interest income rose 41.8% YoY to NIS 3.636bn.

• Regular financing income rose 54.8% YoY and 17.2% QoQ; 9M regular-activity financing profit, excluding non-regular effects, rose 38.6% to NIS 10.364bn.

• Q3 fees and other income totaled NIS 1.002bn; fees rose 17.4% YoY, while 9M fees and other income rose 12.2% to NIS 2.906bn.

• Operating and other expenses were NIS 1.972bn, down 1.4% YoY; cost-to-income ratio was 41.5% and 9M positive jaws were 54.9%.

• 9M net financing profit rose 19.8% to NIS 9.783bn; credit-loss provision was income of NIS 464m versus income of NIS 1.407bn a year earlier.

Outlook and guidance

• Financing income was expected to remain favorable amid further rate increases, reflecting balance-sheet exposure and improving spreads.

• Responsible credit growth and continued organic capital generation were expected to support growth and future dividends.

• Credit losses were expected to normalize gradually; the historical credit-loss ratio was 20–25 bps, with timing uncertain. A 1% parallel rate increase was modeled to add ~NIS 800m, subject to deposit behavior and customer preferences.

• Strategy for 2022–2024 focused on growth, digital services, customer experience and core-system modernization; an updated plan through 2026 was being formulated.