Bank Hapoalim (POLI) Q4 2023 earnings summary

Executive summary

• FY23 net profit was NIS 7,360 million, up from NIS 6,532 million in 2022; ROE was 15.0% versus 14.8%.

• Income growth of 19.3% outpaced expense growth of 3.2%, bringing the FY23 cost-income ratio to 38.5%, down from 44.5%.

• Capital, liquidity and credit-loss buffers supported resilience amid war-related uncertainty, including a NIS 8.0 billion allowance.

Financial highlights

• FY23 total income was NIS 21,382 million; net financing profit reached NIS 17,352 million, up 23.5% YoY.

• Net interest income rose 19.4% to NIS 16,085 million; fee income increased 5.0% to NIS 3,892 million.

• Operating and other expenses were NIS 8,231 million, up 3.2%; Q4 expenses were NIS 1,897 million, down 7.9% QoQ.

• FY23 credit-loss provision was NIS 1,879 million, versus a NIS 34 million release in 2022; Q4 provision was NIS 453 million.

• Q4 net profit was NIS 1,761 million, up 5.5% QoQ; ROE was 14.0%.

Outlook and guidance

• 2024 loan growth was expected to be slower than in 2023, reflecting economic uncertainty; economic growth was forecast at ~2%, subject to developments in northern Israel.

• Poalim 2026 priorities included service excellence, corporate-banking and capital-markets leadership, retail-model adaptation, productivity, innovation and responsible growth.

• Strong capital, liquidity, responsible growth and underwriting standards were cited as support for future growth and opportunities.

• The stated dividend policy allowed payouts up to 40%, subject to Bank of Israel guidance; management cited potential for higher distributions, with no decision on buybacks or a policy update.

• Liquidity was sufficient for 2024 needs; capital-markets funding could be considered in a sharp rebound scenario but was not the current plan.