Israeli Bank Hapoalim’s earnings rise but shares plunge on dividend disappointment

A branch of Bank Hapoalim is seen in Tel Aviv, Israel November 22, 2021. REUTERS/Corinna Kern

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JERUSALEM, March 8 (Reuters) – Bank Hapoalim (POLI.TA) on Tuesday reported a surge in fourth-quarter profit, boosted by funding income, as the bank continued to rebound from the pandemic with a strong credit growth, but the lack of a dividend payment caused its shares to fall.

Hapoalim, one of Israel’s two biggest lenders, paid dividends of NIS 1.5 billion ($456 million) in the second half of 2021, up from 862 million in December.

But it suspended other payments despite Israel’s banking regulator ending a temporary ban on regular dividends in place since the start of the pandemic.

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Two smaller rivals – Mizrahi-Tefahot (MZTF.TA) and First International (FIBI.TA) – have already announced quarterly dividends of 40% and 50% of net profit, respectively.

Hapoalim said it instead aims to use existing capital to meet strong credit demand and protect against any impact of current global market uncertainty on its capital and debt ratios.

Jefferies analyst Joseph Dickerson expressed disappointment with the lack of a fourth-quarter dividend and the bank’s reported earnings.

Hapoalim had the prospect of restoring dividend payments, but its shares fell 5% in Tel Aviv.

The bank said it earned 934 million shekels in the October-December period, up from 915 million a year earlier.

Net interest income increased from 2.24 billion shekels to 2.46 billion shekels.

Expenditure on credit losses was 187 million shekels, while in the prior year period it had recorded income from the unwinding of loan loss provisions of 187 million. In the first nine months of 2021, it had recovered NIS 1.41 billion from provisions for credit losses, reversing most of that built up during the crisis.

Net profit for the full year more than doubled to NIS 4.9 billion, which the bank attributes to a strong economy, while its credit portfolio grew by 17%.

“Over the past year, we have shown accelerated growth in our credit portfolio across all segments and responded to strong demand for credit from our customers, particularly corporate credit and home loans,” said CEO Dov Kotler.

Its Common Equity Tier 1 capital to risk components ratio fell from 11.52% in 2020 to 10.96% in 2021.

($1 = NIS 3.2984)

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Reporting by Steven Scheer; Additional reporting by Ari Rabinovitch; Editing by Uttaresh.V, Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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