The Koruna cut Bank Hapoalim’s profits by 85%


Poalim reports credit losses of NIS 1.1 billion • Do not panic – results are relatively good compared to the “black quarter” in the last decade

Photo: Toni Genes, shutterstock

Bank Poalim concludes the second quarter of the year with a net profit of NIS 133 million, compared with NIS 871 million in the corresponding quarter, a decrease of 84.7%. The return on equity in the second quarter was 1.4%, compared with 9.3% in the corresponding quarter. But the truth is that the total profit is higher – NIS 256 million and it is relevant.

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This is an accounting purchase that allows the recording of expenses and income that are not in the income statement. But these are consequential clauses. In the case of Poalim, this is a large profit as a result of the increase in the value of bonds and a large loss in revaluation of actuarial provisions and liabilities to employees.

Let’s start with the half full glass. In the face of a decline in credit in most areas of the economy, the real estate sector stood out: with an increase in borrowers’ credit and an increase in the credit of the companies operating in it. / Or a strategic decision to support this area more. In front of borrowers from the public – mortgage takers, there seems to be no problem. These are people who take mortgages and have a good, even very good mortgage. In front of other loans – it already depends on the specific loans and in this area there is a modest increase – 2% since the beginning of the year, while lending to households has increased by 5%, in simple terms, it seems that workers did not lead to this increase but led to this increase.

Dov Kotler, CEO of Bank Hapoalim | Photo: Gadi Dagon, News

Another positive point is non-financing income and interest, especially capital market income. Although there is a decrease in total revenues (see table). But not a dramatic drop. In the second quarter, activity in the capital market increased in turnover compared with the corresponding quarter, and this is reflected in the Bank’s revenues. On the other hand, in the field of credit cards there is a significant decrease and also in the heart of the bank – account fee management there is a significant decrease – 13.2%.

The bank reports a decrease in total salary expenses in parallel with the streamlining process, but pay attention to the components. Wages themselves rose to NIS 931 million in the quarter – an increase of 2.4% within a year. The grants and benefits for employees decreased so that in total the total salary decreased. It was to be expected that against the background of the period, the transition to digital, and the state of the economy, the bank will increase the rate of efficiency.

Big credit losses – so what?

The main effect on the quarter’s results is expenditure on credit losses, which amounted to NIS 1.1 billion in the quarter, of which group expenditure on credit losses of NIS 806 million against the background of the duration of the epidemic and its intensity. The increase in the group provision was mainly due to an increase in the provision rates in the various sectors of the economy, in view of the high uncertainty that exists in light of the effects of the Corona virus on the situation in the economy, and in the need to build a reserve for possible credit losses.

Despite this, during the second quarter the Bank continued to maintain high capital and liquidity. The capital attributed to the Bank’s shareholders amounted to NIS 38.0 billion at the end of the second quarter, compared with NIS 38.2 billion at the end of 2019, and the liquidity coverage ratio was 131% at the end of the second quarter of 2020, compared with 127% in the corresponding quarter last year.


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