Bank Hapoalim’s 3Q profit declines

Bank Hapoalim, Israel’s largest lender, reported on Tuesday lower quarterly net profit, weighed down by provisions for a US tax investigation and the ending of its activities in Switzerland.

Hapoalim said it earned NIS 469 million ($134m.) in the third quarter, down from NIS 699m. a year earlier. Excluding the provisions, net profit would have been NIS 861m., compared with NIS 819m. forecast in a Reuters poll of analysts.

Last week, the bank said it would set aside an additional $80m. in the third quarter to cover a possible future settlement in a US tax-evasion investigation, bringing the total amount provisioned for the case to $268.5m.

At this stage, Hapoalim said, it cannot reliably estimate the extent of its exposure in connection with the US investigation. “The eventual outcome may be different, such that the amounts paid within resolutions with the American authorities, if attained, may be significantly higher than the amount of the provision,” it said.

Hapoalim wrote off NIS 110m. for ending its Swiss activities.

Net financing income rose 5.4% to NIS 2.32 billion in the quarter, while net credit-loss expenses amounted to NIS 25m., compared with income of NIS 118m. a year earlier.

Its core Tier 1 capital ratio to risk-weighted assets, a key measure of financial strength, rose to 11.26% from 11.01% at the end of 2016.

The bank said nonperforming loans as a percentage of total credit was at an all-time low of 0.79% in the quarter.

The bank declared a quarterly dividend of NIS 188m. for a payout of 40% of net profit, bringing its distribution in the first nine months to NIS 820m.

Hapoalim’s top rival, Leumi, last week reported quarterly profit fell to NIS 820m. from NIS 919m. (Reuters)