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Bank Hapoalim Announces 2014 Financial Results

Net Profit for the Year 2014 Rose to NIS 2,740 Million Compared With NIS 2,548 Million in 2013

Return on Equity for the Year Stood at 9.0%

TEL AVIV, Israel, March 10, 2015 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE:POLI) (ADR:BKHYY), Israel's leading financial group, today announced financial results for the fourth quarter and full year ended December 31, 2014.

Highlights of the 2014 financial statements:

  • Net profit for the year 2014 rose to NIS 2,740 million compared with NIS 2,548 million in 2013.
  • Return on equity reached 9.0% in 2014, compared with 9.2% in 2013.
  • The Bank recorded a provision for an efficiency program, based mainly on early retirement, in the amount of NIS 390 million.
  • The Bank recorded a provision in the amount of NIS 196 million with regard to the Bank Group's banking activity with American clients.
  • Tier 1 capital ratio in Basel 3 terms stood at 9.3% at the end of 2014, compared with 9.1% on January 1, 2014.
  • Total capital adequacy ratio in Basel 3 terms totaled 14.6% at the end of 2014, similar to the ratio on January 1, 2014.
  • Dividend paid in 2014 - The Bank's Board of Directors approved the quarterly cash dividend distribution, at a rate of approximately 15% of net profit, from its fourth quarter 2014 earnings in the amount of NIS 70 million. The Bank distributed dividends in the amount of NIS 412 million from profits for the year 2014.

Mr. Yair Seroussi, Chairman of the Board of Bank Hapoalim, commented:

"In 2014, Bank Hapoalim continued implementing the strategic plan for 2013-2015, focusing on three areas: efficiency, growth drivers and technology.

Precise and determined implementation by management and employees, led Bank Hapoalim to increase net profit in 2014, despite low interest rates, economic slowdown and tightened regulation.

The performance of 2014 testifies to the bank's capacity as a highly professional financial institution, a competitive and flexible organization that provides distinct value to its customers.

In 2014 we further developed our growth engines putting efforts and resources into fast growing segments of the population. In addition we continued strengthening our technological infrastructure, through innovation and creativity.

Bank Hapoalim's vision includes a commitment to Israeli society, in which we operate and from which we draw our strength. Once again, in 2014, the Bank led the entire banking system in its activity for the community. The Bank focused on projects in the fields of education and social welfare, with special emphasis on smart financial behavior, as a key to promote financial freedom. We are especially proud of the participation of thousands of Bank Hapoalim employees in volunteer work."

Mr. Zion Kenan, Chief Executive Officer of Bank Hapoalim, stated:

"Bank Hapoalim continues to lead the Israeli banking system in professionalism while constantly improving the level of service to our customers.

In 2014 the organization expanded its banking activity even as we pushed harder on our efficiency program. These efforts position Bank Hapoalim as an efficient and competitive bank.

The Bank continued to increase the number of retail clients, lead infrastructure and corporate financing, grew steadily in the commercial banking segment, in which we increased our market share and achieved impressive growth in revenue and number of customers.

The Bank continues to be committed to the small business sector. In 2014 we improved the value proposition, built innovative products, and provided constant support in funding and consulting this customer segment.

Bank Hapoalim's management is the best professional team in the industry in Israel. The professionalism and dedication of employees and managers is the largest and most important asset of the bank. We continued to develop and foster labor relations. The Employee Union is an essential partner in leading the Bank to these impressive results."

Main developments in the Annual Report for the year 2014:

Profit from regular financing activity in 2014 totaled NIS 7,661 million, compared with NIS 7,397 million in 2013, an increase of 3.6%. The financial margin from regular activity totaled 2.17% in 2014 compared with 2.12% in the previous year.

The provision for credit losses, before recoveries, totaled NIS 1,630 million in 2014 compared with NIS 1,623 million in 2013.

Net provisions for credit losses totaled NIS 425 million in 2014 compared with NIS 874 million in 2013. The rate of provision for credit losses as a percentage of credit to the public reached 0.16% at the end of 2014 compared with 0.34% at the end of 2013.

Fees and other income totaled NIS 5,338 million in 2014, compared with NIS 5,241 million in 2013, an increase of 1.9%.

Operating and other expenses totaled NIS 9,140 million in 2014, compared with NIS 9,024 million in 2013, an increase of 1.3%. Salary expenses decreased 2.5%.

Corporate social involvement and contribution to the community -

The Bank continues to lead in a varied and extensive range of community-oriented activities that take the form of social involvement, employee-volunteer activities and monetary donations, especially in the areas of education, culture and social welfare. The Bank Group's corporate social activity in 2014 totaled a financial value of approximately NIS 47 million.

Developments in Balance Sheet Items

The consolidated balance sheet as at December 31, 2014 totaled NIS 407.8 billion, compared with NIS 380.0 billion at the end of 2013, an increase of 7.3%.

Net credit to the public totaled NIS 264.0 billion at the end of 2014, compared with NIS 251.6 billion at the end of 2013, an increase of 4.9%, driven primarily by increases in the retail, small business and commercial segments.

Credit to retail customers totaled NIS 108.9 billion at the end of 2014, compared with NIS 100.4 billion at the end of 2013, an increase of 8.5%.

Mortgages totaled NIS 61.7 billion at the end of 2014, compared with NIS 57.9 billion at the end of 2013, an increase of 6.6%.

Credit to small businesses totaled NIS 29.3 billion at the end of 2014, compared with NIS 26.2 billion at the end of 2013, an increase of 11.8%.

Credit to the commercial (middle-market) segment totaled NIS 35.3 billion at the end of 2014, compared with NIS 30.7 billion at the end of 2013, an increase of 14.9%.

Deposits from the public totaled NIS 297.2 billion at the end of 2014, compared with NIS 276.5 billion at the end of 2013, an increase of 7.5%.

Shareholders' equity totaled NIS 31,361 million as at the end of 2014, compared with NIS 28,834 million at the end of 2013, an increase of 8.8%.

Conference Call Information

Bank Hapoalim will host a conference call today at 5:00 PM Israel Time / 3:00 PM UK Time / 11:00 AM Eastern Time to review the Bank's 2014 financial results.

To access the call, please dial: 1-888-281-1167 in the U.S. and 1-866-485-2399 in Canada or (972-3) 918-0685 for international participants. No password is required. The presentation slides, earnings release and the 2014 financial statement will be available at the Company's website, www.bankhapoalim.com, under Investor Relations, Financial Information.

A replay of the teleconference will be made available approximately two hours after the conference call is completed, through March 17, 2015 by telephone at (972) 3-9255918 (international). A webcast replay will also be available by audio playback on www.bankhapoalim.com, under Investor Relations, Financial Information.

About Bank Hapoalim

Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group has about 280 branches, including a network of 22 business branches, seven regional business centers, and specialized industry relationship managers for major corporate customers.

The Bank Hapoalim Group includes Isracard Ltd, Israel's leading credit card company as well as financial companies involved in investment banking, trust services and portfolio management.

Internationally, Bank Hapoalim operates through branches, subsidiaries and representative offices, in North and Latin America, Europe, the Far East, and Turkey. Bank Hapoalim is listed on the Tel Aviv Stock Exchange as well as through a Level-1 ADR traded "over-the-counter" in New York.

For more information about Bank Hapoalim, please visit us online at www.bankhapoalim.com.

Principal Data of the Bank Hapoalim Group
For the year ended Dec. 31 Change vs.
2014 2013 2012 2013 2012
NIS millions
Profit and Profitability
Net financing profit*** 8,684 8,423 8,415 3.1% 3.2%
Fees and other income 5,338 5,241 5,222 1.9% 2.2%
Total income 14,022 13,664 13,637 2.6% 2.8%
Provision for credit losses 425 874 987 (51.4%) (56.9%)
Operating and other expenses 9,140 9,024 * 8,886 * 1.3% 2.9%
Net profit attributed to shareholders of the Bank 2,740 2,548 * 2,506 * 7.5% 9.3%
For the year ended Dec. 31 Change vs.
2014 2013 2012 2013 2012
NIS millions
Balance Sheet – Principal Data
Total balance sheet 407,794 380,020 * 376,194 * 7.3% 8.4%
Net credit to the public 263,980 251,600 249,182 4.9% 5.9%
Securities 58,778 60,912 52,070 (3.5%) 12.9%
Deposits from the public 297,230 276,525 271,411 7.5% 9.5%
Bonds and subordinated notes 33,671 33,980 35,677 (0.9%) (5.6%)
Shareholders' equity 31,361 28,834 * 26,561 * 8.8% 18.1%
Net total problematic credit risk** 12,721 16,279 13,284 (21.9%) (4.2%)
Of which: net impaired balance sheet debts** 5,389 6,817 6,701 (20.9%) (19.6%)
2014 2013 2012
Main Financial Ratios
Net loan to deposit ratio 88.8% 91.0% 91.8%
Net loan to deposit ratio including bonds and subordinated notes 79.8% 81.0% 81.1%
Shareholders' equity to total assets 7.7% 7.6% 7.1%
Common equity Tier 1 capital according to Basel 3 9.3%
Total capital according to Basel 3 14.6%
Ratio of core capital to risk-adjusted assets according to Basel 2 9.3% * 8.8% *
Ratio of total capital to risk-adjusted assets according to Basel 2 15.5% * 15.6% *
Financing margin from regular activity(1) 2.17% 2.12% 2.31%
Cost-income ratio(4) 61.0% 62.8% * 63.8% *
Total income to assets(2) 3.7% 3.7% * 3.8% *
Total expenses to assets(3) 2.4% 2.4% * 2.5% *
Provision for credit losses as a percentage of the average recorded balance of credit to the public 0.16% 0.34% 0.39%
Net return of profit attributed to shareholders of the Bank on equity 9.05% 9.24% * 10.02% *
Basic net earnings per share in NIS attributed to shareholders of the Bank 2.07 1.93 * 1.90 *
* Retrospective implementation - for details regarding the retrospective implementation of the Supervisor of Banks' guidelines concerning capitalization of software costs, see Note 1D(2) to the Financial Statements.
** Net of the individual allowance, the allowance according to the extent of arrears, and the collective allowance in respect of problematic credit risk.
*** Net financing profit includes net interest income and non-interest financing income (expenses).
(1) Financing profit from regular activity (see the Board of Directors' report, in the section Profit and Profitability – Development of Financing Profit) is divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(2) Total income divided by the average balance of total assets.
(3) Total operating and other expenses, divided by the average balance of total assets.
(4) Does not include provision for efficiency plans and provision with regard to banking services to US clients .
Principal Data of the Bank Hapoalim Group (continued)
For the three months ended
Dec. 31, 2014 Sept. 30, 2014 June 30, 2014 March 31, 2014 Dec. 31, 2013
NIS millions
Profit and Profitability
Net financing profit*** 2,146 2,160 2,322 2,056 2,073
Fees and other income 1,438 1,304 1,297 1,299 1,394
Total income 3,584 3,464 3,619 3,355 3,467
Provision for credit losses 363 80 (3) (15) (59)
Operating and other expenses 2,501 2,219 * 2,255 * 2,165 * 2,591 *
Net profit attributed to shareholders of the Bank 478 734 * 781 * 747 * 633 *
Dec. 31, 2014 Sept. 30, 2014 June 30, 2014 March 31, 2014 Dec. 31, 2013
NIS millions
Balance Sheet – Principal Data
Total balance sheet 407,794 393,989 * 370,156 * 376,635 * 380,020 *
Net credit to the public 263,980 257,826 252,066 250,232 251,600
Securities 58,778 57,190 63,800 65,333 60,912
Deposits from the public 297,230 281,760 268,935 276,014 276,525
Bonds and subordinated notes 33,671 34,073 30,533 31,314 33,980
Shareholders' equity 31,361 31,100 * 30,308 * 29,623 * 28,834 *
Net total problematic credit risk** 12,721 13,362 13,483 14,205 16,279
Of which: net impaired balance sheet debts** 5,389 5,719 6,038 6,305 6,817
For the three months ended
Dec. 31, 2014 Sept. 30, 2014 June 30, 2014 March 31, 2014 Dec. 31, 2013
Main Financial Ratios
Net loan to deposit ratio 88.8% 91.5% 93.7% 90.7% 91.0%
Net loan to deposit ratio including bonds and subordinated notes 79.8% 81.6% 84.2% 81.4% 81.0%
Shareholders' equity to total assets 7.7% 7.9% * 8.2% * 7.9% * 7.6% *
Common equity Tier 1 capital according to Basel 3 9.3% 9.3% * 9.5% * 9.4% *
Total capital according to Basel 3 14.6% 14.6% * 14.9% * 14.9% *
Ratio of core capital to risk-adjusted assets according to Basel 2 9.3% *
Ratio of total capital to risk-adjusted assets according to Basel 2 15.5% *
Financing margin from regular activity(1)(2) 2.12% 2.21% 2.31% 2.09% 2.13%
Cost-income ratio(5) 56.4% 62.5% * 60.8% * 64.5% * 62.0% *
Total income to assets(3) 3.7% 3.7% * 3.9% * 3.6% * 3.7% *
Total expenses to assets(4) 2.5% 2.4% * 2.4% * 2.3% * 2.8% *
Provision for credit losses as a percentage of the average recorded balance of credit to the public(1) 0.54% 0.12% (0.00%) (0.02%) (0.09%)
Net return of profit attributed to shareholders of the Bank on equity(1) 6.23% 9.87% * 10.89% * 10.67% * 9.20% *
Basic net earnings per share in NIS attributed to shareholders of the Bank 0.36 0.55 * 0.59 * 0.57 * 0.48 *
* Retrospective implementation - for details regarding the retrospective implementation of the Supervisor of Banks' guidelines concerning capitalization of software costs, see Note 1D(2) to the Financial Statements.
** Net of the individual allowance, the allowance according to the extent of arrears, and the collective allowance in respect of problematic credit risk.
*** Net financing profit includes net interest income and non-interest financing income (expenses).
(1) Calculated on an annualized basis.
(2) Financing profit from regular activity (see the Board of Directors' report, in the section Profit and Profitability – Development of Financing Profit) is divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(3) Total income divided by the average balance of total assets.
(4) Total operating and other expenses, divided by the average balance of total assets.
(5) Does not include provision for efficiency plans and provision with regard to banking services to US clients.

CONTACT: For further information please contact: Press: Ofra Preuss, Bank's Spokesperson Tel: +972-3-567-3635; Fax: +972-3-567-3500 spokesperson@ mailpoalim.co.il Investors: Effie Werber, Head of Investor Relations Tel. +972-3-567-3440; Fax: +972-3-5673470 effie.werber@mailpoalim.co.ilSource:Bank Hapoalim