Bank Hapoalim Announces 2016 Financial Results

Net Profit totaled NIS 2,628 million with ROE of 7.7%

Excluding exceptional items, Net Profit would have totaled NIS 3,427 million with an ROE of 10.1%

Dividend in respect of 2016 profits totaled NIS 609 million

TEL AVIV, Israel, March 30, 2017 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE:POLI) (ADR:BKHYY), Israel's leading financial group today announced financial results for the full year ended December 31, 2016.

Highlights of the 2016 financial statements:

  • Net profit totaled NIS 2,628 million compared with a profit of NIS 3,082 million in 2015.

  • Return on equity reached 7.7% in 2016, compared with 9.6% in 2015. Excluding a provision of NIS 528 million in respect of the investigation regarding the Bank Group’s business with American clients, and a tax expense of NIS 271 million related to the decrease in the corporate tax rate, the Return on Equity would have been 10.1%. The exceptional items totaled NIS 799 million.

  • Financing Profit totaled NIS 8,574 million in 2016 compared with NIS 8,141 million, an increase of 5.3%.

  • Salary Expenses decreased in 2016 by 3.1%. This decrease reflects the Bank's ongoing efficiency measures and the partial effect of the "Remuneration Limit Law", whose full implementation will be expressed as of 2017.

  • Tier 1 Capital Ratio: The Bank exceeded the capital adequacy targets required by the Bank of Israel and the Bank's Capital Plan. Tier 1 Capital Ratio stood at 11.01% on December 31, 2016, compared with 9.63% at December 31, 2015.

  • Credit growth in Israel: Credit continued to grow according to the Bank's strategy with an increase of 4.1% to Private Customers, 7.1% to Small Businesses and 4.6% in the Commercial segment.

  • Improvement in asset quality: Total problematic debts declined by 18.7% in 2016. The Bank runs a diversified credit portfolio with a better mix among the various credit segments (Individuals, Mortgages, Small Businesses, Commercial and Corporate).

  • Deposits from the public increased by 5.2%.

  • Dividend in 2016 - Dividend in respect of 2016 profits totaled NIS 609 million.

Mr. Oded Eran, Chairman of the Board:

"In the year that I am serving as a Director in Bank Hapoalim, and in the past few months as Chairman of the Board, I discovered a strong bank, with loyal customers, professional and talented management and employees, who identify with their workplace and are devoted to it, and are aware of the challenges that await us in the future and the need to continually improve in every possible parameter.

In the past year, the Bank began to implement the outline for the 2016-2018 strategic plan, which focuses the Bank on several main goals: the creation of agile, optimized infrastructures in areas such as capital management and human-capital development, and the crafting of innovative technological infrastructures as a platform for advanced services for retail and business clients; innovation in financial products and services; focused development of international operations; and continued operational excellence.

This year we achieved a leap forward in the digital value offer for customers, simultaneously with stronger personal and human connections. The Innovation Division was established at the Bank, with the mission of initiating and leveraging innovative solutions and new digital and technological growth drivers in order to accelerate the pace of change and the realization of initiatives.

In 2016 the Bank maintained its leadership in the financing of infrastructures and corporations in 2016. The positive momentum in the Bank’s revenues and number of customers in the commercial banking segment continued and we remain deeply committed to the small-business sector. At the same time, we continued to take steps for growth, diversification of risks and continued reduction in the concentration of the credit portfolio.

The Bank is examining the measures required by the legislation mandating the separation of the activity of the Isracard Group from the Bank. Implications of this legislation are being considered as required by the law, as well as conducting an analysis of the consequences for the activity of the Bank in the period following the separation of these activities. Existing and future legislation, as well as various regulatory directives will have material implications for the structure of the financial services sector and the competitive landscape map thereafter.

We intend to continue and even deepen our activity in the Fintech sector. We see this as a major challenge for the Bank, and at the same time an opportunity to create new ideas and partnerships.

The Bank has and will continue to promote and develop the quality of our most sizable and important resource: our employees. Our good working relations have for years been a strategic asset for the Bank. The Employee Union is a full partner in driving the Bank’s substantial achievements. As part of the promotion and cultivation of human resources, during the year the Bank continued to provide training to employees and managers through the Poalim Campus, online materials, and digital empowerment at the branches.

A subject that Bank Hapoalim traditionally awards with priority is social and corporate responsibility. We accord the highest level of importance to sound corporate governance, transparency and the fostering of sustainability values. We are committed to ongoing dialogue with all of our stakeholders: our shareholders; our customers, from individual households to the largest corporations in Israel; the employees of the Bank; and the entire Israeli society in which we operate and from which we draw our strength. As an expression of this commitment, the Bank has established in the past year the Stakeholders Division headed by a member of the Board of Management.

I would like to express my deepest gratitude to our customers, who continue to demonstrate their confidence in us every day; to my colleagues on the Board of Directors, to the CEO and Board of Management, and of course to all our employees, who are our most important asset. The Bank will continue to move forward and lead the transition to an advanced financial world centered on personal, human, and technological banking."

Arik Pinto, President and CEO:

"The Bank's financial results prove that it is the leading financial institution in Israel. These are strong results, even after taking into account the additional provisions made with respect to the US investigation. Excluding the provisions regarding the investigation and the deferred tax, there was an increase in all the significant financial parameters compared with 2015. The Bank surpassed both the capital target required by the Bank of Israel and its own internal capital plan, while optimizing the use of capital.

I pledge that in the coming years we will continue to act transparently and fairly whilst demonstrating social responsibility. We will act to correct past mistakes and work to strengthen the trust of the public in the banking system in general and in Bank Hapoalim in particular. Our strategic plan will enable us to continue to work for the prosperity and well-being of people, businesses and communities. I believe that next year we will be able to present not only excellent business results, but also a fair, humane, transparent and social bank and in one sentence: a bank which is personal, human and technological.

We established two new divisions this year: Innovation and Stakeholders. The Innovation Division promotes digital banking, Fintech, Smart Data, Smart Economics, BlockChain and more. The Stakeholders Division was established in order to maintain a value-based dialogue with all of the Bank's stakeholders.

We built an advisory network that includes over 200 pension consultants at the highest professional level, which provide objective and professional advice to tens of thousands of customers per year. Over the next five years, we will conduct 200,000 advisory calls with customers on pension and retirement issues, in addition to over one million financial consultation calls we make each year, conducted by our 700 consultants spread throughout the country.

We are already leading the field of direct banking. Our account management application has been downloaded by more than one million customers, and is the leading financial application in Israel, with the next-in-line application having fewer than half a million users. We will launch mobile banking vehicles that will reach remote communities or those of elderly citizens. To date, we deployed more than 1,200 machines for self-service banking throughout Israel, where every hour of the day more than 6,000 transactions are executed.

Today, the bank is involved in financing 27 projects with credit volume of 33 billion shekels, while in our work plan we expect to participate in the financing of 50 projects totaling a credit volume of 65 billion shekels.

In the coming years we will accelerate the organic growth of the Middle Market activity in the US market by expanding the banking teams and entering additional areas and geographical locations.

We will continue to work in order to obtain approval to sell insurance at the Bank's branches, an initiative which will significantly reduce insurance tariffs in Israel, and we will open a digital arena for small businesses, even for those who are not our customers, where they will be able to manage all their regular business needs – from accounting, e-commerce to marketing and content."

Main developments in the financial statements for the year 2016:

  • Total Income totaled NIS 14,721 million compared with NIS 14,362 million in 2015, an increase of 2.5%.
  • Operating and other income totaled NIS 5,376 million compared with NIS 5,433 million at the end of 2015.

  • Net Provision for credit losses totaled NIS 269 million, 0.10% of credit to the public in 2016, compared with a provision of NIS 475 million, 0.17% of credit to the public in 2015.

  • Gross Provision for credit losses, before recoveries, stood at 0.51% in 2016 compared 0.66% in 2015.

  • Operating and other expenses totaled NIS 9,490 million in 2016 compared with NIS 8,790 million in 2015. The increase in expenses stemmed mainly from the bank's provision with respect to the investigation by US authorities, in the amount of NIS 528 million. On the other hand, salary expenses decreased by 3.1%.

  • Net profit in the fourth quarter totaled NIS 138 million. Excluding the effects of the provision for the US investigation, and the decrease in the corporate tax rate, Net Profit totaled NIS 937 million.

  • Contribution to the community - The Bank continues to lead the way in contributing to the community in donations, especially in the fields of education, culture and welfare. The donations totaled NIS 44 million in 2016. During the year, more than 3,500 employees of the Bank engaged in volunteer activities.

Developments in Balance Sheet Items:

The consolidated balance sheet as at December 31, 2016 totaled NIS 448.1 billion, compared with NIS 431.6 billion at the end of 2015, an increase of 3.8%.

Net Credit to the public totaled NIS 272.0 billion, compared with NIS 278.5 billion at the end of 2015, a decrease of 2.3%. Lending to retail, small business and commercial customers increased while corporate lending decreased.

Credit to Private Customers in Israel totaled NIS 40.5 billion compared with NIS 38.8 billion at the end of 2015, an increase of 4.1%.

Mortgages in Israel totaled NIS 68.8 billion compared with NIS 66.8 billion at the end of 2015, an increase of 3.0%.

Credit to Small Businesses in Israel totaled NIS 27.3 billion compared with NIS 25.5 billion at the end of 2015, an increase of 7.1%.

Credit to the Commercial segment in Israel totaled NIS 32.2 billion compared with NIS 30.8 billion at the end of 2015, an increase of 4.6%.

Credit to the Corporate segment in Israel totaled NIS 68.0 billion compared with NIS 79.2 billion at the end of 2015, a decrease of 14.1%.

Deposits from the public totaled NIS 338.5 billion compared with NIS 321.7 billion at the end of 2015, an increase of 5.2%.

Shareholders' Equity totaled NIS 34.0 billion as at December 31, 2016, compared with NIS 33.0 billion at the end of 2015, an increase of 3.1%.

Total Capital Ratio stood at 15.11% on December 31, 2016, compared with 14.36% at December 31, 2015.

Leverage ratio - the ratio of the capital measurement (Tier 1 capital) to the exposure measurement (total balance sheet exposures, derivatives exposures and securities financing transactions, and off-balance sheet items), stood at 7.25% at the end of 2016.

Liquidity coverage ratio - the ratio between the supply of "high-quality liquid assets” to the net expected outgoing cash flow in a stress scenario, stood at 124.00% at the end of 2016.

Conference Call Information

Bank Hapoalim will host a conference call as well as a slide presentation webcast on Thursday March 30th, 2017 to review the 2016 Annual financial results at 10:00 a.m. U.S. Eastern Time / 3:00 p.m. UK Time / 5:00 p.m. Israel Time.

To access the call, please dial: 1-888-281-1167 in the U.S. and 1-866-485-2399 in Canada or (972) 3-9180685 for international participants. No password is required. The presentation slides, earnings release and the 2016 Annual financial statements are available at the Bank's website,, under Investor Relations, Financial Information.

A replay of the conference call will be available beginning at approximately 11:00 a.m. U.S. Eastern Time / 4:00 p.m. UK Time / 6:00 p.m. Israel Time on Thursday March 30, 2017 through 11:00 a.m. U.S. Eastern Time / 4:00 p.m. UK Time / 6:00 p.m. Israel Time on Thursday April 6th, 2017 by telephone at (972) 3-9255918 (international).

The webcast replay will also be available by audio playback on the Bank Hapoalim website at, under Investor Relations, Financial Information.

About Bank Hapoalim

Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group has about 235 retail branches, six regional business centers, a network of 22 business branches 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 America, Europe, the Far East, and Turkey. In these markets, the Bank is engaged in trade, corporate finance, private banking and retail banking.

Bank Hapoalim is listed on the Tel Aviv Stock Exchange. In addition, a Level-1 ADR is traded "over-the-counter" in New York.

For more information about Bank Hapoalim, please visit us online at

Principal Data of the Bank Hapoalim Group
For the year ended Dec. 31
20162015 2014 2013 2012
NIS millions
Main profit and loss data
Net profit attributed to shareholders of the Bank 2,6283,082 2,713 2,537 2,506
Net financing profit*9,3458,929 8,684 8,423 8,415
Fees and other income 5,3765,433 5,338 5,241 5,222
Total income 14,72114,362 14,022 13,664 13,637
Provision for credit losses269475 425 874 987
Operating and other expenses 9,4908,790 9,183 9,041 8,886
For the year ended Dec. 31
20162015 2014 2013 2012
NIS millions
Balance Sheet – Principal Data
Total assets448,105431,638 408,033 380,201 376,194
Net credit to the public271,957278,497 263,980 251,600 249,182
Securities71,44962,884 58,778 60,912 52,070
Deposits from the public338,502321,727 297,230 276,525 271,411
Bonds and subordinated notes33,56034,475 33,671 33,980 35,677
Shareholders’ equity34,04733,032 30,966 28,534 26,561
Net problematic credit risk7,6009,311 12,721 16,279 13,284
Net impaired balance sheet debts 3,110 4,265 5,389 6,817 6,701

For the year ended Dec. 31
2016 2015 2014 2013 2012
Main performance indicators
Return of net profit on equity attributed to
shareholders of the Bank
7.72%9.61% 9.10% 9.30% 10.02%
Return on assets0.59%0.71% 0.66% 0.67% 0.67%
Efficiency ratio – cost-income ratio(5)60.88%61.20% 61.56% 62.60% 63.80%
Financing margin from regular activity(4)2.09%2.09% 2.27% 2.12% 2.31%
Common equity Tier 1 capital ratio to risk-adjusted assets
according to Basel 3(1)
11.01%9.63% 9.29% - -
Total capital ratio to risk-adjusted assets according to
Basel 3(1)
15.11%14.36% 14.60% - -
Leverage ratio**(1)7.25%7.10% - - -
Liquidity coverage ratio**(2)(3)124.00%99.00% - - -

Main credit quality indicators
Allowance for credit losses as a percentage of credit to the
1.49%1.56% 1.56% 1.54% 1.61%
Provision for credit losses as a percentage of average credit to
the public
0.10%0.17% 0.16% 0.34% 0.39%
Additional data
Share price at end of year (in NIS)22.9 20.1 18.4 19.5 16.0
Total dividend per share (in agorot)***51.44 42.87 33.83 21.00 -
Number of employee positions at end of year11,628 11,930 12,683 13,240 13,769
Ratio of fees to total assets1.16%1.22% 1.28% 1.35% 1.36%
Net earnings per ordinary share ( in NIS )
Basic net earnings per share in NIS attributed
to shareholders of the Bank
1.98 2.32 2.05 1.92 1.90
* Net financing profit includes net interest income and non-interest financing income (expenses).
**Publication required as of 2015.
***According to the actual date of payment.

(1) For additional information, see the section "Capital, Capital Adequacy and Leverage" in the Financial Statement. The Bank applied the Basel 3 directives beginning January 1, 2014.
(2) For additional information, see the section "Liquidity and Financing Risk" in the Financial Statement. The Bank applied the liquidity coverage ratio directive beginning April 1, 2015.
(3) Calculated on an annualized basis.
(4) Financing profit from regular activity divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(5) Does not include expenses in respect of Bank Group's business with American clients.

For further information please contact: Press: Ofra Preuss, Bank’s Spokesperson Tel: +972-3-567-3635; Fax: +972-3-567-3500

Source:Bank Hapoalim