Israel’s Bank Hapoalim looks to resume dividends in second quarter

A woman uses an automated teller machine (ATM) outside a Bank Hapoalim branch in Tel Aviv, Israel May 30, 2013. REUTERS/Nir Elias

JERUSALEM, May 23 (Reuters) – Bank Hapoalim (POLI.TA) reported an estimate-beating quarterly profit on Monday, helped by a spike in inflation that boosted financing income, and said it hoped to resume regular dividend payouts from the second quarter.

Amid further unwinding of pandemic loan default provisions, Hapoalim, one of Israel’s two largest lenders, earned 1.654 billion shekels ($494 million) in the first quarter, compared with 1.354 billion shekels a year earlier and a forecast of 1.1 billion shekels in a Reuters poll of analysts.

Hapoalim opted against a dividend distribution for a second quarter, citing the need for caution in the current economic environment and a possible global economic slowdown.

“The Bank aspires to return to a trajectory of ongoing dividend distribution soon … potentially … in the second quarter of 2022 and onward,” it said.

Hapoalim pointed to a Tier 1 capital ratio of 11.17% at the end of March, up from 10.96% at the end of 2021, as proof of its solid financial footing along with a “resilient” credit portfolio with low loan defaults.

Joseph Dickerson, an analyst at Jefferies, said the higher Tier 1 ratio was a surprise and that a payout of 40% of net profit would have lowered the ratio by 20 basis points.

After the regulator allowed banks to resume dividend payments, Hapoalim paid out 1.5 billion shekels in the second half of last year, 862 million of that in December.

Net interest income rose to 2.72 billion shekels in the first quarter from 2.23 billion shekels a year earlier, while income from the provision for loan losses rose to 600 million shekels from 508 million.

The non-performing loans ratio dipped to 0.92% from 1.11% in December.

Israel’s inflation rate reached 3.5% in March, rising to 4% in April. In March 2021, the inflation rate stood at 0.2%.

Hapoalim’s shares were up 2.9% in morning trade.

($1 = 3.3491 shekels)

Reporting by Steven Scheer; Editing by Ed Osmond, Kirsten Donovan

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