Bank Hapoalim posts record NIS 6.5b profit in 2022 amid steady rate hikes

Net interest income increased 38% to NIS 13.5 billion as the Bank of Israel hiked borrowing costs from a low of 0.4% in April to 3.25% in November 2022

Sharon Wrobel is a tech reporter for The Times of Israel.

View of the Bank Hapoalim offices in the center of Tel Aviv. August 4, 2015.  (Miriam Alster/Flash90)
View of the Bank Hapoalim offices in the center of Tel Aviv. August 4, 2015. (Miriam Alster/Flash90)

Bank Hapoalim, one of Israel’s largest lenders posted a record net profit in 2022 as rising interest rates and higher inflation fueled total income and credit activities.

Net profit in 2022 rose 33 percent to NIS 6.5 billion ($1.8 billion) from NIS 4.9 billion ($1.4 billion) in the previous year. The main driver of the jump in net profit is the bank’s 24.5% growth in total income and NIS 34 million ($9.5 million) in income from credit losses. Total expenses increased by only 2.2% during the same period.

Income from regular financing activity for the full year of 2022 soared 45.3% to NIS 14.5 billion ($4.1 billion) driven by steady growth in credit volumes and higher borrowing costs.

Net profit in the fourth quarter of 2022 almost doubled to NIS 1.75 billion ($490 million) from NIS 934 million ($262 million) during the same period last year. The results were driven by the “continuous growth in business activity and a high contribution of the increase in central bank rates, as well as a high contribution of the CPI,” Hapoalim said.

In 2022, the Bank of Israel started to steadily hike the benchmark interest rate from a low of 0.1% last April as it battles rising inflation. The central bank last raised its key lending rate by 50 basis points to 4.25% in February in a bid to rein in inflation which has been hovering above 5%. The central bank seeks to bring consumer prices back into a target range of between 1% and 3%.

“2022 began with deceleration of global economic activity, due to the war in Ukraine, and continued with mounting local and global uncertainty fueled by rising inflation and interest rates, in Israel and worldwide,” stated Bank Hapoalim President and CEO Dov Kotler. “The Israeli economy continued to demonstrate its resilience, even during a time of growing uncertainty.”

Net interest income in 2022 increased 38% to NIS 13.5 billion ($3.8 billion) versus the previous year. Hapoalim’s credit portfolio grew by 10.2% in the full year of 2022.  Corporate credit last year rose by 12.4% and commercial credit increased by 9.8%. The housing loan portfolio grew by 11.4%. Small business credit rose 3.2% year-on-year. Consumer credit declined by 2.3%.

“Over the last year, we continued the responsible growth of our credit portfolio, particularly in corporate and commercial credit and in housing loans; helped our customers cope with increased mortgage payments,” Kotler said.

Hapoalim’s board of directors announced the distribution of a dividend of NIS 525 million ($147 million), or 30% of the quarterly net profit, to be paid on March 30, 2023. Total dividend paid in 2022 was NIS 1.5 billion ($420 million).

Hapoalim’s board of management and its board of directors approved the adoption of a multi-annual strategic plan for 2023-2026 to position the bank as a “leading” lender in Israel. The three pillars of the plan are geared to strengthen the bank’s leadership in core banking, boost productivity, and enhance innovation.

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