(Adds analyst comments, details, background)
By Tova Cohen
TEL AVIV May 24 Bank Hapoalim,
Israel's largest lender, on Wednesday reported
better-than-expected first-quarter net profit on higher income
from financing activities and fees.
In the fourth quarter Hapoalim had reported lower profit
after it took provisions of $68.5 million regarding an
investigation by U.S. authorities into suspected tax evasion by
the bank's U.S. clients.
This was in addition to $120 million Hapoalim had already
Bank Leumi underwent a similar investigation and
paid $400 million in fines in late 2014.
"While we see the ongoing U.S. investigation as a continuing
potential headline risk, we see the bank as capable of
weathering any potential sizable fines," Barclays analyst Tavy
Hapoalim earned 767 million shekels ($213.5 million) in the
first quarter, up from 674 million a year earlier and above the
754 million forecast in a Reuters poll of analysts.
Net financing income rose to 2.26 billion shekels from 2.21
billion, while it had net credit loss expenses of 107 million
shekels compared with 46 million a year earlier.
Hapoalim's net credit to the public slipped 0.7 percent
given the bank’s policy to reduce its exposure to large
corporate clients as it focuses on the retail sector and small
and medium-sized businesses.
The bank declared a quarterly dividend of 307 million
shekels, after it said last month it would increase its cash
payout to 40 percent of net profit.
Hapoalim is next expected to seek approval to raise its
dividend distribution to 50 percent of profit.
Its core Tier 1 capital ratio to risk-weighted assets
rose to 11.21 percent from 11.01 percent at the end of 2016.
"This level easily supports a dividend increase to 50
percent," said Barclays' Rosner, who rates Hapoalim shares
Bank Leumi will report its results on Thursday.
($1 = 3.5927 shekels)
(Reporting by Tova Cohen; editing by Steven Scheer and Jason