Bank Hapoalim reports strong Q3 with 17.6% ROE and increased dividends

Investing.com -- Bank Hapoalim B.M on Thursday reported a return on equity of 17.6% for the third quarter of 2025, showing resilient performance across key metrics despite ongoing regional uncertainties.

The Israeli bank saw its net interest income rise by 1% quarter-over-quarter and 6% year-over-year, benefiting from a meaningful consumer price index contribution of ILS 468 million during the quarter. Credit growth and asset portfolio rollover helped offset tighter credit spreads.

Non-interest income jumped 14% from the previous quarter and 78% year-over-year, primarily driven by fee and other income. The bank recognized ILS 432 million related to the settlement of a derivative claim during the quarter.

Excluding this one-time income, total fees and other income decreased 2% quarter-over-quarter but increased 12% year-over-year.

Operating expenses decreased 3% from the previous quarter and remained flat year-over-year, mainly due to lower salary-related costs. The cost-income ratio for the third quarter stood at 31%.

The bank recorded a net credit charge of ILS 347 million with a cost of risk of 29 basis points, reflecting credit growth and continued uncertainty in the geopolitical and macroeconomic environment.

The non-performing loan ratio improved slightly to 0.49% from 0.50% in the second quarter, with the coverage ratio strengthening to 313% from 298%.

Overall lending increased 2% quarter-over-quarter and 11% year-over-year. Household lending rose 3% from the previous quarter and 9% year-over-year, while corporate lending grew 2% quarter-over-quarter and 12% year-over-year.

Medium-sized business lending was particularly strong, increasing 21% year-over-year.

Deposits grew 2% quarter-over-quarter and 4% year-over-year, driven primarily by corporations and institutional entities, both up 5% from the previous quarter and 9% year-over-year. Private individual deposits declined 1% quarter-over-quarter and 3% year-over-year.

The bank’s CET1 ratio remained stable at 12.05%, unchanged from the previous quarter but up 20 basis points year-over-year. This ratio is running 105 basis points above management’s target of 11%. Risk-weighted assets increased 2% quarter-over-quarter and 10% year-over-year. Tangible book value per share grew 14% year-over-year.

Bank Hapoalim announced distributions totaling 50% of net profit, with a dividend of ILS 0.84 per share (40% of profits) and the remaining 10% allocated to a share buyback program worth ILS 276 million.

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