BANK HAPOALIM B.M. 20
23
Bank Hapoalim
Annual Report 2023
2023 Annual Financial Review // 2
Disclaimer
This presentation includes condensed information and selected data from Bank Hapoalim's 2023 annual financial results.
This presentation is not a substitute for the Bank's 2023 Annual Financial Statements, which include the full financial information, including forward-looking information. The financial statements are available on the Bank's website at www.bankhapoalim.com - Investor Relations/Financial Information.
Some of the information in this presentation that does not refer to historical facts constitutes forward-looking information, as defined in the Securities Law.
Forward-looking statements regarding the Bank's business, financial condition and results of operations, are subject to risks and uncertainties that may cause actual results to differ materially from those
contemplated. Such forward looking statements, include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the Bank's accounting policies, as well as certain other risk factors detailed from time to time in the Bank's filings with the securities authorities.
Data relating to business segments is presented according to "operating segments based on management approach" as disclosed in note 28A in the Bank's annual report.
Special items in ROE, net profit and expenses refer to provision made in relation to the investigation of the US authorities.
2023 Annual Financial Review
Dov Kotler, CEO
CEO comments
2023 Annual Financial Review // 4
2023: Another year of robust profitability and efficiency
ROE
14.8% 15.0%
11.8%
Net profit, NIS million
6,532 | 7,360 | |
4,914 | ||
2021 | 2022 | 2023 |
Substantial positive jaws
Total income vs. total expenses evolution, NIS million
38.5% | Cost-income | |
ratio, 2023 | ||
21,382 | ||
17,920 | Total | |
14,392 | income | |
13,176 | ||
7,501 | 7,803 | 7,972 | 8,231 | Total |
expenses |
2020 2021 2022 2023
Note: Excluding special items, net profit for 2021 totaled NIS 4,957 million (ROE of 11.9%) and total expenses for the years 2020 and 2021 are NIS 7,487 million and NIS 7,753 million respectively.
2023 Annual Financial Review // 5
Following the initial shock, economic activity is recovering; still several economic challenges ahead
Economic "routine" in most sectors
Credit card purchases, index; source: CBS
120 | ||||||
110 | ||||||
100 | ||||||
90 | ||||||
80 | ||||||
Jan-23 | Mar-23 | May-23 | Jul-23 | Sep-23 | Nov-23 | Jan-24 |
Labor market is gradually recovering
Source: CBS
40 | Unemployment rate including |
35 | |
30 | those temporarily absent from |
25 | work |
20 | Unemployment rate |
15 | |
10 | 4.8 |
5 | |
3.4 | |
0 |
Economic challenges ahead
100k | Number of evacuees (approx.) from |
border communities in Israel, to date | |
~100k | Shortage in construction workers | |
(mostly Palestinians) | ||
-80% | Drop in incoming tourism | ||
120 bps | Israel's risk premium increased | ||
and remained elevated | |||
2023 Annual Financial Review // 6
Well-prepared for potential negative developments due to pre-adjusted growth pace and continued build of allowance buffer
Credit growth pace was already aligned to global uncertainties in 2022…
…while consistently building the allowance buffer
Credit growth, QoQ
Covid
rebound period
5.8%
NIS million
1.64% 1.65%
1.86% | 1.92% | Allowance to |
credit ratio* |
1.74%
5.2% | Pre-adjusted | |||
growth | ||||
3.3% | ||||
3.6% | 2.1% | 2.6% | ||
1.9% | 1.5% | 1.5% | ||
1.1% 0.7%
7,989 | |||||||||
7,684 | Balance of | ||||||||
allowance for | |||||||||
6,516 | 6,664 | 7,123 | credit losses | ||||||
2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 |
4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 |
* Allowance in respect of loans, including off-balance sheet items, of total loans.
2023 Annual Financial Review // 7
Strengthened capital and liquidity position will allow for future realization of opportunities
Organic capital generation boosted by strong growth in profitability
1.72% | -0.57% | -0.61% | |||||
0.23% | 12.02% | vs. | |||||
11.25% | |||||||
CET-1 min. | |||||||
10.5% | internal | ||||||
target | |||||||
10.23% CET-1 min. | |||||||
regulatory | |||||||
req. | |||||||
31.12.22 | Net | Dividend | Change | OCI | 31.12.23 | ||
CET-1 | profit | during 2023 | in RWA | CET-1 |
Ample liquidity mainly based on retail deposits
129% | 128% | 73% | 58% |
LCR | NSFR | LDR | Retail deposits |
Above regulatory | of total deposits |
Requirement
of 100%
Less reliant on capital markets for funding | ||||
8.9% | ||||
4.4% | 4.3% | 3.8% | Ratio of bonds and | |
subordinated notes to | ||||
total liabilities | ||||
(as of Sept. 30, 2023) | ||||
Peer 4 | Peer 3 | Peer 2 | POLI |
2023 Annual Financial Review // 8
The bank's position is supported by high underwriting standards and a responsible risk-management approach
Focus on customers whose main sector of activity is housing construction*
52.0%
Housing | ||||||
Real-estate | 27.1% | |||||
construction | ||||||
activity in the | Yield- | |||||
corporate | generating | |||||
3.2% | division, in Israel | properties | ||||
Construction for | ||||||
commerce, services | ||||||
and industry | 17.7% | |||||
Other |
Sound buffers for any development
2.47% | Allowance to loans |
in the real estate sector in Israel |
High underwriting standards in the real-estate and mortgages sectors**
~7 | % of land financing | % | of completed | |||
properties financing | ||||||
with LTV>80% | ~3 | with LTV>80% | ||||
% | of real estate | |||||
The absorption capacity of the projects is | ||||||
under construction | ||||||
the maximum possible rate of decline in the | ||||||
99 | with absorption | Bank incurring losses from the projects | ||||
value of the asset as completed without the |
capacity of over 25%
46% Average LTV of housing loans
- For full disclosure regarding segmentation of credit risk in the construction and real-estate sectors in Israel, by customers' principal area of activity, refer to table 3-6 in the annual report.
- For full disclosure regarding credit risk in the real-estate sector at the Corporate Banking Division in Israel, by financing rate (LTV) and absorption capacity refer to table 3-8 in the annual report.
2023 Annual Financial Review // 9
Pioneering and proactive in supporting our customers
100
NIS million
Founded an aid fund, dedicated to rebuilding of the communities affected by the war in the south of Israel. The fund will collaborate with local council leaders, based on a mapping and prioritization process to identify specific needs and uses.
Comprehensive support for customers
The bank expanded the BOI assistance program and offered its customers further benefits, including mortgage and loan deferrals, fee and interest waivers, interest- free overdrafts and special loans.
Total benefits amounted to
NIS 159 million as of Dec. 31, 2023.
As of the date of publication, an additional NIS 59 million will be booked in 1Q24.
Banking support
We created a support system for the relatives of the casualties and hostages among our customers: we offered personal service by employees at the bank, in order to deliver quick solutions for all of their banking needs. In February 2024, we also opened a contact center dedicated to our customers who have been injured during their service in the military or security forces in the Swords of Iron War, to respond personally to their banking-related requests.
Emergency aid
The bank set up an emergency network and provided emergency aid at a volume of NIS 10 million for immediate needs in various areas, including donations to rescue organizations, hospitals, non-profit organizations providing mental-health support, the Hostages and Missing Families Forum, and aid for displaced families. The bank also acted to raise donations through the Bit app, where NIS 14 million has been collected for similar purposes.
2023 Annual Financial Review // 10
Poalim 2026: moving forward with our strategy amid the war
Professional excellence & leading service
Continued leadership in corporate banking and capital markets
Adaptation of the retail banking operating model
Resource optimization and greater productivity
Differentiating and influential innovation
Responsible growth
CTRO Unit
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Bank Hapoalim BM published this content on 07 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 March 2024 07:41:09 UTC.
