(Repeats to media clients with new slug to match filed
By Tova Cohen
TEL AVIV, March 30 Bank Hapoalim,
Israel's largest lender, reported lower quarterly net profit
because of one-off items including provisions for a U.S. tax
evasion investigation, as well as sharply higher expenses for
Its main domestic rival Leumi reported slightly
higher profit despite one-time tax expenses affecting the
banking sector. Leumi said it would resume dividends in 2017,
six years after stopping payouts due to the financial crisis.
Hapoalim, which issued a profit warning last week, said on
Thursday it earned 138 million shekels ($38 million) in the
fourth quarter, down from 586 million a year earlier. Excluding
one-time items, net profit was 937 million shekels.
Hapoalim said last week it would take provisions of $68.5
million regarding an investigation by U.S. authorities into
suspected tax evasion by the bank's U.S. clients.
This would be in addition to $120 million Hapoalim has already
set aside for this matter.
"We are making great efforts to progress" in the U.S.
investigations, Chief Executive Arik Pinto told reporters. "We
hope by the end of this year we will finish with this."
Leumi underwent a similar investigation and paid
$400 million in fines in late 2014.
Hapoalim's profit was also hit by credit loss expenses of
469 million shekels, compared with 147 million a year ago. It
attributed the large expense in part to one middle market client
in New York and three corporate clients in Israel.
Hapoalim has in recent years reduced its exposure to large
corporate clients as it focuses on the retail sector and small
and medium size businesses.
"For the first time we are not exposed to any company by
more than 15 percent of the bank’s capital," Chief Financial
Officer Yadin Antebi said.
Barclays analyst Tavy Rosner said the main influence on
Hapoalim's share price would be settling the U.S. investigation.
"In our view this would pave the way to a dividend payout
increase from the current 30 percent to 50 percent," he said.
Hapoalim declared a dividend of 41 million shekels, or 30
percent of net profit, for the quarter.
Leumi's board set a payout ratio of 20 percent of quarterly
profit starting in the first quarter of 2017.
Both banks have reduced headcount, with Hapoalim cutting
over 300 workers in 2016 to 11,628.
Leumi's workforce decreased by more than 1,000 employees in
2016, with most leaving towards the end of the year, so a
further reduction in salary expenses will be reflected in 2017.
Leumi's quarterly net profit rose to 443 million shekels
from 431 million a year ago but below a forecast of 468 million
shekels in a Reuters poll of analysts. It had credit loss
expenses of 46 million shekels versus 33 million a year ago.
($1 = 3.6178 shekels)
(Additional reporting by Steven Scheer; Editing by Edmund