November 15, 2018 / 9:10 AM / a month ago

UPDATE 1-Bank Hapoalim Q3 profit tops estimates, dividend on hold

(Adds details, analyst’s quote, background)

By Tova Cohen

TEL AVIV, Nov 15 (Reuters) - Bank Hapoalim, Israel’s largest lender, reported higher quarterly net profit that beat estimates, but again decided not to pay a quarterly dividend due to an ongoing U.S. tax evasion investigation.

Hapoalim said on Thursday it earned 950 million shekels ($257.5 million) in the third quarter, up from 469 million a year earlier and compared with 854 million forecast in a Reuters poll of analysts.

Excluding one-time items, net profit in the quarter was 980 million shekels, compared with 861 million a year earlier.

The bank said it did not make an additional provision this quarter to cover a possible future settlement regarding the investigation of the bank’s business with U.S. clients. It previously had provisioned $365 million.

The bank’s board did not declare a quarterly dividend for the second quarter in a row due to the uncertainty of the probe. It said this did not change its policy of paying dividends of up to 40 percent of quarterly net profit.

“We believe this is for sake of conservatism, despite the bank’s very large excess capital position,” said Barclays analyst Tavy Rosner, who rates the shares “overweight”.

Its shares were up 0.8 percent to 26.58 shekels in morning trade, outpacing a flat blue chip Tel Aviv-35 index.

Net interest income rose to 2.23 billion shekels in the quarter from 2.09 billion a year earlier while it had a credit loss expense of 118 million shekels compared with income of 8 million.

Operating expenses fell 11 percent and included one-time expenses related to legal fees and the discontinuation of Swiss activities.

Its core Tier 1 capital ratio to risk-weighted assets, a key measure of financial strength, rose to 11.32 percent from 11.26 percent at the end of 2017.

Top rival Leumi said on Tuesday it earned 936 million shekels in the quarter, up from 820 million a year earlier.

In September U.S.-Israeli billionaire Shari Arison said she would sell shares in Hapoalim to the public after failing to find a strategic partner to share control of the bank.

$1 = 3.6891 shekels Reporting by Tova Cohen; editing by David Evans

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