Bank Hapoalim Announces 2012 Financial Results

Bank Hapoalim Announces 2012 Financial Results

                     Net Profit totaled NIS 2,543 million

                          Return on Equity of 10.1%

                       Core Tier 1 Capital rose to 8.9%

TEL AVIV, Israel, April 2, 2013 (GLOBE NEWSWIRE) -- Bank Hapoalim (TASE:POLI)
(ADR:BKHYY), Israel's leading financial group, today announced financial
results for the fourth quarter and full year ended December 31, 2012.

Highlights of the 2012 financial statements:

  *Net profit totaled NIS 2,543 million in 2012 compared with NIS 2,746
    million in 2011.
    
  *Return on equity reached 10.1% in 2012, compared with 12.0% in 2011.
    
  *Total consolidated assets as at December 31, 2012 totaled NIS 376.4
    billion, compared with NIS 356.7 billion at the end of 2011, an increase
    of 5.5%.
    
  *Shareholders' equity totaled NIS 26,755 million as at December 31, 2012,
    compared with NIS 23,819 million at the end of 2011, an increase of 12.3%.
    
  *Core Tier 1 capital ratio continued its trend of improvement and rose to
    8.9% at December 31, 2012 compared with 7.9% at the end of 2011.
    
  *The Bank's total capital adequacy ratio reached 15.7% at the end of 2012,
    compared with 14.1% at the end of 2011.

Mr. Yair Seroussi, Chairman of the Board of Bank Hapoalim, commented:

In 2012, Bank Hapoalim successfully completed the three-year Strategic Plan
that we presented to the market in late 2009. We are proud to report that Bank
Hapoalim achieved the goals that we set for ourselves, including:

  *Positioning Bank Hapoalim as Israel's leading financial institution;
  *Stabilizing the Bank on a path of growth; and
  *Achieving attractive returns for shareholders.

Our determined and accurate implementation of the strategic plan served as the
foundation of the Bank's success in 2012. During the year, the Bank
strengthened its key revenue drivers across all business divisions. At the
same time, we conducted a significant streamlining process in order to enhance
the Bank's competitive edge and adjust to the increasing level of competition
in the banking industry.

It is noteworthy to mention the recognition Bank Hapoalim received as the
leading financial institution in Israel. Especially from prestigious industry
publications such as The Banker, Euromoney and Global Finance, who selected
Bank Hapoalim as the Best Bank in Israel for 2012.

Mr. Zion Kenan, Chief Executive Officer of Bank Hapoalim, said:

The Bank's financial results for 2012, which was a challenging year for the
global economy, the Israeli economy and Israeli banking sector, indicate above
all that Bank Hapoalim continues to lead the Israeli banking system.

I am proud to say today that we met all our targets in the three-year
strategic plan we introduced in late 2009. As part of our successful
conclusion to 2012, the Board of Directors approved a new three-year Strategic
Plan covering the years 2013 through 2015.

The new three-year plan is based on a thorough analysis of the economic,
regulatory as well as business environment and incorporates a sound vision of
the changes in the competitive environment in which the Bank operates.

In the face of lingering challenges in the global economy, government debt
markets and international financial system, we anticipate that this program
will provide the Bank a solid platform upon which to continue to move along a
path of steady growth. We will look to achieve this growth while providing a
proper return on long-term capital and further consolidating the leadership
position of Bank Hapoalim in the Israeli banking system.

Main developments in the Annual Report for the year 2012:

During this period, the Bank successfully culminated the implementation of its
three-year strategic plan. Impressive business results and double-digit return
on shareholders' equity were achieved, in line with stated goals.

Profit from regular financing activity (excluding one-off and other
extraordinary items) in 2012 totaled NIS 7,733 million, compared with NIS
7,542 million in 2011, an increase of 2.5%, mainly as a result of an increase
in the volume of activity.

The financial margin from regular activity decreased to 2.22% in 2012,
compared with 2.39% in 2011, mainly due to the prevailing low interest rate.

The provision for credit losses totaled NIS 987 million in 2012 compared with
NIS 1,202 million in 2011. The rate of provision as a percentage of credit to
the public reached 0.39% at the end of 2012 compared with 0.50% at the end of
2011. The decrease resulted from a decline in the provision for debt examined
on a collective basis.

Fees and other income totaled NIS 5,222 million in 2012, compared with NIS
5,204 million in 2011, an increase of 0.3%.

Operating and other expenses totaled NIS 8,825 million in 2012, compared with
NIS 8,365 million in 2011, an increase of 5.5%, mainly related to higher
salary expenses and from an increase in maintenance and depreciation expenses.

Corporate social involvement and contribution to the community - The Bank
continues to lead in a varied and extensive range of community-oriented
activities that take the form of social involvement, employee-volunteer
activities and monetary donations, especially in the areas of education,
culture and social welfare. The Bank Group's corporate social activity in 2012
totaled a financial value of approximately NIS 48 million.

Developments in Balance Sheet Items

The consolidated balance sheet as at December 31, 2012 totaled NIS 376.4
billion, compared with NIS 356.7 billion at the end of 2011, an increase of
5.5%.

Net credit to the public totaled NIS 249.2 billion compared with NIS 246.5
billion at the end of 2011, an increase of 1.1%, driven primarily by increases
in the retail and commercial segments.

Credit to small businesses totaled NIS 24.3 billion compared with NIS 22.8
billion at the end of 2011, an increase of 6.4%.

Deposits from the public totaled NIS 271.4 billion compared with NIS 256.4
billion at the end of 2011, an increase of 5.8%, primarily related to an
increase in core deposits from the retail and commercial segments.

Shareholders' equity totaled NIS 26,755 million as at December 31, 2012,
compared with NIS 23,819 million at the end of 2011, an increase of 12.3%
mainly stemming from retained earnings. 

Core Tier 1 capital stood at 8.9% at the end of 2012 compared with 7.9% at the
end of 2011.

Total capital adequacy ratio was 15.7% at the end of 2012 compared with 14.1%
at the end of 2011. 

About Bank Hapoalim

Bank Hapoalim is Israel's leading financial group. In Israel, the Bank
Hapoalim Group has over 280 branches, eight regional business centers, a
growing network of business branches and specialized industry relationship
managers for major corporate customers.

The Bank Hapoalim Group includes Isracard Ltd, Israel's leading credit card
company as well as financial companies involved in investment banking, trust
services and portfolio management.

Internationally, Bank Hapoalim operates through branches, subsidiaries and
representative offices, in North and Latin America, Europe, the Far East,
Turkey and Australia. Bank Hapoalim is the only Israeli Bank listed on both
the Tel Aviv and London Stock Exchange. In addition, a Level-1 ADR is traded
"over-the-counter" in New York.

For more information about Bank Hapoalim, please visit us online at
www.bankhapoalim.com.

Principal Data of the Bank Hapoalim Group
                                                                
                                                       (NIS millions)

Profit and Profitability
                     For the year ended December 31       Change vs.
                     2012       2011         2010         2011      2010
Net financing        8,415      7,884*       7,496*       6.7%      12.3%
income****
Fees and other       5,222      5,204*       5,347*       0.3%      (2.3%)
income
Total income        13,637     13,088*      12,843*      4.2%      6.2%
Provision for credit 987        1,202        1,030        (17.9%)   (4.2%)
losses
Operating and other  8,825      8,365        8,291        5.5%      6.4%
expenses
Net profit
attributed to         2,543      2,746        2,201        (7.4%)    15.5%
shareholders of the
Bank

Balance Sheet – Principal Data
                     December 31                          Change vs.
                     2012       2011         2010         2011      2010
Total balance sheet 376,388    356,662**    321,063**    5.5%      17.2%
Net credit to the    249,182    246,495      225,288      1.1%      10.6%
public
Securities          52,070     34,411       31,604       51.3%     64.8%
Deposits from the    271,411    256,417      233,965      5.8%      16.0%
public
Bonds and            35,677     32,933       27,608       8.3%      29.2%
subordinated notes
Shareholders'        26,755     23,819**     22,535**     12.3%     18.7%
equity
Total problematic    13,284     12,354       14,269       7.5%      (6.9%)
credit risk***
Of which: impaired
balance sheet         6,701      7,044        8,032        (4.9%)    (16.6%)
debts***

Main Financial Ratios
                                           2012         2011      2010
Net loan to deposit                         91.8%        96.1%     96.3%
ratio
Net loan to deposit
ratio including bonds                       81.1%        85.2%     86.1%
and subordinated
notes
Shareholders' equity                        7.1%         6.7%      7.0%
to total assets
Core Tier I capital
to risk-adjusted                            8.9%         7.9%      8.0%
assets
Tier I capital to                           9.7%         8.7%      8.9%
risk-adjusted assets
Total capital to                            15.7%        14.1%     13.9%
risk-adjusted assets
Financing margin from                       2.22%        2.39%*    2.49%*
regular activity^(a)
Cost-income ratio                          64.7%        63.9%*    64.6%*
Provision for credit
losses as a
percentage of the                           0.39%        0.50%     0.49%
average recorded
balance of credit to
the public^(b)
Net return of profit
attributed to                               10.1%        12.0%     10.4%
shareholders of the
Bank on equity
Basic net earnings
per share in NIS
attributed to                               1.92         2.07      1.66
shareholders of the
Bank
Diluted net earnings
per share in NIS
attributed to                               1.91         2.05      1.65
shareholders of the
Bank

* The Bank adopted the directive of the Supervisor of Banks concerning the
format for statements of profit and loss of banking corporations for the first
time on January 1, 2012. The directives were adopted by retroactive
implementation, with the exception of the cancellation of unpaid accrued CPI
linkage differentials on principal in respect of debts classified as impaired
prior to the initial implementation. Accordingly, the data included in the
statements of profit and loss for the years 2010 and 2011 were reclassified
for adjustment to the new definition, item headings, and presentation method
of the current reporting period. For details, see Note 1(C)(5) to the
Financial Statements.
** Restated, due to the initial implementation of International Accounting
Standard 12, Income Taxes; see Note 1(E)(21) to the Financial Statements.
*** Net of the individual allowance and the allowance according to the extent
of arrears.
**** Net financing income includes net interest income and non-interest income
(expenses). Comparison figures for previous years were adjusted to this
presentation format.
(a) Calculation: Financing profit from regular activity is divided by monetary
assets generating financing income. Financing profit from regular activity
includes net interest income and non-interest financing income (expenses).
(b) In 2010, calculated as the specific provision for the period as a
percentage of total credit to the public.

                                                               

Profit and Profitability
                      For the three months ended
                      December   September   June 30,   March 31,  December
                       31, 2012   30, 2012    2012       2012       31, 2011
                      NIS millions
Net financing         2,111      2,115       2,041      2,148      1,963*
income****
Fees and other        1,314      1,335       1,266      1,307      1,272*
income
Total income         3,425      3,450       3,307      3,455      3,235*
Provision for credit  54         286         344        303        363
losses
Operating and other   2,354      2,249       2,118      2,104      2,197
expenses
Net profit attributed
to shareholders of the 652        625         607        659        672
Bank

Balance Sheet – Principal Data
                      December   September   June 30,   March 31,  December
                       31, 2012   30, 2012    2012       2012       31, 2011
                      NIS millions
Total balance sheet  376,388    367,365     362,105    350,350    356,662**
Net credit to the     249,182    249,904     248,614    244,804    246,495
public
Securities           52,070     53,076      40,728     36,903     34,411
Deposits from the     271,411    264,490     259,668    251,576    256,417
public
Bonds and             35,677     36,051      35,679     34,422     32,933
subordinated notes
Shareholders' equity 26,755     25,759      24,907     24,440     23,819**
Total problematic     13,284     14,187      13,398     13,993     12,354
credit risk***
Of which: impaired
balance sheet          6,701      6,493       6,685      6,356      7,044
debts***

Main Financial Ratios
                      For the three months ended
                      December   September   June 30,   March 31,  December
                       31, 2012   30, 2012    2012       2012       31, 2011
Net loan to deposit   91.8%      94.5%       95.7%      97.3%      96.1%
ratio
Net loan to deposit
ratio including bonds  81.1%      83.2%       84.2%      85.6%      85.2%
and subordinated
notes
Shareholders' equity  7.1%       7.0%        6.9%       7.0%       6.7%
to total assets
Core Tier I capital
to risk-adjusted       8.9%       8.5%        8.3%       8.2%       7.9%
assets
Tier I capital to     9.7%       9.3%        9.1%       9.0%       8.7%
risk-adjusted assets
Total capital to      15.7%      15.1%       14.8%      14.7%      14.1%
risk-adjusted assets
Financing margin from
regular                2.00%      2.30%       2.38%      2.29%      2.28%*
activity(a)(b)
Cost-income ratio    68.7%      65.2%       64.0%      60.9%      67.9%*
Provision for credit
losses as a percentage
of the average         0.09%      0.45%       0.55%      0.49%      0.61%
recorded balance of
credit to the
public(a)
Net return of profit
attributed to          10.3%      10.2%       10.2%      11.3%      11.9%
shareholders of the
Bank on equity(a)
Basic net earnings
per share in NIS
attributed to          0.49       0.47        0.46       0.50       0.51
shareholders of the
Bank
Diluted net earnings
per share in NIS
attributed to          0.49       0.47        0.46       0.49       0.50
shareholders of the
Bank

* The Bank adopted the directive of the Supervisor of Banks concerning the
format for statements of profit and loss of banking corporations for the first
time on January 1, 2012. The directives were adopted by retroactive
implementation, with the exception of the cancellation of unpaid accrued CPI
linkage differentials on principal in respect of debts classified as impaired
prior to the initial implementation. Accordingly, the data included in the
statements of profit and loss for the years 2010 and 2011 were reclassified
for adjustment to the new definition, item headings, and presentation method
of the current reporting period. For details, see Note 1(C)(5) to the
Financial Statements.
** Restated, due to the initial implementation of International Accounting
Standard 12, Income Taxes; see Note 1(E)(21) to the Financial Statements.
*** Net of the individual allowance and the allowance according to the extent
of arrears.
**** Net financing income includes net interest income and non-interest income
(expenses). Comparison figures for periods in 2011 were adjusted to this
presentation format.
(a) Calculated on an annualized basis.
(b) Calculation: Financing profit from regular activity is divided by monetary
assets generating financing income. Financing profit from regular activity
includes net interest income and non-interest financing income (expenses).

CONTACT: For further information please contact:
        
         Press: Ofra Preuss, Bank's Spokesperson
         Tel: +972-3-567-3635; Fax: +972-3-567-3500
         spokesperson@ mailpoalim.co.il
        
         Investors: Effie Werber, Head of Investor Relations
         Tel. +972-3-567-3440; Fax: +972-3-5673470
         effie.werber@mailpoalim.co.il
 
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