Hapoalim Profit Jump Beats Estimates as Provisions Drop

Bank Hapoalim Ltd., Israel’s second-largest lender by assets, said net income rose 33 percent in the third quarter, beating analysts’ estimates, as provisions dropped and fees rose.

The Tel Aviv-based bank posted profit of 625 million shekels ($163 million) in the three months to Sept. 30, beating the median of four analysts’ estimates compiled by Bloomberg for 599.75 million shekels. Provisions declined to 286 million shekels from 498 million shekels a year earlier, and fees and other income rose 5.5 percent, the bank said.

“Hapoalim is showing the highest profit of the sector and the highest return on equity,” said Adi Scop, a banking analyst and head of sales at Tel Aviv-based I.B.I. Israel Brokerage & Investments Ltd. “This stems from good financing income and control over costs.”

Scop, who expected a 600-million shekel profit for Hapoalim, said Israeli lenders may find it more difficult to maintain growth as Israel’s economy slows.

The Organization for Economic Cooperation and Development cut its Israel growth forecast for 2012 to 3.1 percent on Nov. 27, from a May estimate of 3.2 percent. The body also reduced its growth projection for next year to 2.9 percent from the previous 3.6 percent. Israel’s jobless rate rose in October, the Central Bureau of Statistics said yesterday, and the Bank of Israel held the benchmark interest rate at 2 percent on Nov. 26 after a surprise 0.25 percentage point cut in October.

‘More Challenging’

“Next year is going to be probably more challenging,” Hapoalim Chairman Yair Seroussi said in an interview on Bloomberg Television today.

Ran Oz, Hapoalim’s chief financial officer, said cost-cutting efforts at the bank will continue as well as a trend toward a lower concentration of big borrowers, a situation the regulator has defined as posing risk.

“The results don’t yet reflect the economic slowdown,” I.B.I. Israel’s Scop said in a phone interview. “We may see the slowdown in coming quarters.”

Hapoalim shares rose for a second day this week in Tel Aviv, adding 2.6 percent, the most since Oct. 22, to 15.72 shekels at the 4:30 p.m. close. The Tel Aviv Banking Index was up 2.2 percent to 1,123.76 and the benchmark TA-25 gauge increased 0.3 percent to 1,229.97.

Bank Leumi Le-Israel Ltd., Israel’s largest lender by assets, said third-quarter net income tripled to 479 million shekels as provisions fell 23 percent. The median of four analysts estimates for Leumi profit was 532 million shekels, data compiled by Bloomberg show.

Israel Discount Bank Ltd., the third-biggest bank, said net in the third quarter nearly doubled to 221 million shekels, beating the 193.75 million-shekel median estimate, even as money put aside for bad debt increased to 233 million shekels from 226 million shekels.

Discount rose 3.3 percent to 5.70 shekels and Leumi added 1.3 percent to 12.88 shekels.

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