Hapoalim Jumps on Plans to Reintroduce Dividends: Tel Aviv Mover

Bank Hapoalim Ltd. gain the most in more than nine months after the country’s largest lender by assets said it would resume dividend payments after a two-year hiatus.

The lender’s shares climbed 3.4 percent, the most since Oct. 2, to 17.2 shekels at the close in Tel Aviv. The five-member Tel Aviv Banking Index rose 2.3 percent, the most since May 28, taking this year’s increase to 1.1 percent, underperforming the 2.4 percent advance for the benchmark TA-25 Index.

Bank Hapoalim said today it received regulatory approval to reinstate a quarterly cash dividend policy. The lender hasn’t paid a dividend since July 2011, according to data compiled by Bloomberg. The bank’s board approved payment on Aug. 5 of a cash dividend of 92.2 million shekels, at 7 agorot a share, as well as a policy to distribute as much as 30 percent of profit as dividends, according to a statement today.

“This is excellent news for the bank and the sector as it means we are nearing the end of the process of banks’ increasing their capital buffers,” Adi Scop, banking analyst and head of sales at I.B.I.-Israel Brokerage & Investments Ltd. in Tel Aviv said by phone today. “Shareholders can finally start to see dividends and foreign investors like fixed dividend payments.”

Israeli lenders stopped paying dividends after the central bank last year proposed higher Tier 1 capital requirements, including a minimum of 10 percent for the two largest banks. Bank Hapoalim’s Tier 1 capital ratio at the end of the first quarter was 9.87 percent, according to data compiled by Bloomberg.

Hapoalim said its dividend policy will remain in effect until the bank reaches the capital targets set by the regulator.

Shares of Israel’s other banks also rose on the news. Mizrahi Tefahot Bank Ltd., which had a core Tier 1 capital ratio of 8.71 percent at the end of March, advanced 1.5 percent, the most since June 17, to 37.5 shekels. The lender may be next to pay a dividend, said Scop, who has a buy rating on the five-largest Israeli banks.

First International Bank of Israel Ltd., which on June 24 paid its first dividend since September 2010, gained 1 percent. The bank had a core Tier 1 capital ratio of 9.17 percent at the end of the first quarter this year, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.