Corona influence: Bank Hapoalim erports a sharp 76.6% drop in net profit for Q1 to NIS 192 million

The Bank Hapoalim published its financial results for the first quarter of 2020, and the Corona crisis was clearly evident with a sharp 76.6% drop in net profit to NIS 192 million. Bank Hapoalim is the first of the banks to publish its Q1 reports.
The decrease in net profit is a significant increase in NIS 757 million in credit losses, including a group provision of NIS 603 million due to uncertainty over the effects of the Corona crisis and a preliminary step to the possibility of borrowers, including large borrowers such as a fuel group that will find it difficult to meet payments. The Bank also recorded an individual provision amounting to NIS 154 million for specific borrowers who are already experiencing difficulties. If the collection efforts finally succeed, the bank will record profits in the future.
Credit loss expense ratio was 1.73% of the portfolio compared with 1.33% in the same quarter last year, analysts estimate that banks' provisions could also rise above 2% as the crisis's impact becomes clear.
Excluding the influence of Isracard, whose balance in the bank's holdings, after the IPO last year, was distributed in the quarter as a dividend, the bank posted a profit of NIS 301 million in the quarter, a decrease of 59% compared to the corresponding period last year. Return on equity was 2% compared to 9% in the corresponding quarter.
The bank's credit portfolio amounted to NIS 300 billion, up 2.3% on the beginning of the year. The bank grew mortgages with a 3.1% increase from the beginning of the year in the portfolio to NIS 92.1 billion, and grew in business credit by 7% to NIS 81 billion. Another negative indicator of the crisis is the rise in the defective debt rate, which has a delay in their repayment over 90 days to 1.68% compared to 1.35% in the corresponding quarter of 2019.
The capital ratio in the first quarter at the end of the quarter decreased to 11.21% compared to 11.45% in the corresponding quarter and the leverage ratio decreased to 7.14% compared to 7.58% in the corresponding quarter. This is due to the effects of the Corona epidemic, including an increase in customers' business credit needs and an increase in provisions for credit losses, as well as due to a reduction in equity due to the distribution of Isracard's balance of dividends as a dividend.
The Bank reveals that as a result of the Corona, NIS 897 million in loans and / or interest loans were rejected in March, and other payments were deferred during the second quarter of 2020. The Bank recorded an increase in credit losses totaling NIS 1.43 billion in the first quarter and the first quarter. Beyond the change in provisions for credit losses not related to Corona.
The decline in the capital market hit the bank's nostro portfolio, which recorded a decrease of NIS 705 million this quarter. The decrease was partly offset by the opening of credit spreads according to which the discount rate of employee liabilities is set, with an increase in interest rates causing a decrease in actuarial liabilities and an increase of NIS 662 million in capital.
On April 30 this year, the bank reached agreements on the US tax evasion case.