Bank Hapoalim Announces 2026 Second Quarter Results
Rhea-AI Summary
Bank Hapoalim (TASE: POLI, OTC: BKHPF) reported 2Q26 net profit of NIS 2,488 million, up from NIS 2,124 million in 1Q26, with return on equity of 15.0%. First-half 2026 net profit was NIS 4,612 million, reflecting 14.0% ROE. Total income rose 19.8% quarter-on-quarter, driven by a 23.8% increase in financing income and 2.7% growth in fee income, while total expenses were flat, improving the cost-income ratio to 30.6%.
Net credit to the public grew 14.3% year-on-year to NIS 536.2 billion, with broad-based growth across corporate, commercial, housing, small business, and consumer segments. Credit quality remained strong, with an NPL ratio of 0.50% and coverage of 284%. The CET1 capital ratio reached 11.83%, above regulatory and internal minima. The board approved distribution of 50% of net profit, including a NIS 995 million cash dividend (NIS 0.76 per share) and NIS 249 million in share buybacks, and reaffirmed 2026–2027 targets for net profit, ROE, credit growth, and 50%–60% payout.
Positive
- 2Q26 net profit NIS 2,488m; ROE 15.0%, up from 13.0% in 1Q26
- Total income +19.8% QoQ; financing income +23.8%, fee income +2.7%
- Cost-income ratio improved to 30.6% in 2Q26 from 36.6% in 1Q26
- Net credit to public NIS 536.2b, +14.3% YoY and +3.3% QoQ
- NPL ratio 0.50% with NPL coverage 284%; allowance 1.65% of credit
- CET1 ratio 11.83% vs 10.23% regulatory minimum and 11.0% internal target
- Capital distribution 50% of net profit; NIS 995m dividend and NIS 249m buyback
- Profit before tax in 2Q26 NIS 4.3b, +6.4% vs 2Q25
- Guided 2026 net profit NIS 8.5–9.5b; 2027 NIS 9.5–10.5b
- Guided ROE 13%–14% for 2026 and 14%–15% for 2027
Negative
- 2Q26 net profit NIS 2,488m, slightly below NIS 2,542m in 2Q25
- ROE 15.0% in 2Q26 vs 16.7% in 2Q25
- Provision for credit losses NIS 298m in 2Q26; loss ratio 0.22%
- Special bank tax on system rose from NIS 1.3b in 2025 to ~NIS 3.0b in 2026
- Retail deposits declined 1.1% YoY to NIS 318.5b as customers shifted to capital-market products
- Special tax impact estimated at 1.3%–1.4% annual reduction in ROE
News Explained
The NIS 995 million cash dividend is scheduled for August 27, while the Rubinstein Towers sale remains at the bidding stage.
The approved cash dividend of
Separately, Bank Hapoalim has launched a bidding process to sell Rubinstein Towers, so the property transaction is at the bidding stage rather than disclosed as a completed sale.
The bank's 2027 targets assume several property sales generating pre-tax profit of
The release says the increased special bank tax reduced profit after tax and estimates its annual impact at
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Net profit in the second quarter totaled
- Net profit in the first half totaled
- The impact of the special tax on banks is
- Total income increased
- Total expenses stayed flat QoQ; the cost-income ratio was
- Credit growth was strong and diversified across all segments of operation, at
- Credit quality metrics remained strong: the NPL ratio was
- The CET-1 capital ratio stood at
- The board of directors declared distribution at an overall rate of
Income statement
- Net profit for 2Q26 totaled
NIS 2,488 million , compared withNIS 2,124 million in the previous quarter andNIS 2,542 million in the same quarter last year. The main driver of the increase in net profit versus the first quarter is an increase in total income, which was driven by increases of23.8% in financing income and2.7% in fees, while total expenses stayed flat. - Return on equity for 2Q26 stood at
15.0% , vs.13.0% in 1Q26 and16.7% in 2Q25.- Return on equity in the first two quarters of 2026 excluding the special bank tax impact was approximately
16.4% and14.4% , respectively.
- Return on equity in the first two quarters of 2026 excluding the special bank tax impact was approximately
- Income from regular financing activity in the second quarter totaled
NIS 5,109 million , an increase of13.7% vs. 1Q26. The main impact on the increase was a higher contribution of the CPI (NIS 431 million in 2Q26 vs.NIS -33 million in 1Q26) and growth in activity, including lending, deposits, and dealing rooms. On the other hand, a lower average interest rate during the quarter (by 11 basis points) had a negative impact. Excluding the effect of the CPI, income from regular financing activity grew by3.4% . Substantial growth was also recorded in the non-regular financing activity line, due to higher income from equity investments (NIS 213 million in 2Q26) and other items. - The financial margin from regular financing activity increased to
2.70% in the second quarter (vs.2.49% in 1Q26), mainly due to the impact of the CPI, while being adversely affected by the aforementioned rate cut and lower credit margins. The financial margin has been reclassified to reflect the reclassification of credit and deposit balances related to bond lending and borrowing activities between customers, from interest-bearing to non-interest-bearing balances. - Fee income totaled
NIS 1,145 million in 2Q26, a2.7% increase compared to 1Q26, mostly derived from an increase in fees from credit cards, securities, and conversion differences. Compared with the corresponding quarter last year, fees stayed fairly flat, as in the second quarter of 2025 the bank recorded special income received from the international credit-card organizations. - Operating and other expenses stayed unchanged compared to the previous quarter and decreased by
4.4% vs. the corresponding quarter. The flattish expenses, coupled with the aforementioned growth in total income, brought the cost-income ratio to30.6% , compared to36.6% in the preceding quarter and32.8% in the corresponding quarter last year. The cost-income ratio in the first half of 2026 was33.3% , vs.33.8% in the comparable period. - Provision for credit losses in the second quarter of 2026 amounted to
NIS 298 million (a credit-loss ratio of0.22% ). The provision for credit losses in the quarter reflects the growth in the credit portfolio, as well as the persisting uncertainty in the economic environment. There were no exceptional recoveries in the individual provision during the quarter. - Profit before tax in the second quarter of 2026 was
NIS 4.3 billion , a6.4% increase vs. the corresponding quarter. The year-over-year increase in profit before tax reflects the strengthening of the bank's underlying business performance, despite an approximately 60-basis-point average decline in interest rates and lower contribution of the CPI. The improvement was supported by strong business growth and disciplined cost management.
Profit after tax, however, was negatively impacted by the increase in the special tax imposed on banks. The total special tax imposed on the banking system increased from NIS 1.3 billion in 2025 to approximatelyNIS 3.0 billion in 2026, significantly increasing the bank's tax expense.
Balance sheet
- Net credit to the public in the second quarter of 2026 totaled
NIS 536.2 billion , compared withNIS 519.3 billion at the end of the preceding quarter andNIS 469.1 billion at the end of the second quarter of 2025, an increase of3.3% and14.3% , respectively.
Corporate credit increased by4.8% in comparison to the previous quarter and by23.9% vs. 2Q25; commercial credit increased by4.8% QoQ and15.4% YoY. In the retail banking division, the housing loan portfolio grew by2.0% QoQ and by6.5% YoY, small business credit increased by1.5% and10.1% , and consumer credit grew by3.8% and8.4% , respectively. The main growth in the business segments in the second quarter was recorded in the financial services, real estate, information and communication, and transportation and storage economic sectors. Credit balances also include unsecured securities lending and cash collateral given in respect of transactions in derivatives, as detailed in table 2-12 in the 2Q26 financial report. - Total deposits reached
NIS 618.1 billion , an increase of2.5% vs. last quarter and7.1% compared to the same quarter last year. Retail deposits decreased by0.3% and1.1% respectively, toNIS 318.5 billion , impacted by customer preferences to move funds to capital-market products, but still represent52% of total deposits. - LCR and NSFR are at
126% and114% respectively, vs. the minimum regulatory requirements of100% . - The allowance for credit losses stood at
NIS 9.0 billion as at June 30, 2026, of whichNIS 8.7 billion attributed to the collective allowance. The total allowance constitutes1.65% of total credit. - Credit quality indicators continue to be strong; the NPL ratio stood at
0.50% and the NPL coverage ratio (balance sheet allowance for credit losses/NPL) was284% . - Shareholders' equity grew by
8.1% in the last year, toNIS 67.1 billion , due to the bank's strong organic capital generation. The CET-1 capital ratio as at June 30, 2026, stood at11.83% , vs. the10.23% minimum regulatory requirement and11.0% minimum internal target. The total capital ratio as at June 30, 2026, stood at14.81% , vs. a13.5% minimum regulatory requirement. - Profit distribution: The board of directors approved a total distribution of
50% of net profit, in the amount ofNIS 1.2 billion:NIS 995 million in cash dividend (NIS 0.76 per share), and the rest through share buybacks in the amount ofNIS 249 million . The cash dividend is to be paid on August 27, 2026.
Financial targets
Financial targets for 2026–2027, based on baseline assumptions as of March 5, 2026, and following the completion on March 30, 2026, of the legislation regarding a special bank tax in 2026 and 2027:
- Net profit in the range of
NIS 8 .5–9.5 billion for 2026 andNIS 9 .5–10.5 billion for 2027; - Return on equity in the range of
13% –14% for 2026 and14% –15% for 2027; - Growth of the credit portfolio at an average annual rate of
8% –9% ; - Profit distribution at a rate of 50–
60% of net profit, through cash dividends or buybacks, subject to the guidelines of the Bank ofIsrael .
Recent developments
- Real estate asset sale:
In 2021, the bank acquired land inTel Aviv and started building its future headquarters, the Poalim Center. The bank plans to relocate all of its head-office units, currently scattered over eight buildings inTel Aviv , into the new headquarters. The centralization of the units in one building is expected to contribute significantly to enhancing work interfaces and synergies among the units. The relocation, planned to begin in late 2027, will allow properties currently in use to be vacated and eventually sold; accordingly, the bank is promoting property betterment and addition of rights at the main head-office buildings.
The bank launched a bidding process for the sale of Rubinstein Towers, comprising 22,000 square meters of office space inTel Aviv .
The financial targets for 2027 include the sale of several properties currently owned by the bank. The initial assumption is that the pre-tax profit from the sales will be in the range of NIS 800–900 million, to be recognized from 2027 onward.
Conference-call/webinar information
The call will take place at 5:00 p.m.
Participation in the call/webinar is available via the following link: BankHapoalimQ2.2026 (pre-registration is also available via the link).
Contact info:
Tamar Koblenz
Head of Investor Relations
Investor.Relations@poalim.co.il
Dr. Sharona Mazalian-Levi
Spokesperson
sml@poalim.co.il
This press release contains forward-looking statements, as defined in the Israeli Securities Law, relating to future events or future performance.
This press release is provided for convenience purposes only and does not constitute a substitute for a full review of the Bank's latest periodic/quarterly reports, as filed with the Israel Securities Authority.
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SOURCE Bank Hapoalim