Bank Hapoalim Reports 8.5% Net Profit Decline, Announces Unusually Large Dividend

Bank Hapoalim, led by CEO Eli Cohen, reported an 8.5% decrease in net profit for the recent quarter, totaling 583 million shekels. The return on equity (ROE) stood at 16%, down from 18% in the same quarter last year. Adjusting for a special tax imposed by the government, the ROE would have been 17.8%, similar to that of Bank Leumi. For the first half of the year, the bank’s net profit reached 1.1 billion shekels, marking an 8.9% decline compared to the same period in 2025, with a half-year ROE of 14.5%, or 16.2% excluding the special tax.

Net interest income fell by 7.6% to 1.2 billion shekels in the quarter, influenced by lower interest rates and increased competition among banks for credit and deposits. Total income for the first half was 2.3 billion shekels, down 6.6% year-over-year. The bank’s credit portfolio grew sharply by 20% compared to last year and 5.9% from the first quarter of 2026, mainly driven by lending to financial services. Meanwhile, problematic credit risk decreased by 25% compared to last year, with the non-performing loan ratio improving to 0.40% from 0.46% at the end of 2025.

Despite the profit decline, the board addressed the issue of retained earnings that reduce ROE by approving a dividend payout of approximately 558 million shekels, representing about 96% of the quarterly net profit. This payout includes half of the second quarter’s profit plus additional retained earnings. CEO Eli Cohen emphasized the bank’s strong position in capital markets and its role as a key financial partner to leading companies, small businesses, and private clients. He highlighted the bank’s stability, expertise, and high capital adequacy amid ongoing economic changes, along with maintaining one of the best credit portfolios in the banking system.