This article first appeared on GuruFocus .
Release Date: November 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Bank Hapoalim BM ( BKHPF ) reported a strong net profit of 2.8 billion shekel for the quarter, with a return on equity of 17.6%.
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The credit portfolio increased by 11.4% over the last 12 months, reflecting the bank's ability to leverage the strength of the Israeli economy.
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The financial margin improved to 2.77% for the first nine months of 2025, marking the highest in the sector.
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The cost-to-income ratio was impressively low at 30.6% for the quarter, demonstrating effective cost management.
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The bank's capital position is robust, with a CT1 capital ratio rising to 12.05%, supported by strong organic generation capabilities.
Negative Points
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Non-regular financing activities decreased due to customer benefits granted under the Bank of Israel's voluntary program.
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Retail deposits decreased over the last year, although they still represent 54% of total deposits.
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The provision for credit losses increased to 347 million shekel, reflecting a cautious approach amid economic uncertainty.
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There is ongoing regulatory risk with potential tax increases on banks and mortgage subsidization proposals.
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The bank's internal capital target was increased to 11% due to economic and geopolitical uncertainties, which may limit flexibility in capital distribution.
Q & A Highlights
Q: There have been headlines about increasing tax rates on banks and a potential tax for mortgage subsidization. Does the bank have any take on these ideas? A: We see regulatory initiatives from time to time, but many do not progress to legislation. The Bank of Israel opposes these suggestions, and historically, populistic initiatives have not become law. We are monitoring the situation closely.
Q: Considering your upcoming move of the headquarters, how should we be looking at expenses going into next year? A: The project to centralize our headquarters is progressing well and will mainly affect operating costs from 2027 onwards. It will also allow us to sell current buildings in central locations, creating material capital gains.
Q: You increased your internal capital target to 11%. Could you explain the reasoning behind this, and did it influence your decision to stick with a 50% payout ratio? A: The increase follows a dialogue with the supervisor of banks, considering economic and geopolitical uncertainties. Despite peers raising payout ratios, we decided to maintain a 50% distribution rate due to our growth targets and desired capital buffers.
Q: Your coverage ratio is in excess of 300%. What would you need to see to potentially release some of those provisions going forward? A: We have a conservative approach and accumulated buffers during the war. Despite optimism about the Israeli economy, uncertainty remains. We believe it's too early to release buffers, which positions us well for 2026.
Q: Can you give us some color on your call decision approach to next year's seconds callable and how you plan to approach refinancing? A: While we can't specify actions now, our track record shows we typically use call options, understanding investor expectations. Unique circumstances would be needed not to use this option.
Q: Deposits from private individuals fell year-on-year and quarterly. What are the drivers behind this? A: This reflects customer awareness of alternative investments and deposits. We maintain good liquidity levels and balance growth with profitability, relying on deposits and disciplined pricing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
