RNS Number : 9745I
  Bank Hapoalim B.M.
  26 November 2008
   

    Head Office
    63 Yehuda Halevi St., Bank Hapoalim Bldg., Tel Aviv 65781
    Tel: 03-5673800; Fax: 03-5674576
    Date: November 25, 2008
    Reference: 802/08

    To    :    The London Stock Exchange

    Dear Sir or Madam, 



    RE:    Immediate Report regarding the Approval of the 
Financial Statements as at September 30, 2008
    

    1.    We wish to inform you that at its meeting held at 1:15 p.m. on November 25, 2008, the Board of Directors of Bank Hapoalim resolved
to approve the Financial Statements as at September 30, 2008.

    2.    An Immediate Report as required under the Securities (Periodical and Immediate Reports) Regulations, 5730-1970 and the Securities
(Electronic Signature and Reporting) Regulations, 5763-2003, together with a copy of the financial statements has been filed with the Israel
Securities Authority and the Tel Aviv Stock Exchange through the Securities Authority's computer system on November 25, 2008, and has been
sent to the Bank of Israel and the Registrar of Companies in Israel.

    3.    Enclosed is a summary of the Financial Statements of the Bank as at September 30, 2008. The full Financial Statements are
available upon request, and can be accessed on the Bank's internet site: http://www.bankhapoalim.com. 



    Sincerely yours,

    Bank Hapoalim B.M.
    Head Office

                                 ( - )                                                                                          ( - )

         Barry Ben-Zeev                        Ofer Levy
 Senior Deputy Managing Director    Senior Deputy Managing Director
               CFO                         Chief Accountant
        November 25, 2008

    Bank Hapoalim reported today its Financial Results for the Third Quarter of 2008
    Net Profit for Q3 of 2008 totaled NIS 441 million
    Capital Adequacy Ratio at end of Q3-08 reached 11.51%
    Tel Aviv, Israel -- Bank Hapoalim (IT: POLI) (LI: BKHD) (Pink Sheets: BKHYY)
    Highlights of the financial statements: 
    *     Net Profit for the third quarter of 2008 totaled NIS 441 million compared with a profit of NIS 594 million in the previous quarter
and a profit of NIS 823 million in the same quarter last year. 
    *     Return on equity for the third quarter of 2008 was 9.6%, on an annualized basis compared with 13.8% in the previous quarter and
18.3% in the same quarter last year. 
    *     Net operating profit for the third quarter of 2008 totaled NIS 384 million compared with a profit of NIS 545 million in the
previous quarter and a profit of NIS 826 million in the same quarter last year. 
    *     Net return of operating profit on equity for the third quarter of 2008 was 8.3%, on an annualized basis, compared with 12.6% in
the previous quarter and 18.4% in the same quarter last year. 
    *     The Bank's capital adequacy at the end of the third quarter of 2008 stood at 11.51% compared with 11.01% at the end of the second
quarter of 2008 and 10.26% at the end of 2007. Tier 1 Capital reached 7.89% at the end of the third quarter of 2008 compared with 7.65% at
the end of the second quarter of 2008 and 7.50% at the end of 2007. 
    *     Profit from financing activity before provision for doubtful debts totaled NIS 2,083 million in the third quarter of 2008 compared
with a profit of NIS 1,943 million in the previous quarter and a profit of NIS 2,417 million in the same quarter last year. 
    *     The provision for doubtful debts - in the third quarter of 2008 the Bank recorded a specific provision in the amount of NIS 720
million, which reflects a provision ratio of 1.34% in annualized terms, compared with NIS 276 million in the same quarter last year. The
increase was offset by a reduction of provisions and recovery of debts that were written off in previous years in the amount of NIS 309
million compared with NIS 198 million in the same period last year.
    *     Problematic debt for the Bank Group totaled NIS 15.0 billion at the end of September 2008 compared to NIS 12.2 billion at the end
of June 2008, an increase of 23.0%. 
    *     Operating and other income totaled NIS 1,153 million in the third quarter of 2008 compared with NIS 1,205 million in the previous
quarter and NIS 1,267 million in the same quarter last year, a decrease of 4.3% and 9.0%, respectively. 
    *     Operating and other expenses totaled NIS 1,960 million in the third quarter of 2008 compared with NIS 1,911 million in the
previous quarter and NIS 2,132 million in the same quarter last year, an increase of 2.6% and a decrease of 8.1%, respectively. 
    *     Contribution to the community - The community-service activities of the Bank's employees are varied and extensive, and take the
form of community involvement, monetary donations, and wide-ranging volunteer activities. This activity of the Bank Group in the first nine
months of 2008 had a monetary value of approximately NIS 36 million. 
    Chairman of the Board of Directors Dan Dankner commented:

    "The severe shocks to the global economy in general and to the financial and banking system in particular inevitably affect the Israeli
economy as well. Although Israel has been relatively resilient to the turmoil so far, it seems likely that a significant slowdown in the
growth rate of the Israeli economy is in store in the near future, due to causes including a decline in foreign investments in Israel and
lower demand, both in private consumption and in exports. 
    During an economic crisis, the financial sector carries special responsibility. As a leader in the Israeli banking system, Bank Hapoalim
has worked to help the economy in general and the Bank's customers in particular emerge from the crisis, and will continue to do so, with
the caution and discretion necessary under the circumstances, in close cooperation with government and other agencies. In these conditions,
Bank Hapoalim is preparing and adapting to operate in an economy undergoing a slowdown. Our usual operations will continue, with an emphasis
on an enhanced value offer for customers with extensive banking activity. The Bank accords utmost importance to the improvement of customer
service and optimal tailoring of service to our customers' needs. 
    The Bank's capital adequacy has improved, and now stands at 11.5%. "
    CEO Zvi Ziv commented: 

    "Our third-quarter financial statements reflect trends with varied effects on the Bank's business results, especially in comparison to
the results of the preceding quarter. On one hand, the volume of basic banking activity was maintained, and financing profit improved,
though operating income decreased as a result of the new regulations in the area of fees. On the other hand, the economic downturn was
reflected in a sharp increase in the provision for doubtful debts and an increase in the volume of problematic credit, after several years
of continuous decreases in these items. 
    The Bank is diligently monitoring the events in the global and Israeli economy, and adapting its business policy to these developments.
    In its ongoing operations in Israel, Bank Hapoalim continues to stress improved service and better tailoring of services to customers'
needs. This effort encompasses both the upgrade of existing services and new initiatives, including new branches opened based on an
innovative service model."
      Highlights of the financial statements for the third quarter of 2008: 
    Net Profit - the decrease in net profit in the third quarter, compared to the same period last year, is mainly a result of the
following:
    *     Profit from financing activity - before provisions for doubtful debts, decreased mainly due to losses in the credit-derivatives
portfolio with respect to foreign financial institutions which are presented at fair value, from losses from foreign financial institutions'
bonds and from the cessation of consolidation of Bank Massad and Bank Yahav.
    *     Provision for doubtful debts - in the third quarter of 2008 the Bank recorded a specific provision in the amount of NIS 720
million, which reflects a provision ratio of 1.34% in annualized terms, compared with NIS 276 million in the same quarter last year. The
increase was offset by a reduction of provisions and recovery of debts that were written off in previous years in the amount of NIS 309
million compared with NIS 198 million in the same period last year.
    *     Operating Income - decreased by 9.0% compared to the same quarter last year, mainly due to the decrease in income from provident
fund management fees, a decrease in account management fees and a decrease in income from capital market activity and investment in shares
due to a decline in volumes of activity in the market.

    Developments in Balance-Sheet Items
    The consolidated balance sheet as at September 30, 2008 totaled NIS 297.9 billion, compared with NIS 303.0 billion at the end of 2007.
The decrease mainly stems from the cessation of consolidation of Bank Massad and Bank Yahav. Excluding their balances at the end of 2007, an
increase of 1.8% occurred. 

    Credit to the public totaled NIS 214.7 billion, an increase of 4.7% compared to the end of 2007. The increase was influenced by growth
in the construction and real estate sector and in the private individuals sector. Appreciation of the shekel against most foreign currencies
moderated the increase in credit to the public at a rate of 3.1%. Likewise, balances decreased by NIS 4.2 billion, as a result of the
cessation of consolidation of Bank Massad and Bank Yahav data following their sale.
    Deposits from the public totaled NIS 214.8 billion compared with NIS 231.8 billion at the end of 2007.  Excluding Bank Massad and Bank
Yahav data following their sale, the redemption of callable CDs which were used to finance the MBS portfolio, and the appreciation of the
shekel against most foreign currencies; deposits in Israel increased by NIS 12 billion during the first nine months of 2008.


    About Bank Hapoalim
    Bank Hapoalim is Israel's leading financial group. In Israel, the Bank Hapoalim Group includes financial companies involved in
investment banking, credit cards, trust services and portfolio management. The Group also has holdings in non-banking sectors. 
    Internationally, Bank Hapoalim operates through 44 branches, subsidiaries and representative offices, in North and Latin America,
Europe, the Far East, Turkey and Australia. In these markets, the Bank is engaged in trade, corporate finance, private banking and retail
banking. 
    Bank Hapoalim is the only Israeli Bank listed on both the Tel Aviv and London Stock Exchange. In addition, a Level-1 ADR is traded
"over-the -counter" in New York. 


    For further information please contact the Bank's Spokesperson:
    Tel: +972-3-567-3635; Fax: +972-3-567-3500 
    spokesperson@bnhp.co.il

      Principal Data of the Bank Hapoalim Group
                                  For the three months ended on September    Change      For the nine months     Change
 Profit and profitability                           30                                  ended on September 30

                                                2008                  2007                   2008         2007
 Profit from financing                         2,083                 2,417    (13.8%)       2,014        6,192   (67.5%)
 activities before provision
 for doubtful debts 
 Provision for doubtful debts                    471                   139     238.9%         755          522     44.6%
 Operating and other income                    1,153                 1,267     (9.0%)       3,642        3,888    (6.3%)
 Operating and other expenses                  1,960                 2,132     (8.1%)       6,139        5,849      5.0%
 Operating profit (loss) before                  805                 1,413    (43.0%)     (1,238)        3,709  (133.4%)
 taxes
 Provision for taxes (tax                        330                   561    (41.2%)       (191)        1,489  (112.8%)
 benefit) on operating profit
 (loss)
 Operating profit (loss) after                   475                   852    (44.3%)     (1,047)        2,220  (147.2%)
 taxes
 Operating profit (loss)                         384                   826    (53.5%)     (1,076)        2,232  (148.2%)
 Net profit from extraordinary                    57                   (3)                    544          228    138.6%
 transaction, after taxes
 Net profit (loss)                               441                   823    (46.4%)       (532)        2,460  (121.6%)

 Balance Sheet - Principal
 Items
                                                                                                   Change compared with
                                                      30.9.2008             30.9.2007  31.12.2007  30.9.2007  31.12.2007

 Total balance sheet                                  297,854               301,899    302,991        (1.3%)      (1.7%)
 Credit to the public                                 214,735               198,925    205,016          8.0%        4.7%
 Securities                                           29,681                49,103     48,115        (39.6%)     (38.3%)
 Deposits from the public                             214,802               231,922    231,750        (7.4%)      (7.3%)
    Debentures and subordinated                       20,676                18,402     18,812          12.4%        9.9%
                          notes
 Shareholders' equity                                 19,030                19,157     18,778         (0.7%)        1.3%

 Principal financial ratios
                                                                                       30.9.2008   30.9.2007  31.12.2007
 Shareholders' equity to total assets                                                        6.4%       6.3%        6.2%
 Tier I Capital to risk-adjusted assets                                                     7.89%      7.42%       7.50%
 Total Capital to risk-adjusted assets                                                     11.51%     10.33%      10.26%
 Credit to the public to total assets                                                       72.1%      65.9%       67.7%
 Deposits to the public to total assets                                                     72.1%      76.8%       76.5%
 Operating income to operating expenses                                                     59.3%      66.5%       66.1%
 Operating expenses to total income                                                        108.5%      58.0%       65.2%
 Provision for doubtful debts to credit to the public                                        0.2%       0.2%        0.1%
 (balance sheet and off-balance sheet)(a)
 Rate of provision for taxes                                                                15.4%      40.1%       39.1%
 Return of operating profit (loss) on equity, net(a)                                       (7.7%)      16.1%       12.3%
 Return of net profit (loss) on equity (a)                                                 (3.8%)      17.8%       14.1%
 Return of net profit (loss) on total assets (a)                                           (0.4%)       1.2%        0.9%


    (a) Annualized


This information is provided by RNS
The company news service from the London Stock Exchange
 
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