March 31, 2008 / 5:40 AM / in 10 years

REFILE-UPDATE 1-Bank Hapoalim Q4 profit sinks on ABS writeoff

(Adds details, CEO comments)

TEL AVIV (Reuters) - Bank Hapoalim (POLI.TA), one of Israel’s two largest banks, on Monday reported a 71 percent fall in fourth-quarter net profit due to write-offs related to the U.S. subprime crisis.

Quarterly profit was 219 million shekels ($62 million, or 0.18 shekel per share, compared with 749 million shekels, or 0.59 shekel per share, a year earlier.

The average profit forecast of nine analysts polled by Reuters was 77 million shekels.

Excluding exceptional provisions, Hapoalim recorded a net profit of 849 million shekels in the fourth quarter. The bank showed an increase of 69 million shekels in operating and other income in the final three months of 2007.

Income from financing activity before bad debt provisions dropped to 741 million shekels from 1.78 billion shekels a year earlier.

Doubtful debt provisions slid to a negative 9 million shekels from 175 million shekels.

Hapoalim, whose shares have slid some 30 percent so far in 2008, said it posted impairments of 1.18 billion shekels, or $334 million, for its U.S. asset-backed securities portfolio. It had previously said it would write off around $300 million in the fourth quarter due to a decline in the value of its U.S. structured investment vehicle (SIV) holdings.

Zvi Ziv, Hapoalim’s chief executive, said in a statement that in 2008 the bank will accelerate the growth rate of its international operations and will “devote resources to the appropriate management of its exposure to the U.S crisis.”

    To that end, Hapoalim last week sold a 4 percent equity stake to U.S. hedge fund York Capital.

    Hapoalim said it had opted not to declare a dividend at this time.

    “In view of the bank’s decision to gradually raise the ratio of capital to risk assets to 12 percent by the end of 2009, and given the uncertainty regarding developments in global financial markets, the bank has decided not to declare a dividend at the date of approval of its financial statements in 2007,” it said.

    But it said it intended to add a dividend for the last quarter of 2007 to its next dividend payment.

    ($1 = 3.53 shekels)

    Reporting by Tova Cohen, editing by Steven Scheer

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