Harel: Investments and credit drive 30% profit jump

Insurance company Harel has reported a 30% increase in total profit for the second quarter, amounting to 1 billion shekels. According to the results, the company recorded a return on equity of 37%.

Simultaneously with the publication of these reports, the board of directors decided to update the dividend distribution policy to a quarterly basis, replacing the semi-annual policy previously in effect.

The company will distribute a dividend of 400 million shekels. Year-to-date, Harel has announced dividends and share buybacks totaling approximately 1.5 billion shekels. Harel Investments shares have jumped over 50% this year, reaching a market value of 37 billion shekels.

The profit growth was achieved, according to Harel, "thanks to an increase in investment profits and growth in core profits, led by the asset management, credit, and capital sectors, which showed a 68% increase in the second quarter due to continued growth in assets under management and the credit portfolio." In the first half of the year, total profit rose by 19% to 1.6 billion shekels, with a return on equity of 27%.

In the insurance sector, Harel's core pre-tax profit amounted to 699 million shekels, a 4% increase compared to the same quarter last year. For the half-year, core pre-tax profit from insurance business was 1.32 billion shekels, down from 1.36 billion shekels in the same period last year. This change was primarily due to lower core profits from life and health insurance in the first quarter, driven by a statistical increase in life risk claims, which was partially offset by improvements in general insurance.

The group continues to increase its Contractual Service Margin (CSM) through new sales of growth products (life risk, medical expenses, and critical illnesses). The balance of future profits reached 17.7 billion shekels by the end of June.

Under the leadership of CEO Nir Cohen, Harel reports an 18% growth in premiums and pension contributions, totaling 25.5 billion shekels for the first half of the year, bolstered by capital market activity. Assets under management reached 638 billion shekels, a 10% increase since the beginning of the year and 17% over the last 12 months.

Growth in credit activity

The future value of new sales in the first half amounted to 992 million shekels, 23% higher than the new CSM created in the same period last year, indicating significant value creation from new business.

In asset management and credit, core profits from asset management rose by approximately 58% to 131 million shekels (compared to 83 million shekels last year) due to higher asset volumes and management fees. Total assets under management in this sector grew to 498 billion shekels, an increase of 48 billion shekels in six months.

Core profits from the credit sector grew by 32% to 79 million shekels (compared to 60 million shekels last year). The credit portfolio continues to expand, reaching 8.8 billion shekels, an increase of approximately 2.3 billion shekels over the past year.