Bank Hapoalim's net profit beat expectations and jumped 29 percent in the third quarter, reflecting an improved credit portfolio, the company's "focused strategy" and the expanding economy. The bank said on Wednesday that in the three months ending on September 30, net profit rose to NIS 761 million from NIS 590m. in the same period a year earlier, while net return on equity rose to 20.6% from 17%. Earnings per share increased to 60 agorot from 47 agorot and operating profit increased to NIS 1.22b. from NIS 1.03b. Profit from financing activity before provisions for doubtful debts climbed to NIS 2b. from NIS 1.74b., primarily because of higher income from interest on problematic debt that was not previously recorded and the positive impact of the 1.9% increase in the consumer price index on CPI-linked securities. Provisions for doubtful debts decreased to NIS 222m. from NIS 369m. as non-performing loans fell to NIS 5.61b. from NIS 6.19b. and problematic debts fell to NIS 19.98b. from NIS 22.21b. Chairman Shlomo Nehama said earnings rose because of an improved economy and because the bank carried out its business plan. "The strong results of the third quarter of 2005 show that Bank Hapoalim's focused strategy together with an improved macroeconomic environment, is delivering the returns promised to shareholders at the beginning of the year, and even more than that," he said. In line with its policy of paying quarterly dividends, Hapoalim said it would pay a total of NIS 390m., or 31 agorot a share, on December 15. Analysts welcomed the results, with Excellence Nessuah head of research Micha Goldberg saying that the major figures, such as net profit and loan-loss provisions, were much better than expected. "Overall, we are very happy with Hapoalim's results," he said in a research note. IBI Group hailed the bank's improved credit portfolio and predicted that shares would rise. The investment house was proved right as shares climbed 4.4% to NIS 18.90 on the Tel Aviv Stock Exchange. In its sector breakdown, Hapoalim said net profit from basic retail services rose 1.5%; from housing finance it rose 18.5%; and from international activities it rose 19%. The most improved performance came at Hapoalim's financial management operations, where net profit surged almost five-fold to NIS 259m. Nine-month net profit soared 40% to NIS 2.29b., net return on equity rose to 21.2% from 15.8%, and earnings per share jumped to NIS 1.82 from NIS 1.31. Income from financing activities before provision for doubtful debts climbed 5.6% to NIS 5.63b. and provisions for doubtful debts fell 19% to NIS 1.02b. Credit to the public slipped to NIS 180.2b. in the first nine months from 182.54b. at the end of 2004 and deposits fell to NIS 202.79b. from NIS 206.67b.