Bank Hapoalim, Israel's largest lender, reported a rise in quarterly profit due to higher financing income and a drop in a provision for credit losses.

Hapoalim on Thursday posted second-quarter net profit of NIS 655 million, ($179 million), up from 607 million a year earlier and above expectations of 597 million in a Reuters poll of analysts.

Net financing income rose to NIS 2.18 billion from NIS 2.04 billion, while credit loss expenses dipped to NIS 301 million from 344 million.

Analysts had forecast net financing income of NIS 1.93 billion and credit loss expenses of 258 million.

Hapoalim's core Tier 1 capital ratio to risk-weighted assets rose to 9.2 percent from 8.9 percent at the end of 2012.

Israel's banking regulator has required banks to hold core Tier I ratio of at least 9 percent by the start of 2015 as part of a global drive to strengthen the industry and prevent a repeat of the 2008 financial crisis.

The bank declared a dividend of NIS 92 million for the quarter. Last month the bank said it would reinstate a cash dividend on a regular quarterly basis for the first time since the global financial crisis in 2008.