Automatic Bank Services Limited (SHVA) Q1 2023 earnings summary

Executive summary

• Q1 revenue rose to NIS 30,731 thousand from NIS 28,018 thousand YoY, while operating profit declined to NIS 9,771 thousand from NIS 11,810 thousand; net income increased to NIS 7,979 thousand from NIS 6,503 thousand.

• Net income benefited from a swing in net finance results, from NIS 3,276 thousand of expenses in Q1 2022 to NIS 594 thousand of income in Q1 2023.

Financial highlights

• Revenue from services to card companies was NIS 28,382 thousand, up from NIS 25,893 thousand; revenue from other services was NIS 2,349 thousand, up from NIS 2,125 thousand.

• Operating expenses increased to NIS 20,960 thousand from NIS 16,208 thousand, mainly reflecting added personnel and other costs related to separation from Masav and execution of the strategic plan.

• Pretax income was NIS 10,365 thousand versus NIS 8,534 thousand; income tax expense was NIS 2,386 thousand versus NIS 2,031 thousand.

Outlook and guidance

• A tariff update effective May 1, 2023 is expected to have a positive effect on revenue and operating profit.

• ATM settlement services are expected to begin in Q3 2023; the ATM network connection for Ofek Credit Union is planned by year-end 2023.

• The Bank of Israel projected 2023 inflation at the upper end of its 1%–3% target range.