Automatic Bank Services Limited (SHVA) Q2 2023 earnings summary

Executive summary

• H1 2023 revenue reached ₪117.3m vs ₪57.2m YoY; net income was ₪24.1m vs ₪10.8m, while Q2 net income declined to ₪4.3m from ₪12.2m.

• Operations comprise one clearing segment covering payment-card processing, ATM switching and related services; transaction volumes and repricing supported revenue growth.

Financial highlights

• H1 revenue was ₪117.283m, up from ₪57.232m YoY; card-company services contributed ₪108.495m and other services ₪8.788m.

• H1 operating profit was ₪45.831m vs ₪23.870m; net income was ₪24.085m vs ₪10.779m, and EPS was ₪0.60 vs ₪0.27.

• Q2 revenue was ₪33.764m vs ₪29.214m YoY; operating profit was ₪12.320m vs ₪12.060m.

• Q2 net finance expense was ₪4.845m vs net finance income of ₪2.644m; net income was ₪4.276m vs ₪12.224m and EPS was ₪0.11 vs ₪0.31.

• H1 operating expenses rose to ₪71.452m from ₪33.362m, mainly reflecting personnel and other costs from the separation from Masav and strategic-plan implementation.

Outlook and guidance

• A tariff update took effect May 1, 2023; management expected it to positively affect revenue and operating profit.

• Tap on Phone development continued, with a post-period agreement signed with a supplier to develop infrastructure for the expanded payment software service.

• Core-system modernization and automation of manual processes continued in Q2, targeting operational efficiency and improved customer experience.

• ATM settlement and clearing services began in July 2023, including netting and direct settlement through Bank of Israel’s Zahav system.