Automatic Bank Services Limited (SHVA) Q4 2022 earnings summary

Executive summary

• FY22 revenue rose to ₪117.3m from ₪110.4m; operating profit fell to ₪45.8m from ₪50.3m, while net income declined to ₪24.1m from ₪44.6m, mainly reflecting weaker investment results and higher operating costs.

• Operations span one payments-processing segment, covering card transaction authorization, collection and settlement interfaces, ATM switching, terminal software and related services.

• Strategic priorities include expanding digital services, diversifying revenue, separating shared operations from MASAV, strengthening cyber defenses and modernizing core systems.

Financial highlights

• Total revenue was ₪117.283m in FY22 versus ₪110.408m in FY21; card issuers and acquirers accounted for ₪108.495m, with other services contributing ₪8.788m.

• Operating costs rose to ₪71.452m from ₪60.078m; FY22 included ₪5.3m of separation-related costs, ₪2.139m of share-based compensation and ₪1.5m for cyber and modernization initiatives.

• Net finance expense was ₪11.391m versus net finance income of ₪7.402m in FY21, largely reflecting losses on the trading-securities portfolio; net income was ₪24.085m versus ₪44.557m.

• Operating cash flow was ₪47.134m versus ₪43.080m; investing cash outflow was ₪29.105m and financing cash outflow was ₪26.560m, including dividends and lease repayments.

Outlook and guidance

• A 2023–2025 work plan targets wider digital product offerings, cloud-based services, core-system modernization, stronger cyber protection and broader customer reach.

• Core-system modernization was planned to begin in 2023, run for ~2 years and cost ~₪10m; separation-related recurring expenses were estimated at ₪10–12m in 2023 and ₪15.3m annually after separation is completed.

• ATM settlement, direct settlement through the Bank of Israel, and participant-failure arrangements were planned to enter production during Q2 2023; SHVA Arena and SHVA Insights were also targeted for launch in 2023.

• The 2023 outlook faces uncertainty from inflation, rising interest rates, slower economic growth, regulatory change and potential shifts to payment methods that bypass card infrastructure.