Bank Leumi Le-Israel B.M. (LUMI) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 reached NIS 2.4 billion, up 12% year-on-year excluding one-off gains, with ROE at 15.4% and best-in-class cost-to-income ratio of 32.1%.

• Capital return totaled about 40% of net income, including NIS 721 million in cash dividends and NIS 240 million in buybacks.

• Credit growth was 1.6% quarter-over-quarter and 8.6% year-over-year, with strong corporate and mortgage lending.

• Book value per share increased 3.6% in the quarter and nearly 15% over the past year.

• Q1 2024 results included a one-time post-tax profit of NIS 0.6bn from HQ building sale; Q1 2025 results exclude such items.

Financial highlights

• Net interest income rose 7% year-on-year to NIS 4 billion, with net interest margin at 2.22%.

• Fee and commission income grew 9.2% year-on-year, mainly from securities, financing, and credit cards.

• Total expenses decreased by 5.2% year-on-year due to lower salary and operating costs.

• Credit loss expenses improved to 0.05% of the portfolio, reflecting low NPLs and improved debt quality.

• Shareholders' equity increased 11.7% to NIS 63.8 billion as of March 31, 2025.

Outlook and guidance

• Expectation of continued low credit loss expenses due to strong credit quality and low NPLs.

• Targeting a minimum 50% payout ratio in 2025-26, subject to regulatory approval.

• Loan growth expected to continue, supported by a robust pipeline and infrastructure projects.

• Israeli macro recovery expected to continue through 2025-26, with GDP growth and strong labor market.

• Relief programs and donations to continue for customers affected by the war.