Bank Leumi Le-Israel B.M. (LUMI) Q4 2025 earnings summary

Executive summary

• Achieved record net profit of NIS 10.3 billion for 2025, up 4.7% year-over-year, within the NIS 9–11 billion target range, and delivered the highest profits in history despite regional conflict and macroeconomic challenges.

• Return on equity reached 15.8% for 2025, fully aligned with the 15–16% target, and exceeding the upper end of the target range.

• Maintained best-in-class cost-to-income ratio at 29.3%, reflecting ongoing efficiency improvements and technological transformation.

• Net loans grew 14.1% in 2025, surpassing the 8–10% target, with improved credit quality and NPL ratio down to 0.40%.

• Distributed NIS 5.9 billion in dividends and buybacks (58% of net profit), representing an unprecedented capital return.

Financial highlights

• Net income for 2025 was NIS 10,262 million, a 4.7% year-over-year increase; Q1 2026 net income was NIS 2.55 billion.

• Cost-to-income ratio improved to 29.3%, among the best globally.

• Net loans grew 14.1% in 2025, driven by corporate, infrastructure, real estate, and mortgages.

• Credit loss expenses ratio was 0.09%, reflecting strong credit quality.

• Book value per share increased 12% year-over-year to nearly NIS 46; shareholders' equity rose 10.5% to NIS 68.1 billion.

Outlook and guidance

• Updated net profit forecast for 2026–2027 raised to NIS 10–12 billion per year, with ROE targets of 14.5–16%.

• Annual capital return target of 50–65% and credit growth of 8–10%.

• Expect to benefit from Israel’s projected 5.2% GDP growth in 2026 and moderate inflation.

• Confident in maintaining high profitability despite expectations of declining rates and inflation.

• Macroeconomic assumptions include annual CPI of 1.8–2% and BOI interest rate of 3.2–3.7%.