Bank Leumi Le-Israel (LUMI) Q1 2023 earnings summary

Executive summary

• Q1 net income attributable to shareholders was NIS 981 million, down from NIS 1,609 million YoY, including a NIS 1.1 billion after-tax impairment of the Valley investment.

• Higher interest income and loan growth supported operating results, while credit-loss expenses rose and the Valley impairment drove the reported earnings decline.

Financial highlights

• Net interest income was NIS 3,928 million vs NIS 2,899 million reported in Q1 2022; excluding BLUSA from the comparative period, the increase was 45.54%.

• Net income before tax was NIS 2,964 million vs NIS 2,095 million; profit after tax was NIS 2,075 million vs NIS 1,612 million.

• Loan-loss expenses were NIS 406 million vs NIS 40 million of income reported in Q1 2022; collective provision expense was NIS 389 million.

• Operating and other expenses were NIS 1,629 million vs NIS 1,794 million; fees and commissions were NIS 948 million vs NIS 930 million.

• Basic EPS was NIS 0.64 vs NIS 1.11; comprehensive income attributable to shareholders was NIS 1,050 million vs NIS 1,890 million.

Outlook and guidance

• Israel GDP grew 2.5% annualized in Q1; the IMF forecast 2.5% Israeli growth for 2023, with global growth forecast at 2.8%.

• The Bank of Israel raised its policy rate to 4.75% on May 22, 2023; inflation was 5.0% YoY in March, above the 1–3% target range.

• Housing demand weakened with higher rates; a single-digit decline in apartment prices was expected over the coming year, with political and social uncertainty adding downside risk.