Bank Leumi Le-Israel (LUMI) Q2 2022 earnings summary

Executive summary

• Q2 net income attributable to shareholders was NIS 1,992 million, up 19.5% YoY; H1 net income was NIS 3,601 million, up 19.8% YoY.

• The April 1 Valley merger generated a NIS 645 million after-tax gain, including NIS 451 million in Q2; results from Bank Leumi USA ceased to be consolidated from that date.

Financial highlights

• Q2 net interest income was NIS 3,125 million, up 12.7% YoY; H1 was NIS 6,024 million, up 17.6% YoY, with loan growth, CPI and higher rates contributing.

• H1 noninterest income fell 13.7% YoY to NIS 2,507 million; noninterest finance income included a gross NIS 782 million Valley merger gain.

• H1 operating expenses declined 3.4% YoY to NIS 3,277 million, excluding Bank Leumi USA results; fees and commissions rose 4.7% to NIS 1,802 million.

• Basic EPS was NIS 1.36 in Q2 and NIS 2.47 in H1, versus NIS 1.15 and NIS 2.07, respectively, a year earlier.

Outlook and guidance

• The Beit Mani sale is expected to produce a NIS 524 million pre-tax gain when management and staff relocate to Lod, expected in H2 2023.

• A customer crypto service with Paxos is planned for initial launch to Pepper customers in Bitcoin and Ethereum, subject to required regulatory approvals.

• The July 2022 amendment on land-development credit risk weights is being phased in over four quarters from Q3 2022; full capital impact is expected by June 30, 2023, with no material effect anticipated.