Bank Leumi Le-Israel (LUMI) Q2 2023 earnings summary

Executive summary

• Q2 net income attributable to shareholders was NIS 2,453 million, up from NIS 1,992 million YoY; H1 net income was NIS 3,434 million, down from NIS 3,601 million, including a NIS 1.1 billion after-tax Valley impairment.

• H1 earnings benefited from higher net interest income as rates, lending volumes and deposit spreads rose; stronger collective loan-loss provisioning and the Valley impairment weighed on results.

Financial highlights

• Q2 net interest income was NIS 4,284 million vs. NIS 3,125 million YoY; H1 was NIS 8,212 million vs. NIS 6,024 million, up 41% excluding Bank Leumi USA comparative results.

• H1 pretax profit was NIS 6,659 million vs. NIS 5,010 million; profit after tax was NIS 4,406 million vs. NIS 3,520 million, while shareholder net income fell 4.6% to NIS 3,434 million.

• H1 noninterest income was NIS 2,483 million vs. NIS 2,507 million; fees and commissions rose 4.8% to NIS 1,838 million excluding Bank Leumi USA comparative results.

• Total assets were NIS 686.9 billion, down 1.8% from Dec. 2022; net public loans rose 6.4% to NIS 409.6 billion, while public deposits declined 4.1% to NIS 534.0 billion.

Outlook and guidance

• Israeli GDP growth was forecast at 3.0% for 2023 by the Bank of Israel and 2.5% by the IMF; slowing global trade and higher real interest rates were cited as headwinds.

• Deposit spreads may erode if customers continue shifting from non-interest-bearing accounts to interest-bearing deposits; further rate moves depend on inflation and activity.

• Expected gains from the two Tel Aviv headquarters sales total NIS 789 million pretax, subject to completion; recording was expected near transfer in Q4 2023 or by March 24, 2024.