Bank Leumi Le-Israel (LUMI) Q2 2024 earnings summary

Executive summary

• Q2 net income was NIS 2,269 million, down 7.5% YoY; ROE was 15.9%, or 20.2% excluding the Valley National Bank impairment.

• H1 net income rose 47.2% YoY to NIS 5,054 million, with ROE of 18.0%.

• H1 results included NIS 830 million in pretax headquarters-sale gains and a NIS 0.6 billion after-tax impairment on the Valley investment.

Financial highlights

• Q2 net interest income rose 2.2% YoY to NIS 4,378 million; non-interest income declined 3.3% to NIS 1,365 million.

• H1 net interest income declined 0.8% to NIS 8,145 million, while non-interest income rose 56.8% to NIS 3,893 million.

• Q2 cost-income ratio improved to 28.7% from 29.5% YoY; H1 efficiency ratio was 28.9%, down from 31.0%.

• H1 loan-loss expenses fell 71.8% to NIS 204 million from NIS 724 million; the H1 expense ratio was 0.09% of average loans.

• Q2 EPS was NIS 1.49 versus NIS 1.59 YoY; H1 EPS was NIS 3.32 versus NIS 2.23.

Outlook and guidance

• Bank of Israel Research Department forecast GDP growth of 1.5% in 2024 and 4.2% in 2025, with forecasts reduced from April amid war-related uncertainty.

• Bank of Israel policy rate remained at 4.50% in July; rate cuts may resume in early 2025, with a 4.25% forecast for Q2 2025.

• Deposit-spread erosion is expected to continue as customers shift from current accounts to interest-bearing deposits.

• Tax rate guidance for the next financial year was 37%–38%, reflecting special government levies.