Bank Leumi Le-Israel (LUMI) Q2 2025 earnings summary

Executive summary

• Q2 net income was NIS 2,610 million, up 15% year-over-year; H1 net income was NIS 5,013 million, down 0.8% year-over-year.

• Q2 ROE was 16.2%, versus 15.9% a year earlier; adjusted for excess capital above the internal CET1 requirement, ROE would exceed 18% in Q2 and H1.

• Lending growth, improved efficiency and low NPLs supported results amid geopolitical uncertainty and increased credit costs.

Financial highlights

• Q2 net interest income was NIS 4,540 million, up 3.7% year-over-year; H1 net interest income rose 5.1% to NIS 8,557 million, partly offset by spread erosion.

• Q2 fees and commissions increased 11.4% year-over-year; non-interest income rose 5.9% to NIS 1,446 million.

• H1 non-interest income fell 27.7% to NIS 2,814 million, reflecting prior-year headquarters-sale gains, lower derivatives income and FX differences.

• Q2 cost-income ratio improved to 26.9% from 28.7%; H1 ratio was 29.4%.

• H1 operating and other expenses declined 3.9% to NIS 3,341 million; H1 basic EPS was NIS 3.34 versus NIS 3.32.

Outlook and guidance

• Initial 2025 credit-growth target was 8%–10%; H1 growth was 7.4%, and management may consider updating the target at year-end.

• Cost-income improvement is expected to continue over the long term through technology, though not necessarily quarter by quarter.

• Economic recovery is expected to continue through 2025–26; the Bank of Israel forecast GDP growth of 3.3% in 2025 and 4.6% in 2026, subject to geopolitical conditions.

• The Bank of Israel’s July forecast put its policy rate at an average 3.75% in Q2 2026, implying three cuts over the coming year; forecast uncertainty remains high.

• Targeting a minimum 50% payout ratio for 2025–26, subject to regulatory approval; the Q2 50% authorization was not retroactive and allowed no catch-up distributions.