Bank Leumi Le-Israel (LUMI) Q3 2023 earnings summary

Executive summary

• 9M net income was NIS 5.201bn, down 3.4% YoY; Q3 net income was NIS 1.767bn, down 0.8%.

• Higher rates and loan growth lifted net interest income, while war-related uncertainty drove higher loan-loss provisions and weakened the outlook.

Financial highlights

• 9M net interest income was NIS 12.147bn, up 28.7% YoY; growth was 31% against the comparison excluding Bank Leumi USA results.

• 9M loan-loss expense rose to NIS 1.715bn from NIS 185m; Q3 expense was NIS 991m, including NIS 869m in collective provisions.

• 9M noninterest income rose 15.5% to NIS 3.884bn, while operating and other expenses fell 1.4% to NIS 5.034bn.

• Q3 profit before tax rose 5.0% to NIS 2.623bn; Q3 EPS was NIS 1.15, unchanged YoY. 9M EPS was NIS 3.38 versus NIS 3.62.

Outlook and guidance

• The war is expected to materially harm economic activity, markets and future results; impact depends on its duration, escalation and geographic scope.

• Bank of Israel’s October forecast assumed fighting limited to the southern front and ending by Q4 2023: GDP growth of 2.3% in 2023 and 2.8% in 2024; the internal 2024 forecast was 1%.

• Expected war reliefs, waived income and donations had an estimated NIS 560m effect, assuming full realization; actual impact may vary with uptake and conditions.