Harel Insurance Investments & Financial Services (HARL) Q2 2023 earnings summary

Executive summary

• Shareholders’ comprehensive income after tax was NIS 93m in Q2 and NIS 126m in H1, versus losses of NIS 436m and NIS 110m; H1 net loss was NIS 91m, versus NIS 440m net income.

• Comprehensive income before tax was NIS 128m in Q2 and NIS 180m in H1, versus losses of NIS 674m and NIS 217m in the prior-year periods.

• Premiums, benefit contributions and investment-contract receipts rose 9.6% YoY in Q2 and 1.4% in H1; total AUM reached NIS 401bn, up 10% from YE22.

• H1 total income was NIS 13,516m, including NIS 4,783m of net investment and financing income, versus a NIS 4,182m investment and financing loss in H1 2022.

Financial highlights

• H1 premiums, benefit contributions and investment-contract receipts totaled NIS 33bn, compared with NIS 33bn in H1 2022; gross premiums earned rose to NIS 8,896m from NIS 8,590m.

• Q2 total income was NIS 7,870m versus NIS 262m; net investment and financing income was NIS 3,254m versus a NIS 3,749m loss.

• H1 profit before tax was a loss of NIS 157m, versus profit of NIS 632m; basic and diluted loss per share was NIS 0.46.

• Return on equity was 4% in Q2 versus negative 20%; H1 was 3% versus negative 3%. H1 operating cash flow was NIS 2,371m, versus cash used of NIS 1,034m.

• Real Nostro yield improved YoY; H1 yield was zero and Q2 yield was positive.

Outlook and guidance

• Israel’s insurance-sector adoption of IFRS 17 and IFRS 9 was deferred to periods beginning Jan. 1, 2025, with transition on Jan. 1, 2024; early adoption is not planned.

• The Isracard acquisition remains subject to regulatory and other closing conditions; the deadline to satisfy conditions was extended to Nov. 12, 2023.

• Revised dividend thresholds require a minimum economic solvency ratio of 135% with transitional measures and 110% without them.

• Forward-looking results remain subject to product demand, pricing, economic conditions, product and technology development, and accounting policies.