Mizrahi Tefahot Bank (MZTF) Q1 2023 earnings summary

Executive summary

• Q1 net profit was NIS 1,367 million, up 18.5% YoY, with 22.4% ROE; total revenue was NIS 3,826 million.

• Assets rose 10.2% YoY to NIS 434 billion, net loans increased 10.4% to NIS 312 billion and public deposits grew 11.5% to NIS 348 billion.

• Completion of the Union Bank merger and balance-sheet growth supported results; financing revenues from current operations continued their positive quarterly trend from Q3 2020.

Financial highlights

• Total revenues were NIS 3,826 million, up 19.1% YoY; total financing revenues before credit-loss expenses were NIS 3,146 million, up 46.7%.

• Financing revenues were NIS 3,233 million, up 43.0% YoY; financing revenues from current operations were NIS 2,942 million, up 60.4%.

• Commissions and other revenues fell 36.4% YoY to NIS 680 million; operating and other expenses rose 3.5% to NIS 1,437 million.

• Credit-loss expenses were NIS 227 million, versus NIS 79 million in Q1 2022.

• Equity was NIS 24,844 million; fee income was NIS 528 million, with management describing recent quarterly variation as limited.

Outlook and guidance

• Responsible credit growth remained the plan; Q1 credit growth was lower than Q1 2022, and mortgage demand was not expected to return soon to early-2022 levels.

• Future rate hikes were expected to have a diminishing marginal contribution to results.

• The strategic plan targets a cost-income ratio below 50% by 2025; the Q1 ratio was 37.6%.

• Bank of Israel forecasts cited GDP growth of 2.5% in 2023 and 3.5% in 2024.