Mizrahi Tefahot Bank (MZTF) Q1 2024 earnings summary

Executive summary

• Q1 net profit was NIS 1,272M, down 6.9% YoY but up 21.5% QoQ; annualized ROE was 18.1%.

• Assets reached NIS 450.7bn, net public loans NIS 330.5bn and public deposits NIS 365.4bn, all higher YoY.

Financial highlights

• Total revenue was NIS 3,598M, down 6.0% YoY; pre-tax profit was NIS 2,144M versus NIS 2,162M.

• Net interest revenue fell 14.7% YoY to NIS 2,685M; non-interest financing revenue rose to NIS 345M from NIS 87M.

• Operating and other expenses fell 11.0% YoY to NIS 1,279M, including lower payroll and depreciation costs; Q1 2023 included one-time amortization and merger costs.

• Credit-loss expenses were NIS 175M versus NIS 227M YoY; net accounting write-offs were NIS 135M and closing provisions totaled NIS 4,321M.

Outlook and guidance

• Responsible credit growth remains the plan; mortgage demand may recover in 2024, but management does not expect a near-term return to early-2022 levels.

• A revised strategic plan remains possible, but management prefers to assess how the war unfolds before making changes.

• Management did not expect the dividend payout to exceed 40% next quarter; it does not currently plan to raise the payout during the war.

• Israel GDP growth was forecast at 2.0% in 2024; the Bank of Israel’s April forecast put the average rate in Q1 2025 at 3.75%.