Mizrahi Tefahot Bank (MZTF) Q3 2024 earnings summary

Executive summary

• Q3 net profit rose 29.8% YoY to NIS 1,425m; ROE increased to 19.0% from 16.8%.

• 9M net profit was NIS 4,149m, up 7.4% YoY; lower credit-loss expenses and reduced operating costs partly offset softer financing revenue.

Financial highlights

• Q3 total revenue was NIS 3,797m, down 1.8% YoY; financing revenue before credit-loss expenses fell 2.5% to NIS 3,216m, while commissions and other revenue rose 2.3% to NIS 581m.

• Q3 credit-loss expenses were NIS 130m versus NIS 694m YoY; operating and other expenses declined 8.9% to NIS 1,289m.

• 9M total revenues were NIS 11,230m and net interest revenues were NIS 9,061m; 9M net profit was NIS 4,149m versus NIS 3,863m in 9M 2023.

• Total assets reached NIS 472.4bn, up 7.8% YoY; public loans were NIS 348.3bn, up 7.6%, and deposits were NIS 385.1bn, up 9.7%.

• Shareholders’ equity increased 14.9% YoY to NIS 30.4bn.

Outlook and guidance

• Financing income from operating activities had gradually risen since the start of 2024, following early-year rate cuts and customers shifting funds from current accounts to deposits.

• Management expected mortgage growth near Q3 levels, below 2022 activity but above the Q4 2023 and Q1 2024 lows; current balance-sheet growth was expected to carry into Q4.

• Management anticipated reasonable expense growth from the lower level reached after merger integration, with no further step-change reductions expected.

• The Bank of Israel Research Division forecast GDP growth of 0.5% in 2024 and 3.8% in 2025; its average-rate forecast was 4.50% in Q3 2025.

• The 2025 state budget was approved at NIS 607bn with a 4.3% deficit target; the cost-income strategic-plan target was below 50% by end-2025.