Phoenix Financial (PHOE) Q1 2023 earnings summary

Executive summary

• Q1 comprehensive income was NIS 81m; shareholder ROE was 3.3%, while adjusted ROE rose to 12.4% from 9.8%.

• Shareholder net loss was NIS 57m versus NIS 675m income a year earlier; core business income rose 34% YoY to NIS 301m.

• Operating profit excluding capital-market effects, special items and interest increased NIS 135m YoY; market and interest effects remained key sources of earnings volatility.

• AUM reached NIS 386bn; strategy targets profitable growth across insurance, asset management, distribution and credit.

Financial highlights

• Total income was NIS 4.22bn vs. NIS 2.63bn; gross premiums earned were NIS 2.95bn vs. NIS 3.01bn, while total premiums and contributions were NIS 4.4bn vs. NIS 5.5bn.

• Net loss was NIS 33.2m vs. NIS 690.2m profit; shareholder net loss was NIS 57m vs. NIS 675.1m profit. Diluted loss per share was NIS 0.23 vs. earnings of NIS 2.63.

• Net investment and finance income was NIS 917.7m vs. a NIS 681.5m loss; retained insurance payments and liability changes rose to NIS 3.18bn from NIS 635.7m.

• Core activities generated NIS 473m pre-tax profit; a negative NIS 317m net capital-market impact and positive interest-rate effects contributed to NIS 132m pre-tax comprehensive income.

Outlook and guidance

• 2025 targets include comprehensive income of NIS 1.3–1.5bn, AUM of NIS 450–550bn and ROE of 12%–15%; assumptions include a 3% net investment return and are subject to market conditions.

• Management targets growth and high ROE across core businesses, supported by active opportunity and capital-adequacy management, and investments in people and technology.

• IFRS 17 and IFRS 9 implementation in Israel was postponed to January 1, 2025; preparations, including IT systems and controls, are ongoing.

• Psagot mutual-fund transfer remained subject to competition approval; the agreement could be terminated for remaining funds if approval was not obtained by September 30, 2023. Psagot Securities’ NIS 8.1bn AUM acquisition for NIS 50m had competition approval, with court approval outstanding.