Phoenix Financial (PHOE) Q3 2023 earnings summary

Executive summary

• 9M net income was NIS 199.2m vs. NIS 1.084bn; adjusted operating income, excluding capital-market effects, interest and special items, rose NIS 162m YoY to NIS 1.466bn.

• Q3 net income was NIS 144.9m vs. NIS 182.7m; adjusted operating income increased NIS 109m YoY to NIS 537m.

• Q3 core income was NIS 305m, up from NIS 279m; 9M core income was NIS 955m vs. NIS 857m. 9M comprehensive income was NIS 515.3m vs. NIS 598.7m.

• AUM reached NIS 426bn at September 30, up from NIS 364bn a year earlier; the June 30 solvency ratio was 201%, or 205% after the subsequent NIS 300m capital raising.

Financial highlights

• 9M gross premiums earned were NIS 8.975bn vs. NIS 9.152bn; total income was NIS 16.965bn vs. NIS 3.274bn, reflecting the swing in investment results from losses to gains.

• 9M profit before tax was NIS 115.9m vs. NIS 1.493bn; net income attributable to shareholders was NIS 114.1m vs. NIS 1.022bn.

• Core income, net of special items, interest and capital-market effects and excluding 3% real interest rates, was NIS 305m in Q3 and NIS 955m in 9M; non-operating effects were negative NIS 88m and NIS 440m, respectively.

• Shareholders’ equity was NIS 10.018bn at September 30; 9M nostro annualized nominal return was 4.2%, real return negative 0.1%, and excess-return capital-market effects were negative NIS 995m pre-tax.

Outlook and guidance

• 2025 strategic targets include ROE of 12%–15%; normalized ROE was 12.6% in 9M 2023.

• Strategic priorities include growth in insurance, asset management, distribution and credit, with investment in organizational, administrative and technology infrastructure.

• Management expected an initial recovery in Israeli capital markets but anticipated continued volatility; the Bank of Israel forecast GDP growth of 2.3% in 2023 and 2.8% in 2024 before the war’s impact.