Bank Leumi (TASE: LUMI) released first quarter financials this morning, showing a net profit of NIS 2.4 billion. This represents a 12% rise in comparison with the first quarter of 2024, if last year’s sale of the bank’s headquarters building is excluded. Including that transaction, the net profit in the first quarter of this year was 14% lower than in the corresponding quarter.
The bank, headed by Hanan Friedman, achieved a return on equity of 15.4% in the first quarter of this year. This compares with a return of 15.6% in the corresponding quarter last year, if the real estate transaction is excluded. Including that transaction, the return on equity in the first quarter of last year was 20.2%. For 2024 as a whole, the bank achieved a return on equity of 16.9%.
The bank has declared a dividend of 40% of its quarterly profit, amounting to NIS 961 million, of which NIS 721 million will be distributed in cash, while the remainder will be in the form of a share buyback. Under a plan published in March, Leumi intends to raise its dividend to 50% of profit, but, unlike at Discount Bank, its board has yet to make a formal decision on the matter.
Bank Leumi’s quarterly net interest income rose by 6.6% in comparison with the first quarter of 2024 to NIS 4 billion. The bank says that the rise was the result of an increase in its credit portfolio, partly offset by erosion in credit spreads and higher interest paid on deposits. As at the other banks, fee income at Bank Leumi rose sharply, by 9% to NIS 1 billion.
Over the year to the end of March, Bank Leumi’s credit portfolio increased by 1.6%, which compares with 2% growth at Bank Hapoalim and Discount Bank, which published their first quarter results yesterday. The bank described this as "responsible and conservative growth in the credit portfolio, with a focus on strategic segments."
Bank Leumi continues to show a heightened appetite for the mortgage market. Housing loans grew by 10.4% year-on-year to NIS 148.3 billion.
The credit loss expense shrank significantly, by 75%, in comparison with the corresponding quarter, to NIS 55 million. This is the reverse of the trend seen yesterday at Bank Hapoalim and Discount Bank. The credit loss expense at Bank Leumi represents 0.05% of the average balance of credit to the public, a very low proportion. In the corresponding quarter, the proportion was 0.21%, similar to the figure reported by the competitor banks for the first quarter of this year. Bank Leumi said that its credit loss expense was entirely a general provision, and was partly offset by debt recoveries, and was low partly because of shorter loan durations.
In the corresponding quarter, credit loss provisions rose because of the effect of the war that broke out on October 7, 2023. "Despite the improvement in portfolio quality metrics, the provision for credit losses continues to reflect security and economic uncertainty because of global and local developments," the bank said.
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Israeli banks’ stocks have been extremely popular over the past few years. Just since the beginning of this year, they have risen by more than 20%, and in Bank Leumi’s case by 26%, to give it a market cap of NIS 81 billion. The second largest bank in market cap terms is Bank Hapoalim, at NIS 74 billion. Last year, Bank Leumi’s share price rose by 97%, which compares with 78% for Bank Hapoalim. Following the release of its first quarter financials, Bank Leumi's share price is up by 0.9% on the Tel Aviv Stock Exchange this morning.
Published by Globes, Israel business news – en.globes.co.il – on May 20, 2025.
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