This article first appeared on GuruFocus .
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Return on Equity (ROE):16.3%.
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Dividend and Share Buyback:Totaling ILS1.3 billion, with a dividend yield of 4.7% and a payout ratio of 55% of net income.
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Credit Portfolio Growth:Expanded by 5.4% or ILS28 billion, with corporate credit increasing by 10.3%.
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Non-Performing Loans (NPL) Ratio:0.4%.
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Public Deposits Growth:Increased by 1.2% in the quarter and 16.5% over the past 12 months.
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Efficiency Ratio:29.1%.
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Net Interest Income:ILS3.9 billion.
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Total Revenues:ILS5.5 billion, a 1.5% increase from Q1 2025.
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Fees and Commission Income:ILS1.1 billion, a 10.6% increase from Q1 2025.
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Total Expenses:Declined by 8% compared to Q1 2025.
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Pre-Provision Net Revenue (PPNR):Increased by 6% to ILS3.9 billion.
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Credit Loss Expenses:0.12% of gross loans.
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Core Tier 1 Ratio:11.74%.
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Total Capital Ratio:14.07%.
Release Date: May 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Bank Leumi Le-Israel BM ( BLMIF ) reported a strong return on equity (ROE) of 16.3%, reflecting successful strategy implementation.
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The bank announced a significant dividend distribution and share buyback totaling ILS1.3 billion, with a dividend yield of 4.7%, the highest in the industry.
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The credit portfolio expanded by 5.4% in the first quarter, with corporate credit increasing by 10.3%, driven by strategic sectors like real estate and infrastructure.
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Bank Leumi's efficiency ratio stood at 29.1%, among the best globally, driven by technological advancements and AI integration.
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The bank maintained a strong capital position with a core Tier 1 ratio of 11.74% and a total capital ratio of 14.07%, above regulatory requirements.
Negative Points
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Net interest income decreased to ILS3.9 billion from ILS4 billion in 2025, impacted by a negative CPI and lower interest rates.
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The net interest margin (NIM) declined to 1.95% from 2.1% in Q4 2025, primarily due to lower interest rates.
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Total credit loss expenses increased to 0.12% of gross loans compared to 0.05% in the same quarter of 2025.
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The core Tier 1 ratio decreased from 12.05% in the previous quarter to 11.74%, attributed to higher activity levels.
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The bank faces high competition, impacting net interest margins, necessitating proactive measures to manage these challenges.
Q & A Highlights
Q: We've seen a meaningful decline in your earnings sensitivity to interest rates this quarter, almost a 50% reduction. Could you walk us through the key drivers here? Is it more tactical, for example, through hedging or more structural in terms of balance sheet positioning? A: Thank you, David. This is a result of a great job by our ALM department, which invested in assets with lower sensitivity to interest rates, like fixed interest bonds. These activities decreased our sensitivity to decreases in interest rates going forward.
Q: How do you see your loan growth developing from here? Do you think you can reach the 8% to 10% growth target you set at the beginning of the year? Which areas do you see the best opportunities for growth? A: We are aiming to achieve the 8% to 10% growth target. If the Israeli economy performs better than expected, there may be opportunities to exceed this target. Our focus remains on healthy growth, aligned with our underwriting criteria and credit risk appetite. We prioritize maintaining our ROE targets.
Q: How do you see the net interest income and the NIM developing going forward? How does this compare with your policy rate expectation? A: The competition has been high in recent quarters, but we have taken measures to improve margins on both the credit and liability sides. We have launched new products and are proactive with customers to manage these challenges. Our primary aim is to achieve our ROE targets.
Q: Can you elaborate on the strategic focus areas that contributed to your strong credit growth this quarter? A: Our credit growth was driven by strategic segments such as real estate, infrastructure, and mortgages. The infrastructure and power station sectors, in particular, are strategic anchors with a strong, stable, and multiyear project pipeline. This aligns with our strategy and has been supported by advanced technological tools.
Q: What measures are you taking to maintain your efficiency ratio, which is among the best globally? A: Our efficiency ratio of 29.1% is driven by continuous improvement of our platform through technological leverage and investment in AI tools. We have implemented several key AI projects, which enhance our growth potential, scalability, and cost structure optimization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
