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Bank Leumi Le-Israel (IL:LUMI)
:LUMI
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Leumi
(LUMI)
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Select Model
Rating:70Outperform
Price Target:
8,396.00
▲(14.97% Upside)
Action:ReiteratedDate:03/06/26
The score is driven primarily by solid underlying financial performance and a very constructive earnings-call outlook (strong guidance, asset quality, and efficiency). Reasonable valuation supports the rating, while higher leverage and uneven cash-flow trends, plus only mixed/neutral technical signals, keep the overall score from being higher.
Positive Factors
Strong Financial Performance
Leumi's robust profitability and high return on equity indicate strong operational efficiency and effective management, supporting long-term growth.
Improved Credit Quality
Improved credit quality with low credit loss expenses enhances financial stability and reduces risk, supporting sustainable growth.
Strategic Technology Implementation
High digital adoption reflects successful tech transformation, enhancing customer experience and operational efficiency, driving future growth.
Negative Factors
Decrease in Net Interest Income
Declining net interest income could pressure margins, impacting profitability if not offset by other income streams or cost controls.
Potential Regulatory Risks
Potential regulatory changes could increase costs and limit profitability, posing long-term challenges to financial performance.
Increasing Debt Levels
Rising debt levels may strain cash flow and financial flexibility, impacting the company's ability to invest in growth opportunities.
Leumi (LUMI) vs. iShares MSCI Israel ETF (EIS)
Market Cap
₪108.15B
Dividend Yield3.7%
Average Volume (3M)3.41M
Price to Earnings (P/E)11.1
Beta (1Y)0.94
Revenue Growth6.95%
EPS Growth12.41%
CountryIL
Employees7,833
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)171.00
Shares Outstanding1,481,079,500
10 Day Avg. Volume3,842,144
30 Day Avg. Volume3,405,959
Financial Highlights & Ratios
PEG Ratio1.65
Price to Book (P/B)1.54
Price to Sales (P/S)2.34
P/FCF Ratio19.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
₪8,140.02Price Target Upside11.46% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)7.51
Revenue Forecast (FY)₪24.05B
Leumi Business Overview & Revenue Model
Company DescriptionBank Leumi le-Israel B.M., together with its subsidiaries, provides banking and financial services in Israel, the United States, the United Kingdom, and internationally. It operates through Households, Private Banking, Micro Businesses, Small Businesses, Mid-market, Corporations, Institutional Entities, and Financial Management segments. It provides housing loans, collateral loans, and loans to purchasing groups, including mortgage planning, accompanying the customer through the mortgage process, and recycling existing loans; and working capital, acquisitions, and term loans, as well as credit lines; financial support to Israeli high-tech companies; equipment lease financing; credit cards; and online banking services, as well as wealth and cash management services. The company also offers international trade financing, loan syndications and participations, foreign currency time deposits, and dealing room services. In addition, it provides provident funds, mutual funds, study funds, pension funds, and insurance products; invests in marketable securities, market-making activity involving securities and derivatives, repurchase and lending transactions involving securities, short selling of securities, and securities' underwriting services; engages in asset and liability management activities; and provides trust and custodial services for banks. Further, the company engages in the activities, such as advisory services, sale and management of loan portfolios, and development of financial products. Additionally, it provides banking services to private customers and small businesses, largest and multinational corporations, and middle-market companies, as well as financial services to institutional customers and foreign banks. The company operates approximately 250 branches. Bank Leumi le- Israel B.M. was founded in 1902 and is headquartered in Tel Aviv-Yafo, Israel.
How the Company Makes MoneyLeumi generates revenue through several key streams. Primarily, the company earns money from interest on loans provided to customers, including personal, business, and mortgage loans. Additionally, Leumi generates income from transaction fees related to payment processing services. The company may also derive revenue from asset management fees for investment services offered to clients. Strategic partnerships with technology firms and financial institutions enhance their service offerings and expand their customer base, further contributing to earnings. Overall, Leumi's revenue model is supported by a blend of interest income, fee-based income, and partnerships that enhance its product offerings.
Leumi Earnings Call Summary
Earnings Call Date:Mar 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 26, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive operating and financial performance: record net income, robust loan growth, improved asset quality, excellent efficiency, strong liquidity and investor confidence (EUR 750m covered bond, market cap milestone). Management is aggressively pursuing AI and digital initiatives to further lower costs and accelerate product delivery. Key risks include geopolitical uncertainty, downward pressure on NIM from CPI and rate declines, accounting-driven weakness in noninterest income, and the presence of a large excess capital buffer that requires regulatory engagement to fully unlock shareholder distributions. On balance, the highlights substantially outweigh the lowlights, though the business remains exposed to macro/regulatory uncertainties.Q4-2025 Updates
Positive Updates
Record Net Profit and Strong ROE
Net income of ILS 10.3 billion in 2025 (all-time high), inside the ILS 9–11 billion target range; ROE of 15.8% (in line with 15%–16% target).
Robust Credit Growth
Net loans grew 14.1% in 2025 (above the 8%–10% target); quarter-over-quarter credit growth of 5% in Q4 driven by corporate, real estate and capital markets.
Improved Asset Quality and Low Loan Losses
NPL ratio declined to 0.4%; troubled debts at 1.24% of gross loans; provisions cover NPLs by 3.2x; total loan loss expense ratio 0.09% in 2025 (down from 0.16% in 2024).
Excellent Efficiency and Cost Control
Cost-to-income ratio improved to 29.3% (among best globally); salary costs down ~7.4% year‑on‑year; overall expenses down 0.8% versus Q4 2024; book value per share +12% YoY to ~ILS 46.
Shareholder Returns and New Dividend Policy
Total capital return in 2025 of ILS 5.9 billion (≈58% of net income); Q4 payout ILS 1.7 billion (≈65% of quarterly profit) including cash and buyback; dividend yield ~6.5%; new payout policy 50%–65% of profit (up to 50% cash).
Diversified Funding and Strong Liquidity
Issued EUR 750 million covered bonds in European market (rated above Israel sovereign, priced at lower interest); market cap surpassed ILS 100 billion; deposits +11.1% in 2025; LCR 127%; loan-to-deposit ratio 75.7%.
Digital & AI-Led Transformation
Established AI center; >90% of customer transactions via digital platforms; AI integrated into underwriting, credit portfolio management and product development; examples of accelerated project delivery and planned closure of an operational division by mid‑2027 to drive further efficiency.
Raised Near-Term Guidance
Updated net profit target raised to ILS 10–12 billion for 2026–2027 and ROE targets of 14.5%–16%; continued annual credit growth target of 8%–10% with emphasis on project/infrastructure finance.
Negative Updates
Geopolitical Uncertainty
Recent coordinated military operation involving the region (US and Israel vs. Iran) creates short‑ and long‑term economic uncertainty; management states no material impact so far but continues close monitoring.
NIM Pressure from CPI and Rate Dynamics
Net interest income increased only 2.1% YoY; NIM affected by negative CPI and declines in policy rates—with management noting potential pressure as rates fall and some timing-related drivers to margins.
Noninterest Income Weakness and Accounting Mismatch
Noninterest income declined mainly due to lower income from derivatives (derivative costs hit P&L while gains on securities were recorded in equity), leaving overall finance income only +0.9% YoY.
Core Capital and Excess Capital Considerations
CET1 ratio declined to 12.05% from 12.33% QoQ (driven by higher activity); excess capital of ILS 10 billion may depress reported ROE and requires regulatory engagement for large distributions.
Large Provision Buffers and Uncertainty on Reversals
Collective provisions remain elevated (related to prior war), limiting immediate earnings leverage from provision reversals; any material adjustments depend on macro developments and potential regulatory scrutiny.
Regulatory Constraints on Distributions
Past payout limits during wartime and the need to coordinate with the Bank of Israel to release excess capital could constrain timing/size of extraordinary distributions despite the large capital buffer.
Company Guidance
Leumi’s forward guidance for 2026–2027 calls for net profit of ILS 10–12 billion per year, ROE of 14.5%–16%, and annual credit growth of 8%–10% (with a meaningful portion from infrastructure/project finance); a revised capital-return policy targets 50%–65% of net income (up to 50% in cash) after 2025 payouts of ILS 5.9 billion (≈58% of net income) and a Q4 2025 distribution of ILS 1.7 billion (65% of the quarter), while retaining a large capital buffer (excess capital ≈ ILS 10 billion, Q4 CET1 12.05%, total capital 14.08%), strong liquidity (LCR 127%, loan-to-deposit 75.7%) and asset quality (NPL 0.4%, credit-loss expense 0.09%); management assumes average policy rates roughly 3.2%–3.7% and expects to maintain or improve NIM and high profitability (2025: net income ILS 10.3bn, ROE 15.8%, efficiency ratio 29.3%) through AI-driven efficiency and continued disciplined growth.Leumi Financial Statement Overview
Summary
Fundamentals are solid with strong multi-year revenue growth and healthy profitability, but the profile is tempered by meaningfully higher leverage (debt/equity rising to ~1.17x in 2025) and volatile cash generation, including negative operating/free cash flow in 2023 and a sharp free-cash-flow drop in 2025.Income Statement
Revenue has grown strongly over the period (up from 2020 to 2025) with a particularly sharp step-up in 2022 and continued expansion through 2025. Profitability is solid with healthy operating and net margins in recent years, but margins have compressed meaningfully from the unusually high levels seen in 2021–2022, suggesting the earnings environment is less favorable than the peak period. Net income remains high and has grown versus 2023–2025, supporting an above-average score despite the margin normalization risk.78
Positive
Balance Sheet
The balance sheet shows strong scale (assets rising steadily) and consistent mid-teens returns on equity, indicating good profitability on shareholder capital. However, leverage has increased materially: debt relative to equity moved from below 0.6x (2021–2022) to ~1.0x in 2024 and ~1.17x in 2025, which elevates balance sheet risk and reduces flexibility if operating conditions weaken.63
Positive
Cash Flow
Cash generation is mixed and volatile. Free cash flow is positive in most years and generally tracks net income reasonably well in 2020–2022 and again in 2024–2025, but 2023 saw negative operating and free cash flow, highlighting variability. The sharp free cash flow decline in 2025 (down ~46% year over year) is a key concern, even though free cash flow remains positive.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 44.77B | 43.02B | 38.66B | 22.80B | 16.82B |
| Gross Profit | 22.08B | 22.07B | 21.00B | 17.21B | 15.49B |
| EBITDA | 16.13B | 16.10B | 12.58B | 11.49B | 9.94B |
| Net Income | 10.26B | 9.80B | 7.03B | 7.71B | 6.03B |
Balance Sheet | |||||
| Total Assets | 872.97B | 785.55B | 731.50B | 699.17B | 656.45B |
| Cash, Cash Equivalents and Short-Term Investments | 147.62B | 155.83B | 102.47B | 180.64B | 194.22B |
| Total Debt | 79.73B | 62.27B | 32.76B | 28.37B | 16.23B |
| Total Liabilities | 804.84B | 723.89B | 677.00B | 649.72B | 614.40B |
| Stockholders Equity | 68.13B | 61.66B | 54.50B | 49.44B | 41.61B |
Cash Flow | |||||
| Free Cash Flow | 5.27B | 14.30B | -966.00M | 5.33B | 4.66B |
| Operating Cash Flow | 6.18B | 15.04B | -133.00M | 6.09B | 5.20B |
| Investing Cash Flow | -84.28B | -8.32B | -98.23B | -72.89B | -43.27B |
| Financing Cash Flow | 81.22B | 42.07B | 20.03B | 52.47B | 100.24B |
Leumi Technical Analysis
Neutral
7303.00
Price Trends
7619.36
Negative
7239.13
Positive
6610.25
Positive
Market Momentum
-29.12
Positive
40.43
Neutral
26.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IL:LUMI, the sentiment is Neutral. The current price of 7303 is below the 20-day moving average (MA) of 7706.90, below the 50-day MA of 7619.36, and above the 200-day MA of 6610.25, indicating a neutral trend. The MACD of -29.12 indicates Positive momentum. The RSI at 40.43 is Neutral, neither overbought nor oversold. The STOCH value of 26.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for IL:LUMI.
Leumi Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | ₪59.58B | 10.96 | 16.87% | 4.11% | 11.00% | 6.03% | |
70 Outperform | ₪108.15B | 11.14 | 15.67% | 3.70% | 6.95% | 12.41% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | ₪42.11B | 10.67 | 13.10% | 3.69% | 14.48% | 4.65% | |
62 Neutral | ₪26.78B | 11.99 | 16.58% | 4.57% | 14.16% | 1.05% | |
62 Neutral | ₪102.22B | 10.80 | 15.13% | 3.54% | 19.05% | 18.98% |
* Financial Sector Average
IL:LUMI
Leumi
7,303.00
2,337.79
47.08%
IL:FIBI
Fibi Bank
26,690.00
7,751.21
40.93%
IL:DSCT
Discount
3,442.00
775.95
29.10%
IL:MZTF
Mizrahi Tefahot
22,920.00
6,263.34
37.60%
IL:POLI
Poalim
7,787.00
2,822.33
56.85%
IL:FIBIH
Fibi Holdings
33,140.00
13,314.24
67.16%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.