Bank Leumi Caps Fruitful Earnings Season for Israeli Lenders

  • Leumi’s first-quarter profit rises 36% on higher revenue
  • Lender beats peers to see shares climb the most in a month

Bank Leumi Le-Israel Ltd. capped off an earnings season that saw each of Israel’s biggest lenders grow their profit by at least 11 percent. Its shares rose by the most in a month.

Higher interest revenue from loans boosted quarterly income at Leumi and two smaller lenders, Mizrahi Tefahot Bank Ltd. and Israel Discount Bank. Leumi, the last Israeli bank to report earnings, boosted first-quarter profit by 36 percent to 622 million shekels ($174 million), according to a Tel Aviv bourse filing on Thursday.

In the past few years, Leumi and the other big Israeli banks curbed the amount of loans they issued and sold some of their portfolios to meet regulators’ capital requirements. They’re now increasingly looking to get back to growing their main businesses.

“Most of the bad news at Leumi is already behind us,” said Alon Glazer, vice president of research at Leader Capital Markets in Tel Aviv, noting the settlement with the U.S. Department of Justice for alleged tax evasion in 2014 and last year’s efforts to boost capital. “That’s allowed it to reinstate its dividends and to return to growing its credit portfolio.”

Leumi rose as much as 2.6 percent, the most since April 24, and was up 2.5 percent at 16.97 shekels as of 1:45 p.m. in Tel Aviv. It led gains on the Tel Aviv banking index, which climbed 1.6 percent to near a record high.

Glazer has a market perform rating on Leumi, and lifted his 12-month price target to 19 shekels.

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