Bank Leumi Le Israel

Ladies and gentlemen, thank you for standing by. Welcome to LUMID Fourth Quarter 2025 Results Conference Call. All participants are at present in a listen-only mode. Following the management of the presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded March 4, 2026. I would like to remind everyone with forward-looking statements for their respective companies' business financial conditions and results of its operations are subject to risk and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include but are not limited to product demand, pricing, market acceptance, changing economic conditions, risk in product and technology development, and the effect of the company's accounting policies, as well as certain other risk factors, which are detailed from time to time in the company's filings. with the various securities authorities. I would now like to turn over the call to Mr. Michael Clare, Head of Investor Relations. Mr. Clare, please go ahead.

Ladies and gentlemen, thank you for joining Bank Loomis' fourth quarter and full year 2025 financial results webcast. Joining me today are Loomis' CEO, Mr. Hanan Friedman, and Loomis' CFO, Ms. Chagit Argov. Following their remarks, we will open the session for a Q&A. Hanan, please go ahead. The floor is yours.

Thank you, Irith. Good afternoon and thank you for joining the OMI's Annual Results Conference Call. Before turning to our strategy and reviewing our 2025 financial results, let me briefly address the current situation in our region. Five days ago, the United States and Israel initiated a coordinated military operation against Iran. Bank Lumi entered this war from a position of strength, with solid capital buffers and high liquidity. The bank continues to operate almost as usual, supported by robust business continuity plans and disciplined risk management. At this stage, we do not see any material impact on the bank's financial position. we continue to closely monitor developments and ready to deal with any request of our customers. Now, allow me to turn to our strategy and the key drivers of our 2025 performance and our plans for 2026 and ahead. For many years, The prevailing belief in the banking sector was that growth strategy requires a continuous expansion of the workforce, great risk-taking, and inevitable rising credit losses. We at Lumi fundamentally challenged this paradigm. Over the past few years, we have redefined what disciplined growth means. Leveraging technology enabled us to execute sustainable and healthy growth. We did this while keeping strict risk management and did much more with fewer resources, even much fewer resources. We also got much better results in all aspects, credit portfolio quality, efficiency, and customer satisfaction. We are accelerating our strategy by leveraging innovative AI tools that have the potential to reshape our cost structure and our business and technology capabilities. We view AI not as a temporary efficiency tool, but as a long-term strategic asset. We have benefited from the rapid journey we held over the last years to the cloud and from the transformation of many of our technology platforms. To ensure execution and fast execution, we established a dedicated AI center last year. Looking ahead, we are focused on the transition towards agentic AI systems that are capable to ensure proactive real-time execution rather than just data analysis. This shift is aimed at providing hyper-personalized products and a proactive real-time service model. It will accelerate the service shift the bank has led in recent years. Furthermore, we'll integrate AI tools into high-impact core functions, including underwriting, credit portfolio management, product management, and customer journeys, and probably with even more powerful impact, to rapid and effective software development with much less resources and much shorter time to market, and with, of course, much greater product innovation. Lumi holds several structural advantages in this field. First, our AI leadership report directly to me, ensuring that development is a top-down strategic priority. Second, our advanced cloud and data architecture provide the necessary foundation for scaling these tools efficiently. Finally, our access to Israeli premier technology talent is a critical advantage in our ability to execute and to execute fast. We intend to lead this transformation and not to follow, just as we have led the digital revolution of the Israeli banking system in recent years. Our financial results for 2025 validate this approach once again. Despite the significant challenges Israel has faced over the past year, we delivered record profits, the highest in our history. This performance reflects the strengths of a strategy built on structural efficiency, technological transformation, and effective risk management. I am proud to share that we met and in several areas even exceeded the ambitious strategic targets we set and published a year ago. Our net profit reached to 10.3 billion shekels within the 9 to 11 billion shekels range we defined. Ahoy was 15.8% fully aligned with our 15-16% target that we published a year ago. In addition, we achieved a responsible credit growth of 14% above our 8-10% target, leveraging opportunities we picked during the year. More importantly, this accelerated growth was achieved while further strengthening our credit quality. Our NPL, the non-performing loan ratio, declined to 0.4%, positioning us at a strong level by international standards. In other words, we are spreading above market pace while becoming structurally more resilient. Today, we also announced a 1.7 billion shekel payout, mostly cash and partially buyback, in respect of fourth quarter earnings. The total payout for 2025 summed to 5.9 billion shekels, almost 6 billion shekels. This brings a full-year capital return of 58% of net income, fully consistent with our strategic capital framework that was above 15% payout. E-minimum yield reached 6.5% in 2025. Our efficiency ratio improved further to 29.3%, placing us among the most efficient banks globally. This is the direct result of our multi-year technological transformation and our clear strategy to do much more with fewer resources, and as I mentioned, even with much fewer resources. Our AI center will enable us to accelerate this transformation over the coming years and to do even better. The consistent execution of our strategy and the strengths of our results are reflected in continued investor confidence. Several months ago, we became the first Israeli company traded on Tel Aviv Stock Exchange to surpass a market cap of 100 billion shekels. Earlier this year, we also became the first Israeli bank to issue covered bonds in the European market, raising 750 million euros. These bonds were rated above Israel's sovereign credit rating and were priced at a lower interest rate, reflecting sustained confidence in the bank among international investors, many of them our first time investing in Bank Lumi and in Israel. This transaction further diversified our funding base and strengthened our access to global capital markets. Looking forward to 2026, Bank of Israel recently revised its growth focus to the Israel economy upward to 5.2%. As Israel's leading bank, we expect to play a meaningful role in supporting this economic expansion and to be benefited from that. Today, alongside our financial results, we also released our updated financial targets for 2026 and now for 2027 as well, including raising of our net profit forecast to 10 to 12 billion shekels per year. Accordingly, we have adjusted our ROE targets for 2026 and for 2027 to 14.5 to 16% in line with our capital surplus. Despite the expectation of declining interest rates and diminishing inflation, we are confident in our ability to maintain high profitability. The positive macro environment combined with our ongoing integration of advanced AI and technology provides a strong foundation for continued acceleration, growth, and value creation for our shareholders. Our targets are to a capital return of 50% to 65% on an annual basis and annual credit growth of 8% to 10%. A meaningful portion of credit expansion will come from infrastructure financing, project finance, an important segment supported by a visible and growing multi-year pipeline. At Bank Lumi, we have identified this sector as a strategic growth engine. Accordingly, we have allocated the necessary resources and intend to continue leading the financing in this field. In addition, we'll continue to focus our growth on strategic segments such as real estate, retail mortgages, and retail banking. And I want to comment, as we have proved in the past, growth will not come at the expense of returns or credit quality. We'll do both of them. Discipline remains the foundation of our business model. I would like to take this opportunity and thank our board members, my colleagues in the management team of Ben Klumi, our dedicated employees, our customers, and of course you, our investors, for your continued trust and support. I will now ask Mrs. Chagit Algov, our CFO, to walk us through the financial results in more details. Please, Chagit.