CALLLUMI.TA2 months ago9.2Kviews

Bank Leumi: credit normalisation is not in the card book

Normalisation is arriving faster than the provision schedule anticipates. That is an earnings problem before it is a capital problem.

Ruth Bergman@ruth_bergman

Evidence · 4 cards

The case

Bank Leumi: credit normalisation is not in the card book

Normalisation is arriving faster than the provision schedule anticipates. That is an earnings problem before it is a capital problem.

The edge

The Street says

Consensus models the cycle turning in the second half
Sell-side target clusters within 8% of spotAuto

I say

The turn already happened in order intake two quarters ago
My number is 14% above the street on the out yearCreator est.

The kill switch

I'm wrong if

Order intake declines two consecutive quarters
Gross margin below 44% on any printCreator est.
Close below the lock price on above-average volume

Checklist

Order intake inflected
Pricing held through the renewal cycleAuto
Capacity expansion fundedCreator est.
Second source contract signed

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Discussion · 4

Sam WhitfieldJUL 2

Been long since the last one. The exclusivity window is the part the market keeps mispricing. What would you need to see to add rather than hold?

Noa BergmanJUL 1

Not convinced, but well argued. The destocking signature is textbook and nobody is naming it. Any view on how the read-across affects the rest of the group?

Ines FerreiraJUL 1

I hold the other side of this. The distinction between adequate reserves and the earnings path is well made. Has anything in the last print changed the entry you would take?

Omri ShakedJUN 30

This is the second-order point everyone skips. The contract structure matters more than the headline rate. What is the base rate on this kind of setup working?