WEBULL
WebtradeDownload

Bank Leumi Le Israel B.M (TASE:LUMI) Could Be 6% Undervalued On €750,000,000 Covered Bond Pricing

Simply Wall St · 3d ago

Bank Leumi le-Israel B.M (TASE:LUMI) has priced a €750,000,000 covered bond offering to institutional investors outside Israel, securing fixed 3.609% annual funding to support mortgage backed loan purchases via a bank subsidiary.

At a share price of ₪77.77, Bank Leumi le-Israel B.M has seen firm momentum recently, with a 30-day share price return of 8.47% and a 90-day share price return of 15.10%, while the 1-year total shareholder return of 30.87% points to sustained investor confidence over a longer horizon.

Compare Bank Leumi le-Israel B.M's funding move with peers tapping global capital markets by scanning our hand-picked list of solid balance sheet and fundamentals (437 results) for other financially robust banks and lenders.

Bank Leumi le-Israel B.M now trades slightly below both a simple fair value estimate and analyst targets, even after this fresh covered bond funding. Is that a sensible margin of safety, or lingering caution that no longer fits?

Most Popular Narrative: 5.9% Undervalued

Based on the most followed narrative, Bank Leumi le-Israel B.M's fair value of ₪82.65 sits a little above the last close at ₪77.77. This frames the new covered bond funding against a modest valuation gap.

The multiyear improvement in the cost to income ratio to 27% in Q3 2025, supported by advanced technology and high digital adoption by nearly 90% of private customers, suggests scope to keep operating expenses in check and support net margins.

Read the complete narrative. Read the complete narrative.

Want to understand why this valuation tag sits above the current price? The fair value view places significant weight on earnings power, margin resilience and a richer future earnings multiple. Consider which revenue and margin paths would need to hold together for that outcome to make sense.

Result: Fair Value of ₪82.65 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the Bank Leumi le-Israel B.M narrative also leans on low credit losses and a high payout ratio, which could both shift if rates, regulation or macro conditions change.

Find out about the key risks to this Bank Leumi le-Israel B.M narrative.

Another View on Bank Leumi le-Israel B.M Using Market Ratios

While the fair value narrative suggests Bank Leumi le-Israel B.M is modestly undervalued, the market ratio view is more cautious. The current P/E of 11x is higher than the Asian Banks average of 10.5x and above a fair ratio of 10.3x, which points to less cushion if sentiment cools.

That gap implies investors are already paying a slight premium for Bank Leumi le-Israel B.M, even with the fair value tag pointing lower risk. The question is whether you think the bank has enough earnings quality and balance sheet strength to justify that richer multiple over time, or if you would prefer a wider margin of error at this price.See what the numbers say about this price — find out in our valuation breakdown.

TASE:LUMI P/E Ratio as at Sep 2026
TASE:LUMI P/E Ratio as at Sep 2026

Next Steps

Given the mix of optimism and caution around Bank Leumi le-Israel B.M, it makes sense to review the numbers yourself and decide quickly where you land. To see what is driving current investor optimism, take a closer look at the 3 key rewards.

Looking for more investment ideas beyond Bank Leumi le-Israel B.M?

If you like the setup at Bank Leumi le-Israel B.M, do not stop here. The next opportunity that fits your style could already be on your screen.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.