Nawi Group Q1 2025 presentation: Revenue up 23.7%, net profit surges 25%

Introduction & Market Context

Nawi Group (TASE:NAWI) presented its first quarter 2025 financial results on May 27, showcasing strong growth in a challenging market environment. The non-bank business credit provider reported significant increases in both revenue and net profit, while maintaining its position as a market leader with the highest equity in the business credit sector.

The company has navigated the ongoing "Swords of Iron" war by maintaining a portfolio with no exposure to vulnerable sectors such as tourism, restaurants, hotels, and aviation. Instead, Nawi has concentrated its lending activities in the real estate sector, which accounts for 73% of its investment portfolio.

Quarterly Performance Highlights

Nawi Group reported impressive financial results for Q1 2025, with revenue reaching ₪105 million, representing a 23.7% increase compared to the same period last year. Net profit surged to ₪43 million, up 25% year-over-year, demonstrating the company’s ability to grow its bottom line faster than its top line.

As shown in the following key financial figures from the presentation:

The company’s total profit, however, declined by 27.3% to ₪40 million. This discrepancy between net profit growth and total profit decline suggests potential challenges in certain areas of the business or one-time factors affecting overall profitability.

The income statement reveals that financing income grew significantly while expenses also increased, though at a controlled rate:

The trend in income, financing expenses, and net profit shows consistent growth over the past several quarters, indicating sustainable business expansion:

Portfolio Composition and Strategy

Nawi Group’s credit portfolio reached ₪4.019 billion as of March 31, 2025, representing a 31.7% increase compared to the same period last year. The portfolio remains heavily concentrated in real estate, which accounts for 73% of the total, followed by food and agriculture (6%), trade (5%), and industry and logistics (5%).

The company’s portfolio diversification is illustrated in the following breakdown:

The growth trajectory of Nawi’s credit portfolio has been consistently positive over the past several years, as shown in this development chart:

A key strength of Nawi’s business model is its focus on secured lending, with 79% of its credit portfolio backed by collateral. The company reported ₪3.204 billion in loans backed by collateral, with a total collateral value of ₪4.780 billion before deductions. This conservative approach to lending helps mitigate risk in the portfolio.

Financial Position and Risk Management

Nawi Group’s equity position continues to strengthen, reaching ₪931 million as of March 31, 2025, representing a 12% increase year-over-year. This solid equity base provides the company with financial flexibility and supports its growth ambitions.

The development of equity over time demonstrates consistent growth:

The company maintains a strong balance sheet with key figures showing healthy growth compared to previous periods:

Risk management remains a priority for Nawi Group, with the company implementing strict corporate governance rules and maintaining its credit ratings (ILA-1 short-term and ILA+Negative long-term). The company also reported non-utilized credit resources of ₪1.228 billion, providing additional financial flexibility.

Forward-Looking Statements

Nawi Group outlined ambitious targets for the next two years, aiming to grow its credit portfolio to ₪4.3 billion by the end of 2025 and ₪5 billion by the end of 2026. Similarly, the company plans to increase its equity to ₪960 million by the end of 2025 and ₪1.06 billion by the end of 2026.

These targets are outlined in the company’s work plan and budget:

The company identified several growth drivers, including maintaining strict corporate governance, expanding real estate activities through collaboration with institutional entities, and potential growth in consumer credit with collateral. Nawi Group also highlighted its intention to pursue real investments based on its debtor’s assets.

Nawi’s management expressed confidence in the company’s ability to achieve these targets, citing its strong professional team, strict corporate governance framework, and focus on tier 1 activities. The company also maintains its commitment to a 7.58% dividend yield, having distributed ₪21.5 million in dividends for Q1 2025.

Full presentation:

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