Luzon Credit: What Nawi Et Luzon Actually Contributes To Public Shareholders
Nawi Et Luzon is Luzon Credit's new growth engine, but public shareholders do not own a clean look-through claim on 100% of its mortgage activity. This is a 45%-owned JV with bank funding and equity-method accounting, so the bridge from operating scale to shareholder value runs through several layers that do not automatically show up in operating profit.
The main article argued that Nawi Et Luzon is the most important new growth engine inside Luzon Credit. This continuation isolates one question only: when the mortgage and group-purchase-financing venture grows, how much of that actually belongs to the public shareholders of Luzon Credit, and in which line it is supposed to appear.
That question matters because the presentation is selling a strong story. It leans on Tria's prior mortgage track record: 2,600 mortgages granted to date, average LTV of 48.9%, collateral value of ILS 5.32 billion, and legal collections of only 0.4% of credit. It also shows 174 signed group-purchase deals, ILS 5.1 billion of credit facilities, ILS 11 billion of project value and average LTV of 21.4%. So the underwriting and operating capability is not the issue.
But Luzon Credit shareholders did not buy 100% of a mortgage platform. They bought an indirect 45% exposure through Tria P2P, inside a jointly controlled venture in which Nawi Group owns another 45% and Lyd another 10%, with separate bank funding and with accounting treatment that does not consolidate the activity into operating profit. That is the bridge that has to be built.
The First Layer: This Is A Shared Growth Engine, Not A 100%-Owned Asset
In the annual report, Luzon Credit describes Nawi Et Luzon as a jointly controlled company set up with Nawi Group and Lyd. Luzon Credit's stake is held through Tria P2P, and its share is only 45%. That sounds technical, but it is the first point the market can easily miss.
When the capital-markets presentation talks about a huge mortgage market, technology advantages, a portfolio that is ready for rating, and infrastructure for sale or securitization, it is describing the activity's potential. It is not saying that all of that economics belongs to Luzon Credit shareholders. Before getting to banks, covenants or accounting, 55% of the economics already belongs to other partners.
That is not automatically negative. A structure like this can let the company enter a large market with a strong partner. But it does require a much more precise reading. Anyone looking at Nawi Et Luzon as if it were a wholly owned operating division of Luzon Credit will almost automatically understate the gap between the activity story and what should actually accrue to public shareholders.
| Layer | What the documents show | What it means for shareholders |
|---|---|---|
| Underwriting and operating track record | 2,600 mortgages at Tria, average LTV of 48.9%, and 174 historically signed group-purchase deals | There is real operating proof behind the story, but these are capability metrics, not attributed earnings |
| Ownership | 45% to Tria P2P, 45% to Nawi Group, 10% to Lyd | Public shareholders own only 45% of the venture, and even that through a subsidiary layer |
| Operating role | Tria P2P provides technology, operations, management and collections for consideration during the first five years | Part of the value can show up as service income at Luzon Credit's operating layer |
| Funding | Nawi Et Luzon signed ILS 800 million of facilities and had drawn ILS 300 million by year-end | The operating scale sits inside the JV and its bank funding stack, not inside shareholder cash at the parent |
| Accounting | Nawi's results are not part of operating profit, and ILS 684 thousand of Luzon Credit's share of 2025 losses was not recognized | Even the accounting measurement is not a clean look-through |
The Second Layer: Luzon Operates, Nawi Brings The Funding Stack
Here the disclosure is unusually clear. Tria P2P is described as the operating body of the joint venture. It provides Nawi Et Luzon with technology, operations, management and collection services tied to the loans the venture will originate, and it is supposed to receive consideration for those services during the first five years from completion.
Nawi Group, by contrast, sits in the funding layer. Note 11 says that Nawi Group committed to provide the joint venture with an unsecured capital note structured as a shareholder loan in the amount of ILS 120 million, with principal not repayable before December 3, 2030, subject to financing limitations. The same note also says Nawi Group will receive management fees for ongoing responsibility over the financial facilities, expanding funding sources and lowering their cost. In the business-description section, the wording is slightly different: there the report says Nawi Et Luzon issued Nawi Group a perpetual capital note of ILS 90 million, against which bank credit was made available to the venture.
The gap between ILS 120 million in the note and ILS 90 million in the business-description section is not the core issue here. The core issue is that in both descriptions the capital anchor and senior-funding layer are identified with Nawi Group, not with Luzon Credit's public shareholders. Luzon brings the system, underwriting and operations. Nawi brings the funding architecture.
By year-end 2025 that structure already had hard numbers behind it: on December 4 and December 23, 2025 Nawi Et Luzon signed financing agreements with two Israeli banks totaling ILS 800 million, and it had drawn ILS 300 million by December 31, 2025. So the market may hear a mortgage-growth story, but the balance sheet working underneath that story is first and foremost the balance sheet of a JV financed by banks.
| Item | Figure | Why it matters |
|---|---|---|
| Total bank facilities | ILS 800 million | This is the scale of the funding layer built under the growth story |
| Drawn amount as of 31.12.2025 | ILS 300 million | Activity had already started to move at scale inside the venture |
| Equity-to-assets ratio | 23% actual versus 16% minimum | For now there is reasonable covenant room at the JV level |
| Large-credit exposure above ILS 6 million | 8% versus 15% limit | As of year-end 2025 there was no obvious large-borrower concentration stress |
| LTV and single-loan limits | In compliance | The banks are already defining the risk frame of the business |
That table matters because it shows two things at once. First, the venture has already moved from the licensing phase to the funding and origination phase. Second, this is dedicated funding at the JV level, with its own financial undertakings. Anyone looking at the ILS 300 million draw and assuming that this equals ILS 300 million of public-shareholder economics is jumping over the most important structural layer.
The Third Layer: Luzon Credit's Operating Profit Does Not Include Nawi's Results
The presentation states this explicitly, but it is easy to miss the significance. In the approved 2026 budget slide, the company shows total expected revenue of ILS 42.896 million and operating profit of ILS 5.343 million for the whole activity mix. The breakdown includes ILS 35.120 million of P2P fee revenue, another ILS 1.643 million from new investment tracks, and ILS 6.133 million of net lender revenue. On that same page, the presentation explicitly says that because Nawi Et Luzon is 45%-owned, the accounting treatment is equity method, and therefore its results are not part of operating profit.
The implication is twofold. First, even if Nawi Et Luzon becomes a major growth engine, that does not mean it will automatically show up in Luzon Credit's operating-profit line. Second, the budget already shown to investors is a budget that excludes Nawi's own results from operating profit. So anyone trying to use the ILS 5.343 million figure as a proxy for the economics of Nawi is reading the slide backwards.
That also explains why 2025 produced a less intuitive result: the company did not include its share of Nawi Et Luzon's losses, ILS 684 thousand, in its financial statements. The reason given is IAS 28, under which recognition of additional losses stops once the investor's share of losses equals or exceeds its recognized rights. Put simply, even the downside does not flow cleanly in the way it would in a fully consolidated subsidiary.
So this is not only a question of how much belongs to shareholders. It is also a question of where it gets recorded. What can enter Luzon Credit's operating profit is the consideration Tria P2P receives for technology, operations, management and collections. What does not enter operating profit is Nawi's own result, because that remains in the equity-accounting layer.
What Has To Happen For Nawi To Become Accessible Value For Shareholders
The core point is that the test here is not whether Nawi Et Luzon can grow. The documents already provide a basis for believing it has underwriting know-how, technology, distribution and financing lines. The real test is whether that growth can become value that shareholders can actually see.
The first step is clear profitability at the venture level. As long as there is no full disclosed view of the JV's own earnings power, there is no basis for a clean look-through valuation. The presentation gives an operating-profit target for Luzon Credit, but not an explicit profit target for Nawi Et Luzon itself.
The second step is proving an economic exit channel. The presentation talks both about portfolio readiness for rating and sale, and about infrastructure for sale or securitization. Yet it also lists as a challenge the company's limited experience in bonds and in selling mortgage portfolios. That is an important yellow flag. To turn balance-sheet growth into accessible value, it is not enough to originate loans. The platform has to show it can sell, recycle or refinance them on attractive terms.
The third step is cost of funds. That too is stated explicitly in the presentation as one of Nawi Et Luzon's challenges: funding cost remains high relative to the banking system. So shareholders should not ask only whether volumes can grow. They also need to ask whether the spread after funding costs and operating expenses remains wide enough to produce an equity-accounted line that is worth something.
The fourth step is translation into the public-company layer. If the value remains only at the loan-book level, without meaningful service income, without stable equity-method earnings and without a credible distribution path over time, shareholders will be left with an impressive growth story that does not really settle into Luzon Credit's operating profit or net income.
Conclusion
Nawi Et Luzon is clearly the new growth core of Luzon Credit. This is not just a marketing story. There is real underwriting experience, real operating infrastructure, a license, financing lines and an initial scale that is already moving. But for Luzon Credit shareholders, this is not full ownership of a mortgage engine. It is a partial and layered claim.
That layering runs through four gates: only 45% ownership, a role split in which Luzon operates and Nawi funds, bank facilities and covenants sitting inside the venture itself, and accounting treatment that removes Nawi's results from operating profit and even stopped recognition of ILS 684 thousand of losses in 2025.
That is why the right question for 2026 is not whether Nawi Et Luzon can grow. The documents provide a basis for believing it can. The right question is whether that growth can make it through all the structural layers and turn into earnings or accessible value that Luzon Credit shareholders can actually see, measure and eventually benefit from.
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