Bank Hapoalim B.M.

Reported Q2 2026 net profit was ILS 2.5 billion, up 17.1% quarter-on-quarter, and EPS was ILS 1.9. Return on equity was 15% in the quarter, or approximately 16.4% excluding the special bank tax; first-half ROE was 14%, or about 15.4% excluding the tax. Total credit was ILS 536 billion, up 14.3% over the last 12 months and 3.3% in the quarter. Regular financing income increased 13.7% quarter-on-quarter, with ILS 431 million of CPI contribution; nonregular financing income was ILS 325 million. Fees rose 2.7% in the quarter and were flat versus Q2 2025. Expenses were down 4.4% year over year and flat quarter over quarter, and the cost-income ratio was 30.6% for the quarter. Cost of risk was ILS 298 million, or 0.22%, and the NPL ratio was 0.5%. CET1 stood at 11.83%. Management reaffirmed 2026 guidance for net profit of ILS 8.5 billion to ILS 9.5 billion, ROE of 13% to 14%, credit growth of 8% to 9%, and a payout ratio of 50% to 60%. For next year, management targets ROE of 14% to 15% and net profit of ILS 9.5 billion to ILS 10.5 billion.

Ram Gev framed the quarter as a continuation of strong business momentum, emphasizing broad-based credit growth, disciplined cost control, and strong profitability even after the special bank tax. He repeatedly highlighted that the bank is balancing growth, profitability, and risk, and said the first-half growth figures give him confidence in the bank’s strategy and full-year targets. His tone was confident but measured, especially on NIM, where he said the bank is well positioned versus peers but macro factors make the outlook uncertain.

Ram Gev highlighted strong underlying earnings power, noting that regular financing income rose 13.7% quarter-on-quarter, with ILS 431 million from CPI, while expenses fell 4.4% year over year and remained flat sequentially. He said the cost-income ratio improved to 30.6% and that cost of risk was 0.22%, reflecting portfolio quality, ongoing net charge-offs, and growth-related provisioning rather than reserve releases. On capital, he said CET1 was 11.83% versus a minimum regulatory requirement of 10.23% and an internal target of 11%, and reiterated a 50% payout, including ILS 1.2 billion of total distribution for Q2, with cash dividends and buybacks split between the two.

Analysts asked about the rise in cost of risk, and management said there was no material reserve release or exceptional recovery, just normal provisioning tied to portfolio growth and ongoing charge-offs. They also pressed on expense trends and whether further improvement is likely; management pointed to lower performance-based bonuses, a severance-model adjustment, and early-retirement savings of about ILS 300 million annually versus the 2024 expense base. On liquidity, war impact, and asset quality, management said there was no material impact, LCR was 126%, and the bank does not see meaningful deterioration despite some sector sensitivity. On housing, the chief economist said inventory is elevated but not alarming versus demographics, and he expects any price decline over the next 12 months to be moderate.