Israel Discount Bank Limited

Discount Group reported Q3 2025 net income of ILS 1.13 billion and ROE of 13.7%; adjusted net income excluding one-offs was ILS 1.25 billion with ROE of 15.1%. Banking operations in Israel generated ILS 890 million of net income and ROE of 14.3%. Total revenues rose 0.9% quarter-on-quarter, fee income increased 2.5% quarter-on-quarter and 10.9% year-over-year, and NII decreased 0.2% quarter-on-quarter. Credit loss expenses were 28 basis points, with the increase mainly tied to two isolated corporate incidents at Mercantile totaling about ILS 50 million. Guidance/comments: management expects to maintain a 50% dividend payout going forward and said the CAL sale is likely to boost 2026 ROE by 1.2% while reducing Tier 1 by 0.6%.

Morris Dorfman emphasized that the group continues to deliver strong, resilient profitability, saying the bank has consistently shown double-digit ROE over the past two years and stable net income. He framed the quarter as evidence of Discount’s strength in a challenging environment and pointed to ongoing growth across most credit segments. He also highlighted the strategic focus on efficiency improvements across Discount, Mercantile, and IDB New York.

Dorfman said expenses fell 3.8% quarter-on-quarter and 1.2% year-over-year, bringing the cost-income ratio down to 44%, helped by a 6% drop in salary expenses. He said the Tier 1 capital ratio was 10.47%, above the Bank of Israel requirement of 9.2%, and liquidity remained well above regulatory minimums with an LCR of 1.7% and NSFR of 11.6%. He also noted that the quarter’s provision increase was mainly due to two isolated corporate incidents at Mercantile, while core asset quality stayed solid with an NPL ratio of 0.70% and coverage of 191%.

On mortgages, management said the growth reflected timing of home completions rather than a broad real-estate pickup: many buyers who purchased homes two or three years ago are only now drawing mortgages. On the small-business AUM jump, Dorfman said there was nothing unique behind it and described it as part of the bank’s strategy and focus on that segment. On dividends, he said the bank intends to keep paying 50% consistently rather than changing the payout each quarter, and on expenses he said there is further room for efficiencies at Discount, Mercantile, and IDB New York.