Israeli Bank Stocks Decline in October, Jerusalem Bank Leads Losses
Translated & summarized from Ice by baba
Israeli bank stocks collectively declined in October, with the banking index dropping 3.87% and Jerusalem Bank experiencing the steepest fall of 16%. Despite the monthly losses, several large banks like Bank Leumi and Bank Hapoalim show positive year-to-date gains. High interest rates continue to support bank income, though future rate cuts pose a challenge. Investors are awaiting third-quarter financial results and dividend policy updates.
The story in 5 lines · by baba
- Israeli bank stocks fell in October, with the banking index down 3.87% and Jerusalem Bank losing 16%.
- The International Bank had the smallest drop at 1.32%, while Bank Leumi also showed moderate losses.
- Broader market weakness and political uncertainty contributed to the declines in bank stocks.
- Despite October's losses, several major banks show positive year-to-date gains.
- High interest rates benefit banks, but future rate cuts may impact profitability.
October proved to be a weak month for bank stocks on the Tel Aviv Stock Exchange, with the banking index losing 3.87%. All six publicly traded banks experienced declines, with Bank Leumi showing the most moderate drop and Jerusalem Bank suffering a sharp double-digit decrease. This downturn occurred amidst broader weakness in the local market, as the TA-35 index fell by 3.45% and the TA-125 index dropped 3.42%. Increased political uncertainty following elections towards the end of the month also contributed to global market volatility.
Among the major banks, The International Bank (Bituach Leumi) recorded the best performance with a 1.32% decrease, outperforming the sector index and most competitors. Bank Leumi followed with a 2.69% loss, being the only large bank to stay below a 3% decline. Mizrahi Tefahot Bank saw a 4.17% drop, while Discount Bank weakened by 4.81%, and Bank Hapoalim experienced a nearly 5% decrease, closing at 4.97%.
Jerusalem Bank was the month's most disappointing performer, with its stock plummeting 16%. While this placed it at the bottom of the ranking, the article notes that it is a much smaller company with lower trading volumes, making its stock more volatile. The rankings are based on price changes up to October 30 and do not account for dividend adjustments.
Despite October's losses, the overall picture for bank stocks since the beginning of 2026 remains partially positive. Bank Leumi leads the large banks with a 5.78% increase year-to-date, followed by Bank Hapoalim (3.92%), Mizrahi Tefahot (2.54%), and Discount (0.57%). The International Bank has fallen 5.46% year-to-date, and Jerusalem Bank stands out with a significant 24.07% decline.
Beyond stock performance, Israeli banks continue to operate in a relatively favorable environment, supported by high interest rates that boost their financing income. However, potential future interest rate reductions could narrow interest margins, prompting banks to seek new growth engines. Investors will be closely monitoring third-quarter financial reports, return on equity, dividend policies, and credit portfolio developments.
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