Interest Rate Cuts and Special Tax to Hit Bank Profits
Translated & summarized from TheMarker by baba
Leader estimates that Israel's five major banks will see a 10% drop in net profit to approximately 8 billion shekels in the third quarter. Interest rate cuts and a special bank tax are expected to reduce profits, though inflation and credit growth may offer some offset. Israel Discount Bank's stock fell 5% after releasing its report.
The story in 4 lines · by baba
- Major Israeli banks' Q3 net profit expected to fall 10% to 8 billion shekels.
- Interest rate cuts and a special bank tax are blamed for the profit decline.
- Inflation and credit growth are expected to partially offset profit losses.
- Israel Discount Bank's stock dropped 5% after its Q3 report release.
Leader estimates that the net profit of the five major Israeli banks will reach approximately 8 billion shekels in the third quarter, a decrease of about 10% compared to the same period last year. The anticipated decline in profits is attributed to interest rate cuts and a special tax imposed on banks, which are expected to negatively impact results. However, inflation and credit growth are projected to mitigate some of this damage.
Specifically, Alon Glazer, Vice President at Leader, estimated in a client review that banks would conclude the third quarter of 2026 with a net profit of 7.96 billion shekels, down from 8.7 billion shekels in the prior year's equivalent quarter, marking a 10% drop. The first bank to release its quarterly report, Israel Discount Bank, saw its stock price fall 5% in Tel Aviv trading.