Discount Bank Reports 8% Net Profit Increase but Plans Lower Dividend Payout Than Competitors

Discount Bank, led by CEO Avi Levi, reported a significant 8% rise in net profit for the second quarter, reaching 1.2 billion shekels compared to the same period last year. Excluding a special tax imposed by the Finance Ministry on banks, the net profit would have increased by 4% to 1.3 billion shekels. The bank's net interest income declined by 4% to 2.5 billion shekels, reflecting the current lower interest rate environment. Return on equity improved to 14% from 13.6% in the previous year, though it slightly decreased to 15.4% from 15.6% when excluding the special tax.

The Discount Bank board approved a dividend distribution of 40% of the second quarter 2026 profits, totaling approximately 481 million shekels. This payout ratio is lower than those of its peers, with Bank Leumi and Bank Hapoalim distributing 50%, and Bank Mizrahi-Tefahot paying nearly 96% of their quarterly net profits. The bank explained the conservative dividend approach as a result of evaluating expected capital needs and capital planning, especially considering the timing of the sale of CAL (Credit Card Company).

Strategically, Discount Bank is advancing significant initiatives, including accelerating efficiency measures through an early retirement plan and reducing its workforce by about 8% by the end of 2026, a notably higher reduction than in previous years. Additionally, the bank is examining a potential merger of Mercantile Bank into Discount Bank to better align its operational structure with the banking sector’s business, technological, and operational challenges.