Discount Bank Reports 1.2 Billion Shekel Profit in Q2 2026 Amid Efficiency Drive and Merger Plans

Discount Bank reported a net profit of 1.2 billion shekels for the second quarter of 2026, marking a 7.9% increase compared to the same period last year. Excluding one-time items, mainly a special tax on banks, the adjusted quarterly profit was 1.32 billion shekels, a moderate 3.9% rise. The bank's return on equity improved to 14% from 13.6%, although its domestic operations saw a decline in return on equity from 17% to 15%. For the first half of the year, profits slightly decreased to 2.13 billion shekels.

Total revenues for the quarter fell by 0.7% to 3.47 billion shekels, with net interest income dropping to 2.54 billion shekels. However, non-interest income rose by 10.9%, driven primarily by a 7.8% increase in fees. The bank's efficiency ratio improved to 44% from 46.1%, and to 41.4% in Israel, partly due to ongoing cost-cutting measures. The credit portfolio expanded, with net public credit growing 5.4% since the start of the year to 304 billion shekels. Large business credit surged 12.3%, medium business credit grew 4.3%, and mortgages increased by 4.6%, while credit to small and micro businesses declined by 2%. Credit loss expenses were 70 million shekels in the quarter but more than doubled to 252 million shekels for the half-year.

As part of its efficiency plan, 213 employees retired during the reporting period, and 264 more, mostly permanent staff, agreed to voluntary retirement arrangements. The bank expects to reduce its workforce by about 600 employees in 2026, with annual costs of 250 million shekels for retirees to be gradually reflected through 2028.

In mid-July, the board approved exploring a merger of Mercantile Bank into Discount Bank, with no binding decisions yet. The bank emphasized that Mercantile's unique brand would be preserved. Mercantile's quarterly profits fell 10.9% to 205 million shekels, while credit card company CAL saw profits jump 42.5% to 104 million shekels, and Discount Capital more than doubled its profits to 103 million shekels.

Discount Bank Group CEO Avi Levy stated that the results reflect consistent implementation of the strategic plan. Alongside accelerating efficiency measures, the bank is conducting a thorough review of its group structure to strengthen its competitive position.