Israel’s Big Five Banks Post 8.5 Billion Shekel Profit Despite Rate Cuts and Special Tax
In the second quarter, Israel’s five largest banks, Bank Leumi, Bank Hapoalim, Mizrahi-Tefahot, Discount Bank, and Bank Yahav, reported a combined net profit of 8.5 billion shekels, marking a 2% increase despite challenging macroeconomic conditions and a special tax imposed by the Ministry of Finance. This growth occurred even as net interest income, the banks’ earnings from loans minus interest paid on deposits, declined by 1% year-over-year to 16.1 billion shekels.
Bank Leumi and Bank Hapoalim were the only two among the five to see a rise in net interest income, increasing by 0.7% and 0.6% respectively, while the other three banks experienced declines ranging from 2.6% at Mizrahi-Tefahot to 7.6% at Bank Yahav. The banks also collected substantial fees from customers, totaling 3.8 billion shekels, a 3% increase over the previous year. This fee growth partly reflects the expansion in credit issuance, as banks often charge fees on loans.
Credit extended to the public by these banks reached 2 trillion shekels, growing by 246 billion shekels or 14% over the past year. Among the banks, Bank Leumi posted the highest net profit at 2.83 billion shekels, followed by Bank Hapoalim with 2.49 billion shekels, Mizrahi-Tefahot with 1.4 billion shekels, Discount Bank with 1.2 billion shekels, and Bank Yahav with 0.6 billion shekels. Mizrahi-Tefahot’s net profit remained unchanged, with controlling shareholders set to receive 300 million shekels.
The banks have increasingly incorporated artificial intelligence to improve operational efficiency, notably Bank Leumi, which saw a dramatic improvement in this area. Meanwhile, the banks are contesting a declaration by the Competition Authority that labeled them a concentration group, arguing the decision was unauthorized and harmful to customers.
Looking ahead, the banking sector is preparing to capitalize on emerging trade opportunities in the Middle East, signaling ongoing strategic adjustments amid evolving regional dynamics.
