Bank Leumi Reports Record 2nd Quarter Profit of 2.83 Billion Shekels in Israel

Bank Leumi announced a record quarterly profit of 2.83 billion shekels for the second quarter, marking an 8.5% increase compared to the same period last year. The bank's return on equity stood at 16.3%, slightly up from 16.2% the previous year. Excluding the impact of a special bank tax, the net profit would have reached approximately 3.1 billion shekels, with a return on equity of 17.9%. Following these results, the bank's board, led by CEO Hanan Friedman, approved a dividend distribution totaling 50% of the quarterly net profit, amounting to 1.4 billion shekels. This includes a cash dividend of 1.13 billion shekels and a share buyback program worth 283 million shekels.

Beyond the bottom line, the report reveals a complex growth picture. Bank Leumi's net credit portfolio surged by 16% year-over-year to 567 billion shekels, with a 9% increase since the start of the year. The bank focused growth primarily on the business sector: large business credit rose 16% to 216 billion shekels, small business credit grew 9% to 101.6 billion shekels, and the commercial sector expanded 7% to 45.1 billion shekels. The mortgage portfolio increased by only 4% to 160 billion shekels.

However, the rise in loan volumes barely translated into higher net interest income, which remained nearly flat at 4.57 billion shekels, a slight 0.7% increase. This stagnation is attributed to a combination of declining prime interest rates, moderated inflation, and ongoing compression of credit and deposit margins due to a gradual shift of customers from current accounts to interest-bearing deposits. While aggressive credit portfolio growth helped prevent a decline in financial income, it did not generate significant growth in these revenues.