This article first appeared on GuruFocus .
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Net Income:ILS330 million in Q1 2026.
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Return on Equity (ROE):10.9% in Q1 2026.
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Net Income Excluding One-Offs:ILS1,040 million, ROE of 12.2%.
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Cost-Income Ratio:48.3% in Q1 2026.
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Total Credit Growth:2.2% quarter-over-quarter, 8.4% year-over-year.
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Loan Loss Expenses:0.25% of total loans.
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Dividends:50% of Q1 net income, ILS465 million.
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Operating Expenses:Declined by 16.7% quarter-on-quarter.
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Tier 1 Capital Ratio:10.24%.
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Liquidity Coverage Ratio (LCR):128%.
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Net Stable Funding Ratio (NSFR):170%.
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Mercantile Bank Net Income:ILS178 million, ROA of 11.7%.
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IDB New York Net Income:$19 million, ROA of 7.2%.
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CAL Net Income:ILS64 million, ROE of 10.3%.
Release Date: May 18, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Israel Discount Bank Ltd ( ISDAF ) reported a net income of ILS330 million and an ROE of 10.9% in Q1 2026, despite challenging conditions.
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The bank's credit portfolio grew by 2.2% quarter-over-quarter and 8.4% year-over-year, indicating robust loan growth.
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Operating expenses declined by 16.7% quarter-on-quarter, primarily due to cost-cutting measures and a reduction in staff costs.
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The bank maintained a strong liquidity position with a tier 1 capital ratio of 10.24%, well above regulatory requirements.
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The pending sale of CAL is expected to improve the bank's capital and liquidity ratios, providing a one-time net gain of ILS307 million.
Negative Points
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The special bank tax imposed by the Ministry of Finance reduced net income by ILS107 million in Q1 2026.
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Higher collective provisions and negative CPI impacted the bank's profitability, keeping ROE below previous quarters.
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The depreciation of the shekel negatively affected dollar-denominated loans, impacting overall credit growth.
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The bank's net interest margin is under pressure due to ongoing challenges in lending and deposit margins.
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The military conflict with Iran and subsequent economic uncertainties have led to a more conservative approach in some segments.
Q & A Highlights
Q: Costs were strong this quarter, supported by early delivery on debt account reductions. Can you help us understand how much of the targeted FTE savings is still to come, given only part of the exits have been realized so far, and whether that implies further net cost reduction ahead or a more stable run rate as savings are reinvested? A: Sure. We expect to reduce headcount by about 600 employees this year. The average cost of an employee is roughly ILS400,000 annually, so you can estimate the savings. Most employees will leave by the end of the year due to personal tax issues, so savings will be recorded next year. Morris Dorfman, Deputy CEO, Head of Strategy, Finance and Holdings Division
Q: Can you talk about the impact from the war on your financials and update us on your macro forecast and full-year guidance? Also, what are your issuance plans for Eurobond? A: The macro environment in Israel is unpredictable, but the economy is strong and recovers quickly from disruptions. We expect strong growth this year. Regarding issuance, we plan to issue debt later this year, likely between the second and third quarters, though the type of debt is still under consideration. Morris Dorfman, Deputy CEO, Head of Strategy, Finance and Holdings Division
Q: How has the recent military conflict affected your credit portfolio growth and quality? A: Despite the military conflict, loan growth was robust at 2.2% quarter-over-quarter and 8.4% year-over-year. Credit quality remained strong, with the entail ratio dropping below 0.7% and the allowance ratio steady at 1.3% of total credit. Morris Dorfman, Deputy CEO, Head of Strategy, Finance and Holdings Division
Q: What are the expected financial impacts of the pending sale of CAL? A: The sale of CAL is expected to increase our capital ratio by 0.5%, improve liquidity ratios, and result in a one-time net gain of approximately ILS307 million. Morris Dorfman, Deputy CEO, Head of Strategy, Finance and Holdings Division
Q: Can you elaborate on the strategic focus and cost-cutting measures at IDB New York? A: IDB New York is focusing on improving corporate stability by reducing the cost of funding and enhancing asset quality. Over the last two quarters, we reduced the workforce by about 70 employees, or 10%, to improve profitability. Morris Dorfman, Deputy CEO, Head of Strategy, Finance and Holdings Division
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
