Q2 2026 Bank Leumi Le Israel BM Earnings Call Transcript
Key Points
- Record quarterly net income of ILS2.8 billion, the highest ever for an Israeli bank, with ROE of 16.3% (17.9% excluding special tax).
- Exceptional efficiency ratio of 24.7% in Q2, the best in Israeli banking history and among the best globally, driven by AI and technology adoption.
- Strong credit growth of 9% in H1 2026, already meeting the full-year target, with robust expansion in strategic segments like infrastructure and corporate.
- High asset quality with NPL ratio at just 0.45% and 10 consecutive quarters of income from specific provisions, reflecting conservative underwriting.
- Solid capital position with ILS8.5 billion excess capital above regulatory targets, plus unrealized gains from Valley National Bank investment, and a shareholder return of ILS1.4 billion (5.5% yield).
- Net income impacted by the special Israeli tax on banks, which reduced ROE by 1.6 percentage points in Q2.
- Net interest margin (NIM) declined to 1.9% from 1.95% in Q1, due to lower interest rates and compression in credit and deposit spreads.
- CET1 ratio slightly decreased to 11.65% from 11.74% in the previous quarter, due to higher activity and rapid loan growth.
- Geopolitical uncertainty remains high, with potential risks to economic recovery and credit quality from the ongoing war.
- Fee income growth was partly offset by benefits granted to customers under the Bank of Israel program, limiting overall fee growth to 2.8% year-over-year.
Good day everyone and thank you for joining Bank Leumi's conference call for the second quarter of 2026. Joining me today are Mr. Hanan Friedman, President and CEO, and Ms. Hagit Argov, CFO and head of the finance division.
The presentation accompanying this call is available on the bank's investor relations website. At the conclusion of the presentation, we will have a Q&A session.
Before we begin, I would like to remind you that the conference call may include forward-looking statements, while actual results may be different. I would also refer you to the disclaimer on slide two, which applies equally to this call.
I will now hand it over to Mr. Hanan Friedman. Hanan, go ahead.
Hello everyone, and thank you for joining us today. We concluded the second quarter with strong results. Net income reached above ILS2.8 billion, marking the highest quarterly net income ever recorded by an Israeli bank.
Our ROE in the
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