Poalim (BKHPF) Q2 2026 Earnings Report

The call presented a strongly positive operational and financial performance: robust profitability (Q2 net profit up 17.1% QoQ), high ROE (15%, ~16.4% excl. special tax), diversified double-digit YoY credit growth (14.3%), very low NPLs (0.5%) with strong coverage, controlled expenses (cost-income ~30.6%) and healthy liquidity and capital metrics. Key negatives are management-confirmed constraints and risks: the special bank tax materially suppresses reported ROE, provisions remain elevated (cost of risk 0.22%) with allowance ratio slightly diluted by growth, financing income benefitted significantly from CPI (masking underlying momentum), potential NIM pressure from expected rate cuts, some retail deposit shifts and a modest compression of capital buffers due to fast growth and a high payout policy. Overall, positives (profitability, growth, asset quality, cost control, liquidity) outweigh the measured headwinds and uncertainties discussed.

Guidance-wise, the bank reiterated 2026 targets of net profit ILS 8.5–9.5 billion and ROE 13%–14%, and said it expects to return to an ROE of 14%–15% next year with net profit of ILS 9.5–10.5 billion; for both years it plans average growth of 8%–9% and a payout ratio of 50%–60%. Management also highlighted the current 50% distribution in respect of Q2 (ILS 1.2 billion total; ILS 995 million cash or ILS 0.76 per share, with 20% via buyback), a CET1 ratio of 11.83% (vs. internal target 11%), shareholders’ equity +8.1% YoY, total credit ILS 536 billion (+14.3% YoY, +3.3% q/q, +6.6% YTD), deposits +7.1% YoY (+2.5% q/q), NPLs 0.5% with allowance ratio 1.65% (~3x coverage), Q2 net profit ILS 2.5 billion (EPS ILS 1.9), NIM 2.70% (up from 2.49%), cost-income 30.6% (33.3% H1), cost of risk 0.22% (ILS 298m), LCR 126%, and a reminder that the special bank tax reduces ROE by ~1.3–1.4 percentage points on an annual basis.