Leumi and Hapoalim Report Strong Q2 Profits Amid Mortgage Growth - Dividend Increases

Israel's two largest banks — Bank Leumi and Bank Hapoalim — reported robust financial results for the second quarter of 2025, driven by strong credit growth, resilient mortgage activity, and increased income from financial services.

Bank Leumi: 15% Rise in Net Profit, NIS 1.3 Billion Distributed to Shareholders

Bank Leumi, led by CEO Hanan Friedman, reported a net profit of NIS 2.6 billion, a 15% increase compared to Q2 2024. The bank’s return on equity reached 16.2%, up slightly from 15.9% in the same quarter last year.

Key contributors to the profit increase included:

• 1.3% rise in inflation, boosting financing income.

• Growth in the credit portfolio, especially in mortgages and business lending.

• A 24% increase in income from securities fees.

Despite the positive results, the bank noted challenges such as a rise in provisions for credit losses and erosion in financing margins, partly due to a decline in current account balances.

Leumi announced an updated distribution policy, raising shareholder payouts to 50% of net profit, following approval by the Bank of Israel. Shareholders will receive NIS 1.3 billion, with NIS 979 million as a cash dividend and the remaining NIS 326 million allocated to a share buyback program.

The bank’s net credit to the public rose 12.8% year-over-year, reaching NIS 489 billion, including a 9.5% surge in the mortgage portfolio to NIS 151 billion.

Bank Hapoalim: Record Profit of NIS 2.5 Billion in Q2, Highest in Bank’s History

Bank Hapoalim, under CEO Yadin Antebi, closed the second quarter with a record-breaking net profit of NIS 2.5 billion, up from NIS 2.2 billion in Q2 2024. This marks the second consecutive quarterly profit record for the bank.

Hapoalim’s return on equity rose to 16.7%, up from 16.4% a year ago. The bank generated:

• NIS 4.8 billion in net interest income.

• NIS 1.6 billion in non-interest income.

• A total revenue of NIS 6.4 billion.

However, the bank faced rising credit loss provisions, amounting to NIS 300 million in Q2 — a significant shift from NIS 49 million in credit loss income in the corresponding quarter last year. The full-year forecast suggests credit losses could near NIS 1 billion, nearly double the NIS 693 million recorded in 2024. The small business sector accounted for NIS 159 million in losses — the largest among borrower categories.

Hapoalim also updated its dividend policy to distribute 50% of net profit, returning NIS 1.27 billion to shareholders. Unlike in previous quarters, the bank did not repurchase any of its own shares in Q2.

Hapoalim’s mortgage portfolio grew modestly by 1.5% to NIS 145.2 billion, signaling a cooling in the mortgage and real estate sector, following 12 months of rapid expansion totaling nearly NIS 11 billion.

Sector Outlook: Resilience Amid Inflation and Regulation

Both banks continued to grow their mortgage lending, despite new regulatory restrictions on balloon loans and rising credit loss provisions. The Bank of Israel's policy approval for increased profit distributions signals regulator confidence in the banks’ capital strength.

With inflation contributing positively to financing income and consumer demand for mortgages and business credit holding strong, the sector appears resilient. However, continued increases in impaired credit — particularly among small businesses — will be a key metric to monitor in the coming quarters.