Bank Discount reported its second quarter results this morning, 13 August 2026.
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The Quarter
| NIS millions | The quarter | Last quarter | A year ago | Y/Y change |
|---|---|---|---|---|
| Interest income | 5,683 | 5,116 | 5,692 | -0.2% |
| Interest expense | 3,140 | 2,807 | 3,034 | +3.5% |
| Net interest income | 2,543 | 2,309 | 2,658 | -4.3% |
| Credit loss expense | 70 | 182 | 60 | +16.7% |
| Non-interest financing income | 354 | 221 | 274 | +29.2% |
| Fees | 567 | 589 | 526 | +7.8% |
| Total non-interest income | 923 | 814 | 832 | +10.9% |
And for the first half:
| NIS millions | The half | A year ago | Change |
|---|---|---|---|
| Interest income | 10,799 | 11,028 | -2.1% |
| Net interest income | 4,852 | 5,075 | -4.4% |
| Credit loss expense | 252 | 112 | +125.0% |
| Fees | 1,156 | 1,044 | +10.7% |
| Operating and other expenses | 1,649 | 1,755 | -6.0% |
The Mechanics, Unusually Visible Here
Interest income itself barely moved - minus 0.2%. The expense on it rose 3.5%. The result: net interest income fell 4.3%.
This is the mechanics of a falling rate cycle in its cleanest form.
When rates fall, credit reprices downward faster than deposits - the borrower benefits immediately, the depositor later. The difference is absorbed by the margin.
And what is unusual here is that expenses rose while income stood still. At most banks in such an environment both lines fall together. Here only one fell, and the other rose.
And for the half the picture is identical: interest income minus 2.1%, net interest income minus 4.4%.
And What Discount Did Differently from the Other Three
It cut costs. Not slowed their growth - cut them.
Operating and other expenses fell 6.0% for the half, from NIS 1,755 million to NIS 1,649 million. That is a decline in absolute terms, not merely relative to income.
And that separates it from all three others that reported this week. At Hapoalim the efficiency ratio improved, but through mix. At Leumi expenses rose 1.1%. At FIBI they rose 2.4%. Discount brought them down.
And the efficiency ratio shows the cumulative effect:
| The half | A year ago | Full-year 2025 | |
|---|---|---|---|
| Efficiency ratio | 46.0% | 47.4% | 49.2% |
An improvement of 3.2 percentage points in two years.
And alongside it, fees rose 10.7% for the half - meaning the bank worked in both directions at once: reducing expense and growing alternative income.
The Line Worth Flagging
The credit loss expense for the half more than doubled: NIS 252 million against NIS 112 million - up 125.0%.
But the quarterly breakdown changes the reading:
| NIS millions | Q1 | Q2 |
|---|---|---|
| Credit loss expense | 182 | 70 |
Meaning most of the jump happened in the first quarter, and in the second the expense fell 61.5% against it. Against the comparable quarter a year ago it rose only 16.7%.
And the quality metrics support the calmer reading: the allowance for credit losses against credit to the public fell to 1.20% from 1.30% a year ago.
So: the half-year figure looks more worrying than the most recent quarter describes.
Capital and the Balance Sheet
| The half | A year ago | Full-year 2025 | |
|---|---|---|---|
| Return on equity | 12.4% | 13.3% | 12.6% |
| Return on assets | 0.95% | 0.96% | 0.91% |
| Tier 1 equity ratio | 10.27% | 10.53% | 10.38% |
| Total capital ratio | 13.21% | 13.47% | 13.07% |
| Leverage ratio | 6.6% | 6.7% | 6.5% |
| Liquidity coverage ratio | 122.3% | 128.5% | 120.8% |
| Net stable funding ratio | 113.6% | 117.9% | 117.2% |
| Net credit to the public against deposits | 84.2% | 81.8% | 80.3% |
And the last line is the one worth tracking. The ratio of credit to deposits rose from 80.3% at the end of 2025 to 84.2% - meaning the bank is leveraging its deposit base harder.
And that also explains the decline in the capital and liquidity ratios - all of them fell together, an arithmetic consequence of credit growing faster than the deposits funding it.
The Dividend
On 12 August 2026 the board resolved to distribute a dividend of 40% of second quarter profits - a total of about NIS 481 million, equal to roughly 39.33 agorot per ordinary A share of NIS 0.1 par value.
For comparison: the dividend per share for the half was 73.0 agorot, against 50.88 agorot in the comparable half and 133.57 agorot for full-year 2025.
A Methodological Note Worth Knowing
From the second quarter 2025 report, CAL is presented in the bank's accounts as a discontinued operation.
The practical implication: most of the breakdowns in the report do not include CAL's figures, including restated comparatives. So comparison with earlier periods requires care - some of the changes reflect the change in presentation rather than in activity.
