Israeli Banks Face Economic Instability

SadaNews Economy Translation - Israeli banks are facing a situation of economic instability despite recording many acceptable profits in the first quarter of 2026.

According to the Hebrew economic newspaper Globes, the stocks of some large banks declined over the last week, with their market values dropping by more than 32 billion shekels.

Bank Hapoalim has become one of the most affected banks in the first quarter of this year, as indicated by its data, after its stock fell by about 6%, causing a loss of around 11 billion shekels within two days in the last week. This resulted in a reduction of its market value to 98 billion shekels, as reported by the newspaper, translated by Sada’s Economy Division.

The Tel Aviv-based five banks index lost more than 320 billion shekels in the last week due to the decline in their stocks, despite having achieved an increase in the shares of foreign investors.

Bank Hapoalim has experienced a wave of resignations from senior executives in recent days, including some who worked in the business division and others in the mortgage sector, with some having been at the bank for 30 years.

The reasons for the resignations remain unclear, the newspaper noted, as translated by Sada’s Economy Division.

Bank Hapoalim is the second largest bank in Israel by market value on the stock exchange and is currently implementing an efficiency improvement plan launched by management and announced at the end of 2024, which has resulted in the reduction of 770 positions.

While it remains uncertain whether the wave of resignations is linked to the labor dispute, it represents a loss of senior talent in the bank, with a cumulative experience close to 80 years.

In a related context, Bank Hapoalim announced that it achieved net profits of 2.1 billion shekels in the first quarter and declared distribution of half of this amount as dividends to shareholders.

This represents a decline of 13% compared to a net profit of 2.4 billion shekels in the same period last year, which the bank attributed in its statement to lower interest rates and the inflationary environment, in addition to paying a special tax imposed by the Israeli Ministry of Finance on the five largest banks in the economy.

It is noteworthy that Bank Hapoalim recorded tax revenues of 300 million Israeli shekels in the corresponding quarter to liquidate its Swiss bank, and the net profit was affected by a decrease in credit loss expenses.

The newspaper predicted that the total value of the new tax this year would reach 3 billion shekels, expected to decrease to 125 million shekels next year.

The bank indicated that the imposed tax has cost it nearly 1 billion shekels this year (950 million shekels), which will lead to a decrease in the return on equity by approximately 1.3% to 1.4% annually.