Mizrahi Tefahot Bank Ltd

Ladies and gentlemen, thank you for standing by. Welcome to the Mizrahi Tzachor Bank third quarter 2025 business results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded November 18, 2025. With us on the line today are Mr. Ajit Shahak, CFO, and Mr. Menno Aviv, Chief Accountant. We would like to draw your attention to slide number one of the financial statement for the third quarter 2025 presentation, which includes general comments regarding legal responsibility, including that, The information contained in the presentation constitutes information from the bank's 2025 quarterly reports and or immediate reports, as well as the periodic quarterly and annual reports and or immediate reports published by the bank in previous years. Accordingly, the information contained in the presentation is only partial, is not exhaustive, and does not include the full details regarding the bank and its operations or regarding the risk factors involved in its activity and certainly does not replace the information included in the periodic annual and or quarterly or immediate reports published by the bank. In order to receive the full picture regarding the bank's 2025 quarterly and annual reports, the aforesaid reports should be pursued fully as published to the public. The bank's results and practices may be significantly different from those included in the forecasting information as a result of a large number of factors, including inter-area changes in the domestic and global equity markets, macroeconomic changes, geopolitical changes, legislation and regulation changes, and other changes that are not under the bank's control, which may lead to estimations not realizing and or to changes in the business plan. The forecasting information may change subject to risks and uncertainty due to being based on the management's estimation regarding future events, which include interalia, global and local economic development forecasts, particularly regarding the economic situation in the market, including the effect of macroeconomic and geopolitical conditions, expectations for changes and developments in the currency and equity markets. forecasts related to other various factors affecting exposure to financial risks, forecasts with respect to changes to borrowers' financial strength, public preferences, changes in legislation and provisions of regulators, competitors' behavior, the status of the bank's perception, technology developments, and human resources developments. Mr. Shachoff, would you like to begin?

Thank you all, and welcome to the Midrash HaTafafot Q3 2025 analyst call. As you all know, the last two years were very unusual for Israel. From the first day of the war, the bank has taken a pro-client approach, trying to offer immediate relief to its clients beyond the mandatory relief plan of the Bank of Israel, and we adapted the COVID experience and best practices to the current situation. And for the bank, it is much more boring, as you can see from the report and the results, and without any material awareness. I think the most conspicuous item in this report is the virtual credit growth. This growth has crossed the board along with most of the asset classes, including mortgages, corporates, and middle markets, and is part of our strategic plans. Since life is not always linear, many of the working on materializing Q3, so it would be reasonable to assume that the and growth rate in Q4 would be lower. This growth should help us to create a nice for 2026. We think that our credit metrics reflects a balanced credit portfolio with adequate risk management. You can see provisioning was relatively standard for this period. And then for the other items, please let me use this call to further highlight a couple of points. CPI contribution to financing revenues is traditionally high in Q3, and that was also the case this time. CPI contribution in Q4 is, of course, expected to be lower. The net profit and the return on equity reflects the strong balance sheet and the good efficiency ratio. Our cost income ratio for the quarter is below 35%, and the line is our strategic plan. On the expense side, you can see the continuation of 2024 being the notch down compared to the 2024 level. And as always, salaries are also affected from variable remuneration related to the bank's results. It is also very noticeable that the results have been reached despite the relative extra tax Israeli banks are paying in 2025 and despite the extensive Bank of Israel client relief outline. Our implementation of the outline is targeting more financing, interesting or saving benefits to clients and less operational benefits, and one can easily estimate the impact of these two items on the results. Liquidity is very robust with high share of core deposits and capital ratios are in tandem with profitability and growth. Demand for mortgages is healthy and we continue to follow our strategy to retain our market share in the market. We think that it is reasonable to assume that today's balance sheet growth will materialize in the coming quarters and we do expect to see further responsible credit growth in the coming quarters. We will be trading 50% of Q3 profits as dividends. All in all, things we are following are boring, yet effective tasks and accommodating to the new environment. Thank you very much for your attention. And with that, I will leave it with the hand of Mr. Manu Aviv, our chief accountant. Thank you, Mr. Shahab. Let's overview the main figures in the financial statements. The net profit in Q3 2025 reached 1,483,000,000 shekels. The net profit in the first nine months of 2025 reached 4,226,000,000 shekels. The return on equity in Q3 reached 17.6%, and in the first month of 2025 reached 17.2%. amounted 34 billion shekels. The cost income ratio in Q3 2025, 34.2%. The financing revenue from current operations in Q3 reached 2,822,000 shekels. The total revenues in Q3 reached 3,830,000 shekels. Operating and other expenses total to 1,310,000,000 shekels. The ratio of provisions to loans in Q2-3 reached 0.04%, and the ratio of Q1 reached 10.14%, and the total rate ratio reached 13.03%. I think we can go now to Q&A.

Thank you, all of you. Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you're using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. The first question is from Tabby Rosner of Barclays. Please go ahead.

Good afternoon. Thank you for the presentation. Just a couple of short questions, if I may. I saw the announcement from Bank of Israel earlier this week allowing banks to distribute higher capital as long as it meets the capital requirements. What's your take about the announcement? Do you feel that there is room to distribute more, or are you comfortable with the current level for the time being? Thanks, Ari. We're comfortable with the current level. As you can see, we use this capital for growth and credit growth, and we think that, for example, in this quarter, a 50% dividend alongside a return on equity of 17.6% reflects the good mix and balance between these two. and we think that we would keep on with our strategic plan and grow our credit, and we need this capital. Great. Thanks for that. And then on the business side, on the mortgage aspect, how do you feel in terms of the competitive dynamics of the banks and institutions competing equity on prices or actually thinking about mortgages in the near term? We're not allowed to refer to prices, but we see a very competitive market on the mortgage arena for many, many quarters. Our strategy is to retain our market share, and we're able to do it despite the heavy competition. Okay, good that. And then just a housekeeping one. How should we think of Expensive growth in the next couple of quarters, is it still like mid-single-digit type of growth or are you expecting to kind of lower it at some point? Can you please repeat it for the equipment here? Yeah, just about the expenses in general, salaries and so on. Should we expect mid-single-digit growth through the cycle as like a normal run rate? Yes. Okay, that's all for me. Thank you for the presentation.

Thanks. Thank you. There are no further questions at this time. This concludes the Mizrahi Tahrir Bank LTD Third Quarter 2025 Business Results Conference Call. Thank you for your participation. You may go ahead and disconnect.