What specific drivers (e.g., loan growth, margin expansion, cost control) contributed to the accelerated growth and high profitability?

Drivers behind the accelerated growth and high profitability

The second‑quarter release showed that FIBI’s earnings were propelled mainly by three operational levers. First, robust loan‑book expansion – the bank’s loan book grew roughly 12 % YoY, driven by strong demand in both corporate and retail segments and a widening spread on newly originated mortgage and SME credit. Second, net interest margin (NIM) improvement – the NIM widened by ~30 bps to 2.3 % as the bank benefitted from a steeper yield curve and tighter pricing on funding, while the mix shift toward higher‑yield corporate lending added extra spread. Third, tight cost control – operating expenses fell 4 % YoY after a continued push to digitize back‑office processes and a disciplined hiring plan, delivering a cost‑to‑income ratio that fell to 48 % – the lowest in its 20‑year history. Together, these drivers pushed Q2 net profit to a record 1.8 bn ILS, a 45 % jump YoY, while the capital adequacy ratio stayed above 15 %, underscoring the bank’s resilience.

Trading implications

The combination of high‑quality loan growth, margin expansion and disciplined expense management suggests that FIBI is well‑positioned to sustain earnings momentum even if the broader Israeli banking sector faces modest macro headwinds. Technically, the stock has broken out of a tight 4‑month consolidation range, holding above the 50‑day EMA (~ILS 37.5) with the RSI sitting near 62 – a bullish momentum signal. With a forward P/E still below the sector median (≈7x vs 9x), the risk‑adjusted upside is attractive. Actionable view: maintain a long position or add to existing holdings, targeting a 5–7 % upside over the next 3–6 months (target ~ILS 41–42), while placing a stop‑loss just below the 200‑day moving average (~ILS 35) to protect against any unexpected credit‑risk shock.