Dramatic change of direction: Why did BlackEdge's profit drop?

The company BlackEdge, formerly Michman Financing, concludes the second quarter and the first half of 2026 with continued expansion in activity, alongside a significant change in its business model. The company is now focusing on building a long-term credit portfolio, increasing activity in the mortgage sector, and investing in technological infrastructure based on data and artificial intelligence.

As of the end of June, the company's credit portfolio totaled approximately 976 million shekels, an increase of about 12.3% compared to approximately 869 million shekels in June 2025. Including signed frameworks, the portfolio volume already reaches approximately 1.1 billion shekels. About 68.8% of the portfolio consists of loans backed by collateral, and in addition, it contains future revenues not yet recognized in the amount of approximately 170 million shekels.

In the second quarter, gross financing revenues totaled approximately 28 million shekels, similar to 28.2 million shekels in the corresponding quarter. Net financing revenues totaled approximately 14 million shekels, compared to approximately 14.2 million shekels in the corresponding period. The net profit attributable to the company stood at approximately 4.3 million shekels, compared to approximately 9.5 million shekels in the second quarter of 2025.

The company explains the drop in profit by the fact that it is in the midst of a strategic transition from a model based on faster profits to a model of recurring revenues and long-term activity. In other words, the company is willing to absorb a hit to profit in the short term, with the goal of building a more stable and established credit portfolio.

At the same time, BlackEdge has expanded its sources of funding. The company holds funding sources in the amount of approximately 1.56 billion shekels, including approximately 222 million shekels in equity, approximately 630 million shekels in bank and institutional credit, approximately 145 million shekels from financial institutions, and approximately 367 million shekels through bonds. In addition, a cooperation agreement was signed with an institutional body for an off-balance sheet framework of approximately 200 million shekels.

Also in the mortgage sector, the company is promoting a significant move. In July 2026, the subsidiary BlackEdge Mortgages received a license for extended credit provision from the Capital Market Authority. In addition, an agreement was signed with Menora Mivtachim to receive credit frameworks in the amount of approximately 580 million shekels, including 500 million shekels of senior debt and 80 million shekels of subordinated debt.

The company also signed a service and operations agreement with Bank of Jerusalem, as well as an agreement with another banking corporation for a credit framework of up to 50 million shekels. These moves are intended to support the expansion of activity in the mortgage and credit sector.

At the same time, BlackEdge is investing in the development of technological infrastructure based on data analysis and artificial intelligence. The goal is to improve credit underwriting processes, streamline risk assessment, and build a competitive advantage over the banking system.

In terms of financial strength, there has also been development. The equity-to-balance ratio stands at approximately 20.4%, with equity totaling approximately 222.4 million shekels. In addition, the financing banks agreed to reduce the minimum required tangible equity ratio from 20% to 15% of the balance, which gives the company greater flexibility for further expansion of activity.

At the end of 2025, the company's rating was upgraded by S&P Maalot to ilA with a stable outlook, in addition to an ilA3 rating from Midroog. The company's chairman, Doron Sapir, and CEO Yaniv Biton, who holds 66.14% of the control, emphasize that the company continues to focus its activity on high-quality credit with a long duration, while expanding activity and building new growth engines.