Clal CEO Yoram Naveh: "The 'small bank' reform is currently not attractive for us - and that's a pity"

The Clal Holdings group concluded the second quarter of 2026 with a record core business profit of 732 million shekels, a 21% jump compared to the same quarter last year, and CEO Yoram Naveh is not trying to hide his satisfaction. This is a company that has gone on the offensive: for the first time in its history, it is launching a share buyback program, assets under management have crossed 456 billion shekels, and the stock has already jumped by about 46% in the last year.

Beyond the nice numbers, in an interview with ice, Naveh also addresses two issues that interest every saver and investor: to what extent Clal is still betting on the Israeli economy, and why the "small bank" reform, which is supposed to increase competition in the financial market, is in his opinion missing the mark regarding credit card companies like Max, which is owned by the group.

How do you summarize the quarter?

"The results are good, and I see them as the realization of our strategy. What is really important is the improvement in core profits, and it is not trivial to show such an improvement of 21% quarter over quarter. In all core areas, we managed to improve, and these are record results for core business profit. We are distributing a dividend for the first time in the middle of the period and not just at the end of the year, and this time through a buyback.

Our leadership in returns brings very large accumulations to the funds, and I have no doubt that this also translates into profitability on the bottom line. Max also presents a high return on equity, with a clear strategy."

The distinction that Naveh emphasizes is not accidental. Core profit measures the profitability of ongoing business activity — insurance underwriting, savings management, and credit cards — excluding capital market fluctuations. When it jumps, it means that the company's real profit engine is strengthening, and not that it is a one-time wave from investments on the stock exchange. For the entire half-year, core profit climbed to 1.32 billion shekels, an 18% increase, while total profit after tax amounted to 614 million shekels in the quarter and 1.05 billion shekels for the half-year.

What caused the improvement in core profits?

"In life and health insurance, in pensions and provident funds, and in credit cards, we see a growth trend, exactly as we predicted. The real story is general insurance. In property auto insurance, we see a deterioration, and it does not skip us. We are willing to lower the price, but we will not maintain market share at any cost. Property auto insurance is another field within the activity, and it will not shake the company. Proper management over time is what allows us to release."

Core profit in general insurance jumped in the half-year to 414 million shekels, compared to 298 million last year, a 39% increase. Life insurance contributed 265 million shekels, and health remained stable. Naveh's message is clear: the company is willing to absorb a hit on property auto insurance policies instead of chasing volumes, even at the price of losing customers — an approach that should maintain the quality of the portfolio over time.

Why did you choose to launch a buyback specifically now?

"There is a combination of several things here. With dividends, it's not that we are shooting from the hip — after 10 years of not distributing, we returned to distributing, and we increased it cautiously from year to year. Now is the first time we are distributing even before the end of the year given the strength of the results. In addition, we joined the TA-35 index, and we have many international investors.

We saw that a company like ours is expected to also perform buybacks, and as part of that message, and our ability to accelerate the distribution, there is a message here to the market that we are sticking to the leading group. Quarter by quarter, we prove that we are stable — this is representative profit from core activity, without financial margin."

In practice, these are two complementary moves: the board of directors approved a buyback program of up to 200 million shekels for a year, and at the same time, Clal Insurance will distribute a dividend of 200 million shekels to the parent company. The buyback in a sense also sends another message — the management believes the stock is trading cheaply.

The confidence to distribute is provided by a high solvency ratio: 180% considering the deployment instructions and 155% without them, far beyond the required threshold, when the equity attributed to shareholders climbed to 11.5 billion shekels.

How significant do you see the nostro activity looking forward?

"Clal operates in a very solid and responsible manner. We manage the nostro for the purpose of profit but are at appropriate risk levels, and therefore we have excess financial margin. We are seen both in the Israeli market and in the international one."

The excess financial margin — the part of the profit directly affected by the capital market — fell in the half-year to 263 million shekels compared to 444 million last year, and this explains why total profit rose at a more moderate rate than core profit. In simple language: when the stock market rises less, the company's portfolio also contributes less, so it is important that the core engine knows how to work well and stably. This quarter showed exactly that.

Are you still optimistic about the Israeli market?

"We have always been long on Israel. What happened is that others reduced exposure, more than we increased. Precisely because they left, we were able to deepen the portfolio when the multiples were attractive. Today the market is more expensive and the outlook is more heterogeneous. We sold into the rises, and today we are already more at the benchmark — but still long on Israel."

In other words, Clal took advantage of the period when other investors fled the local market to buy cheap, and sold some of the holdings when prices climbed. The rally did not skip the Tel Aviv Stock Exchange and the shekel, which strengthened significantly and expresses investor confidence in the Israeli economy, and therefore Naveh signals that he is already closer to the exposure level of the indices — but still betting on the continued strength of the economy.

And what about the small bank reform?

"The reform, in principle, is positive, and it is possible that it is suitable for entities without activity and also for international entities like Revolut. But in credit card companies, the fact that high capital and liquidity requirements also apply to the rest of the existing activities creates a high entry cost for us. We reflected this to the supervisor and in the meantime, it is still under discussion.

I think that at the moment it is not attractive for Max, and we would be happy if the regulator would consider these things to improve competition. The reform, as it looks at the moment, is not attractive for us and it's a pity. It would have been possible to set a threshold that up to 10 billion shekels of deposits there would be easements without a time limit, and then it would have been easier for us to jump into the water and encourage competition."

Naveh's point touches the heart of the reform intended to open the banking market to competition. For an entity like Max, which manages a credit portfolio of about 14 billion shekels, the capital and liquidity requirements that will apply to all activity make entering the deposit field too expensive to justify the step — and thus, according to him, the reform misses precisely the players who could have injected real competition into it.

Bottom line, Clal concludes an especially strong quarter with record core profit, resilience that allows it to return money to shareholders, and an asset engine that continues to swell — all this while the struggle for supremacy in the industry heats up, after Migdal just presented a return on equity of 22.4% against 22.5% for Clal.

From Naveh's perspective, the numbers have already done their part. The question that remains open is whether the market will finally price all this correctly, and whether the regulator will listen to those who ask to join the competition that it itself is trying to create.