Earnings Call: Q1 2026

May 26, 2026

Summary

Q1 delivered record ILS 17bn net inflows and record AUM, with revenue up 32% YoY and adjusted EBITDA margin at 42.3%. Management targets at least 20% profitability growth in 2026, with AI-driven efficiencies expected to add support.

Good day, everyone, and welcome to the Meitav First Quarter 2026 Earnings Conference Call. I would like to note that today's call is being recorded. With us today on the call are Ilan Raviv, Chief Executive Officer, and Einat Rom, Chief Financial Officer. Please note that certain statements made on this call may be forward-looking and are subject to risks and uncertainties as described in our regulatory filings. All figures are in Israeli shekels and US dollars. At the end of the presentation, we will hold a Q&A session. You may ask a question using any of the following methods: submitting it via the Zoom Q&A feature, using the raise hand function on Zoom, dialing into the conference call using the numbers displayed on the screen. When prompted by the operator, please indicate that you would like to join the Meitav Investment House call. Once connected, you may press asterisk one on your phone to queue a question. We will do our best to address as many questions as possible. Ilan, please go ahead. Hello. Thank you very much for joining us for the first quarter of 2026 conference call of the Meitav Investment House. I am going to begin with a general overview of Meitav's excellent results for the first quarter of 2026. As you may recall, when we spoke in March and reviewed our annual reports, I said that the 2025 performance showed lots of strength and momentum, which we forecast will continue into 2026, and I am very happy to report that it actually has. We have had a very strong opening to the year in the first quarter, and following the first quarter as well, the strong momentum continued. We had a record quarter with highs on our assets under management, on our revenues, on our profitability, and maybe most importantly, on the net inflows into our business. Actually, the first quarter of 2026 marked record net inflows for any quarter for Meitav in Meitav's history. Total of ILS 17 billion of net inflows across all our products, both long-term savings and short-term savings products. I have to mention that during the quarter, the macro environment was challenging, both from the regional issues here in Israel and, of course, the issues which affected the global economy and the global markets. We saw volatility, especially in March, global volatility, but I think the markets recovered very, very swiftly, especially here, our domestic market in Israel, but also across the world. And maybe more importantly, our business was very minimally, if at all, affected from this turbulence during the first quarter. The Israeli economy has again proven its resilience. It has become really a point which defines the Israeli economy, this resilience over and over again. The performance of our domestic equity markets actually outdid most of the global markets in the first quarter. Our currency, the shekel, strengthened in the first quarter and following the first quarter, and was very firm against most of the currencies. I think this is another signal of the health of the Israeli economy. I think it's a signal that's been seen by the international investors. In summary, we continue to see a very strong quarter with client demand, with robust inflows, and broad-based across all three of our business pillars, even during this period, as I mentioned, of regional instability. If we look on a year-over-year basis, first quarter revenues were up 32% compared to the corresponding quarter in 2025. Our adjusted EBITDA was up 46%, and our net earnings attributable to the shareholders was up 34%. This was backed by very strong investment performance, particularly in the actively managed mutual funds, which continue to be ranked very highly across all of the bank's rating systems here in Israel. With these strong results in the first quarter, we feel very confident in our ability to meet and even potentially exceed our target of 20% growth in profitability in 2026 versus 2025. This is, of course, subject to market conditions. Let me turn to assets under management. At the end of the quarter, our total AUM reached a record ILS 426 billion, compared to ILS 407 billion when we opened the year, and ILS 332 billion a year ago at the end of the first quarter of 2025. This represents a growth of 28% year over year. This momentum has continued into April. Our AUM reached a record again of ILS 448 billion, which is about $142 billion at the end of the month of April, reflecting the continued growth and strength of our inflows and, of course, the good investment performance. If I move over to the long-term savings segment, revenues were up 36% year over year, again driven by very strong client deposits of about ILS 3 billion and market share gains of approximately ILS 10 billion. So, those were the two elements of the inflows in the first quarter in the long-term savings sector, ILS 3 billion in deposits, in inflows, and ILS 10 billion of market share gains from our competitors. This was an industry-leading inflow performance, by far, I should say, industry-leading. As noted in the previous call, our net inflows account on average in the last five years for about 17% of AUM growth annually in each year, and I'm glad to say that 2026 is shaping up to be a very strong year in terms of the growth of the AUM. Some financials on the long-term savings segment. The segment profit grew by 64% year over year. This reflects very strong and very good operating leverage in the segment, as Einat will go into in a moment. Besides the growth in the AUM, we've also seen an increase in the average management fees, which we charge our clients. If we take an example in the provident and the study funds, which is about two-thirds of our long-term savings segments, the assets there, the average management fees reached 56 basis points, so they inched up from the 2025 closing. I am glad to say that this is still below the market average, so I see room for further improvement in the average management fees. On top of the growth in the AUM from the inflows, we also saw growth from the investment performance, which contributed an additional 15% in previous periods, and this momentum of net inflows in total has continued into after the end of the quarter of 2026. Let me turn a second to our short-term savings. I remind you that our short-term savings segment includes our mutual funds, both active and passive, as well as our portfolio management activities. The revenues are up 41% year-over-year. Net inflows of ILS 3 billion in the first quarter in our traditional or actively managed funds during the quarter. These are mainly equity and fixed income or combinations of equity and fixed income funds. We are also seeing strong demand for our higher-fee products, such as equity funds, such as mutual hedge funds, and such as funds which are based on momentum-based strategies. I will give just one example, which I like to cite, which is our Tel Aviv 125 actively managed fund. It is one of the largest of its kind in Israel, AUM of just under ILS 2 billion, and it has outperformed its benchmark, which is the Tel Aviv 125 index, in every one of the past 10 years. On an annual basis, in every one of the last 10 years, we have outperformed the index on that fund. So it is our, I would say, our flagship or one of our flagship funds. A word on portfolio management. We also saw strong inflows in the first quarter of over ILS 1 billion, mainly coming in from private individual portfolios, so high net worth and other private individual portfolios, and some corporate-type portfolios, and that is the kind of growth that we like to see. To move over to our brokerage platform, first of all, I remind us that in the beginning of the year, we merged into one segment our institutional brokerage and our retail brokerage operations, so they are now one segment, effective from the 1st of January of this year. That profit segment is up 21% year-over-year. One of the most important parameters for me on the retail brokerage side is the number of clients that we have and the opening of new accounts, the joining of new clients, and I am glad to report that at the end of the first quarter, we had 123,500 clients, accounts, with 9,700 new accounts opened in the first quarter. That is a rate of over 3,000 accounts per month, and that is the rate we are going at, and we are very happy with that. We also saw growth in the equity trading volumes, especially the domestic equity trading volumes. Although on the foreign equities, we actually saw some softening or comparatively softer numbers during the quarter in terms of volumes, following the very strong Q4 2025 numbers that we all know. Non-bank credit. Three companies, I remind us, in our non-bank credit segment, two domestic credit companies and one operating in Ireland. The revenues of that segment were up 8% year-over-year. We do see some price pressures on the two domestic companies, especially our SME credit company, Peninsula. We manage it very, very carefully, and we have a very disciplined approach to the risk and our underwriting standards. To round out the business, let me say a word about the alternative. We continue to grow our alternative investments with two new funds which we launched at the end of 2025. We labeled them, what we call them, the Meitav Access Funds. One is in the world of real estate, and the other is in the realm of private equity. On top of that, the hedge fund which we acquired, or the GP of the hedge fund, which we acquired towards the end of 2025, has fit into our platform very well and continues to grow and gather momentum. It's called Trio, and really, the first quarter of 2026 is the first full quarter where we can see the results of the Trio hedge funds in our reports. Before I hand over to Einat, our CFO, I'd like to briefly touch on our technology enhancements. As we discussed in the last call, we've been investing a lot of time, a lot of effort, and a lot of budgets in AI-driven systems and automations across our operations, particularly in two segments, long-term savings and in our retail brokerage. These capabilities continue to support client servicing and operational efficiency. Our two main AI-based projects at the moment are in the field of customer service and in the field of back office operations. Over 50% of our workforce is employed in these two areas, in these two realms. We expect these two projects, especially the client service one, to be up and running in the next few weeks, and we expect to see both of these projects reflected, or the advantages of these two projects reflected in our financial reports by the end of the year, later in 2026, and definitely by the end of the year. I'll stop there, and I'll hand over to Einat. Einat, please. Thank you, Ilan. Let's dive into some numbers. All figures are presented in shekels, with the US dollar conversion at an exchange rate of one US dollar equal to 3.165 shekel at the end of the quarter. I would like to mention that currently, the exchange rate is ILS 2.90 to dollar, so it's a meaningful strengthening to the shekel following the end of the quarter, which positively impacts the US dollar equivalent value of our shekel-denominated results. As Ilan noted, the first quarter of 2026 represents a continuation of strong trends we reported in our annual financial statements, with broad-based revenue growth, improving operating leverage, and a continued margin expansion. Total revenue for the quarter were ILS 598 million, which is approximately $189 million. Operating profit reached ILS 223 million, about $70 million, up 55% year-over-year and 17% compared to the previous quarter. Net profit attributed to the shareholders was ILS 128 million, about $40 million, up 33% year-over-year and 10% compared to Q4 2025. In our long-term savings segment, revenues reached ILS 242 million, which is approximately $76 million, compared to ILS 178 million in the corresponding quarter of 2025. EBITDA margin, it is very important for me to mention that EBITDA margin increased in the long-term savings segment from 36% in 2025 to 38% in the first quarter of 2026, and it is quite an improvement. Our short-term savings segment revenues were ILS 149 million, which is about $47 million, compared to ILS 106 million in the first quarter of 2025. The brokerage revenues amounted to ILS 80 million. Just to remind you, it is the retail brokerage together with the institutional brokerage, as Ilan mentioned. It is around $25 million, and it is compared to ILS 65 million in the first quarter of 2025. Our non-bank credit segment revenues reached ILS 98 million, which is approximately $31 million, compared to ILS 91 million in the first quarter of 2026. Twenty-five 2025, sorry. Drilling down to a margin, adjusted EBITDA margin, as you can see, reached 42.3% in the quarter, compared to approximately 40% in Q4 2025 and 38% in the first quarter of 2025. That reflects the continued scalability of our operating model. As we mentioned before, a significant increase in revenues and full control on expenses, mainly our G&A expenses that I will explain in a minute. I would like to remind you about the G&A expenses. I would like to remind you that during the previous conference call regarding the 2025 annual financial statements, our G&A expenses seasonality was discussed, as well as the fact that the fourth quarter is typically a period when these expenses are higher compared to other quarters in the year. Indeed, our G&A expenses for this quarter amounted to ILS 169 million, which is about $53 million, compared to ILS 178 million in the previous quarter. This is a decrease of 5%. This, of course, contributed to the improvement in the operating profit, in addition to improvement in the gross profit, and our EPS this quarter was ILS 1.57. It is up 28% year-over-year and 8% compared to Q4 2025. Financing expenses for this quarter totaled ILS 7 million, which is around $2.2 million. This is a representative pace for 2026, consistent with the improvement we flagged following our equity raise in December 2025. Just to remind you that these expenses consist of our financing expenses in respect to IFRS 16. Last in this slide, our effective tax rate is 33%, consistent of what we guided in our last call and expected to remain representative for future periods. Turning to the balance sheet, following our ILS 500 million equity raise we completed in December 2025, and our healthy profits, our shareholders' equity has surpassed the ILS 2 billion mark, and the equity-to-balance sheet ratio is more than 30%. With that, we are ready to take your questions. Today's first question will come from the telephone, and it will come from Dan Fannon with Jefferies. Please proceed. Thanks. Good morning. Good morning. Wanted to talk about the growth organically. You mentioned inflows as well as the share gains. If you could just expand upon some of the trends that are driving the record inflows that you saw in the first quarter, and I guess that are continuing here in April, the diversity of products, the performance, or other factors that you're seeing that are driving that level of growth. Sure. Thanks for the question, Dan. As I mentioned, record inflows across both long-term savings and short-term savings products. There are a few drivers behind that. First of all is our good performance, and when I say good, I mean consistently good over long periods of time. We have learned, and I think the market here has also learned, that both the investors and the distribution channels are really looking for long-term top quartile results. If you can supply that, then the inflows are, I would not say guaranteed, but that is the basis for the inflows coming into the company. If you look at our investment results over the last 3 and 5 years, those are the 2 main longer-term periods that we publish the results, you can see that we are top quartile at sometimes just at the complete top of the league, or if not, in the first few places in the league. So, investment results continuing to do well. Second thing, which is a bit harder to get maybe your head around, is the fact that the brand. We invest a lot of time and effort in maintaining our strong retail brand. Israel, we are a retail brand in Israel, the largest investment house here, and we do a lot of maintaining of that brand, and we have reached the level where, in terms of the surveys show us, in terms of top of mind, people feel very comfortable saving with us, and that is also a strong driver of the inflows. Lastly, it is no secret that the market here in Israel works with distribution channels, both in the short term and in the long term. Different distribution channels, but both coming in through channels. I think we have great relationships, both contractual and ongoing relationships, as well as great operational and service, operational capabilities and servicing of the distribution channels. They are mainly bank investment advisors, which sit in the branches of the commercial banks here in Israel and advise the bank clients on which mutual funds, for instance, to buy. That's the main channel there, distribution channel there, and that works very well. We're rated highly in the bank systems, and it works very well, and we see the results. The other distribution channel are insurance agents, insurance agencies in the wider context, and they do more on the long-term savings products. Again, there we have great digit platforms and servicing capabilities and reporting with them, and that helps very much in smoothly bringing in the money. It's big numbers in terms of the number of clients and the amounts, the number of inflows, because a lot of them, don't forget, are small money in terms of, for instance, mandatory pension contributions and other payslip deductions which come in, and you need to do it very, very smoothly from an operational point of view, and I think we've mastered that quite well. That's the basis of the strong inflows, and I think if we keep up all three of those efforts in terms of the performance, in terms of the brand, in terms of work with the distribution channels, then we should continue to see such good inflows going into the future as well. I can tell you we're already in the second quarter and quite into the second quarter. Almost two out of three months are almost behind us, and the inflows continue to come in very nicely. We will soon be publishing the April numbers, and you will be able to see them for yourself. That's what's behind the inflows. Great. That's very helpful. I guess then to follow up here, on slide 13, it shows the improvement in the fee rate that has been pretty consistent. Can you also just then unpack that a bit in terms of the mix and which products are seeing greater growth that's driving that improved management fee rate? Yeah. The slide shows the management fee rate on our provident and study funds, which is a big chunk, about two-thirds of our long-term savings assets, right? There we see the consistent tick up in the average management fee, and we think that will continue because we're still below average on the whole pool of AUM there. So we think we still have room to improve that number, and new funds are coming in at slightly higher management fees. The fees on the pension funds are quite stable, so I don't see any fee pressure on the downward side or any uptick in terms of the fees on the pension funds, which is the other third of the long-term savings assets. On the short-term saving assets, the story there is really more of a blend, which mutual funds are raising money at the time, and that obviously depends on what is happening in the markets, where interest rates are going, where global equity markets are going, et cetera, as the same as you see them, same trends as you see in the U.S. and around the world. The first quarter, we saw, as I said, strong inflows into equity funds, and especially domestic equity funds, and these are the higher fee products of our mutual fund portfolio. So, I think that on the whole, on the blend of the products, both short-term and long-term, we are enjoying a period of rates either stable, depending on the product, or slightly moving up. I say slightly, but on our assets, a slight change, a basis point change is obviously very important, very significant in terms of money. I ask Einat for the next reports maybe to think of opening up another digit, not 2 figures after the point, but tenth of basis points so that you can actually see the progress of the management fees. Great. Understood. Thank you. Dan Fannon, as you look at your priorities for investment in 2026, and then you mentioned some of the AI benefits that are rolling out, how are you thinking about expense growth more broadly in this year and maybe beyond 2026 as well? Well, our 20% increase in profitability did not take into consideration our AI improvements, so there is room to grow over there in terms of decreasing our G&A expenses. As we mentioned before, as long as we maintain, and we are working on it, on maintaining the G&A expenses stable, so we can really enjoy the economies of scale and increase revenues with a moderate increase in direct costs. So, we think that at the end of the day, profitability will grow and the margin will improve. Let me just elaborate a bit more on that, Einat. The two major AI projects which are in the works at the moment, we think the fruits of those two projects, which address about 50% of our workforce, which is the service, client service, and the back offices and the operational units, the operations units, we think that the fruits of these two main projects, you will be able to see them in our expenses, in a reduction of our expenses by the end of the year. I hope we can reflect them already in Q3 and Q4 figures, but definitely going into 2027, we will be able to see them. I just remind us that we have been growing organically very strongly for, what, the last two or even more, two and a half years With a stable workforce with a stable workforce. I see a lot of efficiency already being driven into the system by the fact that we are able to take care of many clients much more, and inflows and other requests and service requirements of our clients without having to increase our headcount. As I said, I think this AI will help us even drive it down eventually, not eventually, but in the next few quarters. Thanks. We will make processes more efficient by using other tools besides AI. You can see that we are working on it, and we are working on the workforce and our G&A expenses, and we hope to maintain it stable, at least stable. Should we move over to Great. No, that's very helpful. Lastly for me, would just be on the credit business, why did the portfolio shrink quarter-over-quarter? Well, no, quarter-over-quarter, it shrunk from the previous quarter, not from the quarter-over-quarter, not in the previous year, but from the previous quarter, the Q4 of 2025. The fluctuations in the credit portfolio, the small fluctuations that can happen because end of periods, end of month, we don't attach much significance to it. It's been stable at around ILS 3.7 billion. I will say, though, that we are looking to grow it very gently and gradually in today's environment, which we think is the prudent thing to do and the right thing to do. The credit spreads in Israel, not only in Israel, but specifically in Israel, have shrunk, both in the corporate bond markets and in direct credit, over-the-counter credit deals. If you want to remain with your margins, if you want to try and not shrink your margins, then it's very hard to grow your portfolio. If I have to choose at the current period, I would rather forego a little bit of the growth of the portfolio and leave the margins and leave the quality of the credit portfolios as is. I don't want to get dragged into price wars in terms of credit spreads. to take risks at the moment, and the risks involved in it. Yes, they are stable. As I said, the total portfolio, one company shrunk a little bit, and two of the companies grew, and the total was very near, ILS 3.67 billion versus ILS 3.7 billion. We are happy with that. We are fine with that, Dan. Great. All right. Well, thank you for taking all my questions. Thank you, Dan. Do we have any more dial-in, or should we move to the chat, the Q&A? We currently do not have any more telephone dial-in questions, so we can now move on to the Zoom audio questions. As a reminder, if you do want to ask an audio question over the Zoom platform, please click the raise hand icon on your Zoom screen. We will now pause momentarily to allow those who would like to ask those questions to raise their hand. Let me start with the questions that we have already received. Yeah, in the Q&A. Very expected question is the appreciation of our local currency, the effect of the strong shekel on our business, and the impact of the decreasing interest rates in Israel. I remember yesterday afternoon, the central bank here lowered the rate by 25 basis points, the central bank rate. Einat, why don't you talk a word about the interest rates, and then I'll talk about the exchange rates. Go ahead. Okay. Thank you. Well, there are several effects across different segments for interest rate decrease. First is the retail brokerage. A decrease in the interest, of course, impact our financing income and has a negative impact. However, we saw in the past that people trend to more trade in the market, so we receive higher commissions. In the previous times when the interest rate decreased, we saw that we will be able to maintain a quite stable ARPU, average income per client. So, we think that the overall impact in the retail brokerage will not be very significant. In our short-term savings, for example, I think we will see a positive impact because when the interest rate decreases, people tend to withdraw their deposits from the bank and to move it to portfolio management or to buy mutual funds. I believe that in this area, we will see a positive impact for the decrease in the interest rates. The last are, of course, our non-bank credit segment. The vast majority of the loans are in variable interest, and also our cost of funds are in variable interest. As long as we maintain a stable margin, we will not have any impact from this decrease. The only place that we will see an impact is in Peninsula. Peninsula has an equity at the end of the quarter of about ILS 570 million, which is about USD 180 million. Of course, interest rates, if it decreases there, it's affecting the margin. For example, 25 basis points, like the decrease yesterday, will affect Peninsula in about ILS 1.4 million annually. If we take the consolidated revenue of the group, it's not going to be very significant in our results. Okay. Let me continue with the exchange rate, effects of the exchange rate. First of all, from an overview, we are a domestic Israeli company, so most of our revenues, and when I say most, it is over 95% of our revenues are shekel denominated, and all of our expenses, or almost all of our expenses, are shekel denominated as well. The effect is not very significant. There are two places where we have effects of the strengthening currency. One is, again, in our credit operations. We have a company in Ireland. It accounts for about 3% of our revenues and about 3% of our net profits, and they are affected by the exchange rate of the EUR versus the shekel. But what we have seen recently is the shekel strengthening across the board against the dollar and the euro and other currencies. So, that is one effect. The second effect is within our retail brokerage. Of course, we have foreign currency revenues, both in terms of commissions on foreign equities trading and in terms of the net interest margin on foreign currency current accounts and deposits. We have not given that number in the report, so I do not want to say it, but it is a single-digit number in terms of the million shekels per year effect, in terms of the move that we have seen so far over the appreciation. I must say, we have seen a very sharp move. At the end of the quarter, the exchange rate was 3.16. Today, the exchange rate is below 2.9. So, that is a very sharp move in a very short- period of time. very short period, yes. But as I am trying to explain, on our business, on our domestic, very well-diversified retail shekel-denominated business, I do not foresee a big effect from that. What else do we have on the chat? Again, questions regarding the net inflows. I think I answered those questions. Yeah when I addressed Dan Fannon's questions about the reasons for our strong inflows. Improvements in the EBITDA margin, Einat, anything more to add on that? Yeah. We discussed it also in the previous call when we talked about our annual financial statements. The EBITDA margin was then 40%, and I mentioned that the long-term savings is relatively low margin compared to the other segments, and we saw an improvement and an increase in the margin there from 36% in 2025 to 38% this quarter. There is room to grow there also, and we also saw an improvement in the margin in our short-term savings this quarter. As I mentioned before, as long as we increase our revenues and maintain the G&A quite stable, and taking in mind, of course, all the AI improvements that we plan to have, I think there is room to grow and there is room to improve margins and EBITDA margins. Yeah, definitely. The last question that I see is regarding the effects of AI, if I can give more details. I'll just say that we have three main areas where we're bringing in AI to help make our work more streamlined and more efficient. One of them is, as I mentioned, in the service and in the back office. The second one is in our IT department proper, and the third is giving AI tools over to our employees. We're working on all three of those verticals in parallel. Our service and back office is over 50%, just a bit over 50% of our workforce, so obviously that's the big potential for cost savings is there. Our IT department is about 12% of our workforce, and obviously we all know how their work has been affected by introduction of the different AI tools. Thirdly, overall, on our employees, we've introduced AI capabilities across the board. Every employee today in Meitav on his desk has the ability to use AI tools, Copilot. Microsoft Copilot is our chosen main tool, along with some Claude and Anthropic tools, and I see the employees are using it and making their work more efficient. As I said, the business is growing at the moment on the same workforce, so I think we're already proving that thesis already as we go. So, let's wait another quarter or two and start talking about the effect of that in terms of numbers. I think that's all the questions that we have for today. I want to thank you for joining us today. We're very proud of the first quarter of this year. We are very optimistic regarding Q2 and forward in 2026, and we look forward to seeing you guys in our future calls. Thanks very much. Thank you.