Clal and the securities book: how much of Elrov's profit is business and how much is market
Elrov's 2025 profit line was largely written by mark-to-market gains on the securities portfolio, led by Clal Insurance. After the control-permit path was withdrawn, the key question is no longer just how much value exists on paper, but how much of it is actually accessible to shareholders.
Where the profit really came from
The main article argued that Elrov's 2025 profit still does not prove that the core operating business has moved into a new phase. This follow-up isolates the line that distorted the picture the most, the securities portfolio, led by Clal Insurance. When the company reports NIS 1.415 billion of net profit for the year, but NIS 1.469 billion of fair-value gains on securities before tax, the real question is no longer just how much Elrov earned. It is what kind of earnings they were.
This is not a semantic distinction. Rental income was almost flat, NIS 478 million versus NIS 479 million in 2024, and hotel operating profit fell to NIS 87 million from NIS 98 million. At the same time, the report also shows NIS 224 million of positive revaluation of investment property and NIS 205 million of other income. So the 2025 profit line primarily reflects a strong year in financial assets and revaluation items, not a year in which the hotel and real-estate engines alone explain the headline.
That sensitivity was already present in 2024, but 2025 turned it from a hint into the structure of the profit line. In 2024, fair-value gains on securities were already close to net profit, NIS 381 million versus NIS 386 million. In 2025 the connection became impossible to ignore. A surface read suggests a broad operating jump. A deeper read shows that the market portfolio did most of the work.
Clal is almost the whole portfolio
At the balance-sheet level, the securities book is not a side asset anymore. It reached NIS 2.563 billion at the end of 2025, up from NIS 1.132 billion at the end of 2024. Of that amount, Clal Insurance alone accounted for about NIS 2.285 billion, and Bank Leumi for about NIS 258 million. In practice, Clal is almost the entire story, while Leumi is a secondary component.
What matters even more than the absolute size is the nature of the holding. The notes show that Clal was about a 14% holding at both year-end dates. That means the jump in value did not come from a move toward control, and not from a dramatic expansion of the stake. It mostly came from a repricing of the same holding. That is a crucial distinction. A gain generated by a listed stake is perfectly real in accounting terms, but it does not say the same thing about the quality of Elrov's hotel or income-producing real-estate operations.
The same pattern continued after the balance-sheet date. By March 27, 2026, the securities portfolio had risen to NIS 2.785 billion. Clal alone moved from NIS 2.285 billion to NIS 2.504 billion, while Bank Leumi moved from NIS 258 million to NIS 259 million. On simple arithmetic, almost all of the NIS 222 million increase in the portfolio by late March came from Clal. The same asset that wrote 2025 also kept writing the opening of 2026.
There is a balance-sheet message here as well. At year-end 2025, securities at fair value stood at NIS 2.563 billion out of NIS 2.867 billion of current assets, while cash and cash equivalents were only NIS 176.8 million. So if the reader wants to understand Elrov's liquidity layer, most current assets should be read as a market portfolio, not as cash sitting ready for use.
After the withdrawn permit, value yes, control no
This is where profit quality becomes a standalone issue. If Clal had been moving toward control, one could argue that the listed stake was gradually changing from a large financial asset into a strategic platform. But in 2025 that path stalled. After the notice of intent to reject, the company said in June 2025 that it had withdrawn the application for a control permit in Clal Insurance.
That does not mean influence disappeared. In November 2025, Aharon Fogel and David Granot, candidates recommended by the company, were appointed to Clal's board. So Elrov remained a large shareholder with some ability to influence the process. But that is no longer a control thesis. The distinction matters. Control could have justified reading Clal as a long-duration strategic asset. Without it, and especially after the withdrawal of the application, the default reading is a large financial holding that drives mark-to-market earnings.
That is why the 2025 profit is not just high. It is also highly dependent on a variable outside the ongoing operating cycle of the hotels and the real-estate business. As long as the control path is frozen, Clal matters to Elrov mainly through market price, equity, and the income statement. That is meaningful, but it is still not the same thing as a business engine controlled from the inside.
Accessible value is not the same as operating earnings
It would be too simplistic to call all of this value paper only. The group reports bank credit lines against the securities portfolio, and at the end of 2025 it had NIS 307 million of bank loans secured by securities worth NIS 932 million. On top of that, the company reported another NIS 1.631 billion of securities that were not pledged as collateral.
That matters, because it means the value is not fully trapped. Elrov can lean on the portfolio for financing purposes, not just look at it as an accounting gain. But this also needs precision. The banks count the Clal and bank shares as collateral at only 60% to 90% of quoted market value, and if collateral ratios weaken they can demand more collateral and potentially move toward realization. So the book creates financing flexibility, not a one-for-one substitute for operating cash flow and not value that automatically reaches shareholders.
In other words, there are three different layers of value here. First, market value, and that rose sharply. Second, financing value, which clearly exists because part of the portfolio is unpledged and part of it supports borrowing capacity. Third, value at the shareholder level as recurring business earnings or direct cash accessibility, and that layer is much weaker. For that value to become truly tangible, Elrov would have to sell, release, refinance, or reopen a strategic path. Until then, shareholders are left with a large market profit and better flexibility, but not necessarily with higher-quality earnings.
What to watch from here
In the next reports, the first metric is not whether profit stays high. It is whether profit keeps tracking Clal's share price more than it tracks the hotels and the rental assets. The second is what management actually does with the value. If the holding remains mostly a source of revaluations and P&L volatility, the story stays financial. If it is translated into disposals, released collateral, capital allocation, or a new strategic move, the quality of value changes. The third is whether the control path stays closed or eventually returns.
Until that changes, the right read of 2025 is fairly sharp. Elrov posted real profit, but it was mainly market profit from the securities portfolio, led by Clal Insurance. It improves equity, it improves room to maneuver, and it may continue to move results after the balance-sheet date. But it is still not the proof that Elrov's core operating business has become a different company.
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