Menora Mivtachim Holdings in the First Quarter: Profit Improved, but Dividend and Credit Moves Pulled Equity Down
Menora opened 2026 with higher adjusted profit, credit growth, and a profit reservoir that held steady. Still, the dividend and the ERN and Yesodot transactions reduced equity, so the next quarters will test credit quality and the group's ability to keep upstreaming cash without eroding capital buffers.
Menora Mivtachim Holdings opened 2026 with higher profit, but also with heavier capital use. Adjusted profit after tax rose to NIS 522 million and comprehensive profit attributable to shareholders rose to NIS 464 million, so the business is still working after a strong 2025. Still, equity attributable to shareholders fell from NIS 9.19 billion to NIS 8.89 billion, mainly because of a NIS 500 million dividend and the deeper ownership of ERN and Yesodot. This gives an early answer to the prior annual analysis: value is moving up to the holding company, but it is moving alongside credit expansion that consumes capital and raises the need for clean underwriting. The quarter strengthens core profits in life, health, and credit, but it does not yet prove that a credit book that grew 45% in a year can keep expanding without higher losses and capital burden. The rest of 2026 is therefore less about whether the company can earn money, and more about whether earnings, dividends, and credit growth can coexist without eroding capital buffers.
Company Setup
The group is an insurance and financial holding company with several profit engines: life and long-term savings, pension and provident funds, general insurance, health, credit, and the nostro portfolio. Profit does not come from one source. It is built from insurance underwriting, management fees, contractual service margin release, investments, and credit profits. A strong quarter therefore needs two checks: how much of the profit is recurring operating profit, and how much can move to the holding company after regulatory capital, investments, and distributions.
In the first quarter, premiums and contributions rose from NIS 8.6 billion to NIS 9.4 billion, and assets under management reached NIS 443.9 billion. That is a wide activity base, but for a large insurer, managed volume is not the thesis. What matters is earnings quality after claims, rates, investments, required capital, and dividends. Here the quarter is good, but not completely clean.
Adjusted Profit Is Strong, but the Comprehensive-Profit Gap Matters
Adjusted profit before tax rose from NIS 619 million to NIS 803 million, and adjusted profit after tax rose from NIS 406 million to NIS 522 million. That is a real improvement in core earnings. Life and long-term savings rose to adjusted profit before tax of NIS 231 million from NIS 162 million, health rose to NIS 172 million from NIS 128 million, and credit rose to NIS 53 million from NIS 36 million.
But comprehensive profit before tax rose only from NIS 583 million to NIS 634 million. The gap between NIS 634 million and adjusted profit of NIS 803 million came from NIS 168 million of adjustments, mainly NIS 122 million from investment income and NIS 46 million from interest-rate effects. Adjusted profit is a legitimate tool because it strips out market and rate volatility, but in a quarter where actual returns were below the normative return, it shows a sharper jump than comprehensive profit.
That distinction changes the segment read as well. In life, part of the improvement came from lower mortality risk claims after an unusually weak prior-year quarter, together with CSM release and pension and provident growth. In health, adjusted profit improved mainly in medical expenses coverage, but comprehensive profit fell from NIS 68 million to NIS 45 million because of a larger negative interest-rate impact and investment losses. The insurance activity improved, while the reported result remained sensitive to capital markets and the rate curve.
Credit and Dividend Change the Capital Read
Credit is where the quarter most changes the next read. The credit book reached NIS 8.85 billion at the end of March 2026, compared with NIS 8.30 billion at the end of 2025 and NIS 6.12 billion at the end of March 2025. Most of the book is business credit, NIS 6.81 billion, while consumer credit is NIS 2.04 billion. This is no longer a small add-on to the group. It is a relatively new profit engine that reduces dependence on insurance and capital markets, but replaces part of that dependence with underwriting quality, collateral, developers, and funding.
The positive signal is that credit profit before tax rose 48%, while net impairment losses in the segment remained around NIS 24 million, similar to the prior-year quarter. The point that still requires caution is the growth pace: when a book grows quickly, credit losses can appear later. The company now owns 100% of ERN, and in February it increased its holding in Yesodot to 60.1%. That gives the group more control over the credit engine, but also brings the risk deeper into shareholder equity.
The same quarter also showed that value is more accessible to the holding company. Menora Insurance and Menora Pension and Provident approved dividends to the company of NIS 400 million and NIS 60 million, of which the company's share was NIS 54 million, while the company approved a NIS 500 million dividend to shareholders. The upstream channel works. The problem is that comprehensive profit of NIS 464 million was not enough to cover the dividend and the equity impact of ERN and Yesodot.
There is no immediate liquidity pressure here. The holding company had solo financial liabilities of about NIS 54 million against liquid financial assets of about NIS 854 million, and Menora Insurance's latest solvency ratio was 163.1% without transitional measures and 172.3% with transitional measures. Still, this is no longer only an earnings question. As credit grows and the dividend remains meaningful, the market will need to see that capital surplus is replenished quickly enough.
Conclusions
The first quarter strengthens the group more than it closes every concern. Core activity improved, the total profit reservoir remained at NIS 21.2 billion, and subsidiary dividends prove there is a real flow of value to the holding company. On the other hand, adjusted profit looked stronger than comprehensive profit, equity declined despite high quarterly profit, and the credit book is growing fast enough to require a close look at underwriting quality rather than only growth.
The current read is that the group enters 2026 from a position of strength, but with less room for forgiving interpretation. If credit keeps growing without higher losses, motor property does not pull general insurance lower, and subsidiaries keep transferring dividends without eroding capital buffers, the market will get more evidence that 2025 was a base rather than a temporary peak. If credit provisions rise, if equity keeps declining after distributions, or if comprehensive profit continues to lag adjusted profit, high earnings alone will not be enough to clean up the thesis.
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