IBI in the First Quarter: Recurring Profit Starts to Arrive, Alternatives Still Depend on Success-Fee Timing
IBI opened 2026 with a sharp rise in revenue and profit, and even after removing a one-time Capital gain the group shows a much higher profit run-rate than in the parallel quarter. The edge sits in the gap between recurring-profit layers that already strengthened and the alternatives segment, where NIS 76.7 million of variable consideration has still not been recognized.
IBI opened 2026 with a quarter that begins to answer the question left open at the end of 2025: whether the broad platform built through acquisitions, trading, funds, pension distribution and Capital can actually converge into profit that reaches shareholders. The current read is more positive than it was before the quarter, because profit attributable to shareholders jumped to NIS 94.4 million, and even after removing about NIS 15.3 million of one-time gain from Capital, the profit run-rate remains far above the parallel quarter. Just as important, operating cash flow reached NIS 145.1 million and the group reduced short-term bank credit while increasing cash. Still, this is not a clean quarter: alternatives contributed almost nothing to profit, a meaningful part of Capital's profit benefited from a one-time item, and the company still carries a layer of success fees and variable consideration that can become income or disappear. The 2026 checkpoint is therefore not revenue size alone, but conversion quality: how much profit comes from recurring layers, how much remains tied to capital-market cycles, and how much cash can continue to be distributed as dividends without weakening growth capacity.
Company Snapshot
IBI is already more than a classic investment house that manages mutual funds and portfolios. It is a financial group with two main engines: financial products, which include mutual funds, portfolio management and alternative investments, and financial services, which include trading, custody, Capital, underwriting, and pension and financial agencies. Its economic machine combines recurring fees and managed assets, transaction and market-sensitive income, and one-time gains or success fees that arrive unevenly.
The previous Deep TASE annual coverage of 2025 framed 2026 as a proof year. The company had already become larger and broader, but the reader needed to see whether that scale reaches net profit attributable to shareholders, not only segment EBITDA, asset value or revenue shared with minority interests. The first quarter gives a first answer: more of the platform is working together, but there is still a sharp difference between activities that are producing profit now and activities that hold optionality for later timing.
The quick map explains why the headline can mislead. Trading and custody services and Capital were the two largest revenue buckets in the quarter, each around NIS 132 million. Mutual funds and portfolio management added NIS 96.3 million, while underwriting contributed a strong quarter with NIS 40.7 million. By contrast, alternatives fell to NIS 31.2 million of revenue and only NIS 2.5 million of segment profit, mainly because of success-fee recognition timing.
Recurring Profit Strengthened, Alternatives Still Depend on Timing
Group revenue reached NIS 485.0 million, up 46.5% from the parallel quarter. EBITDA rose to NIS 199.8 million from NIS 91.7 million, and profit attributable to shareholders rose to NIS 94.4 million from NIS 31.0 million. These are not only growth numbers. They show that the group's cost base began to benefit from operating leverage: revenue rose much faster than expenses, which increased by only 19%.
But reported profit includes a NIS 23.5 million one-time gain recorded in Capital following the move to control of wealth management and trust companies. The company's shareholder share of that gain is about NIS 15.3 million. After removing it, profit attributable to shareholders is still around NIS 79 million, more than 2.5 times the parallel quarter. The quarter does not rely only on an accounting event, but the accounting event does inflate the reported jump.
Capital is the strongest proof, but also the place where caution is needed. Revenue rose to NIS 132.2 million, segment profit rose to NIS 71.5 million, and segment EBITDA reached NIS 78 million. Management points to a backlog of M&A transactions signed in 2025 and in the first quarter of 2026 that is expected to support the second quarter as well. This is the kind of proof missing at the end of 2025: not only scale built through acquisitions, but activity beginning to show higher profitability. Still, a large part of the quarterly profit came from the one-time gain, so Capital needs to prove in the next quarter that backlog closes into profit without remeasurement.
Trading and custody delivered a stronger operating quarter. Revenue rose 43.2% to NIS 132.6 million, and segment profit almost doubled to NIS 56.7 million. Self-directed trading reached 82.3 thousand customers, with 7.3 thousand new accounts opened during the quarter. The target of 150 thousand self-directed trading customers by the second quarter of 2028 turns IBI SMART from a marketing asset into a business checkpoint: if those customers begin consuming pension, credit, employee-options and additional products through the same app, customer economics improve. If they remain mostly trading accounts, platform value is lower.
Mutual funds and portfolio management also supported the thesis. Revenue rose to NIS 96.3 million and segment profit to NIS 21.8 million, while mutual funds reached NIS 90 billion of managed assets versus NIS 70.1 billion in the parallel quarter and NIS 87 billion at the end of 2025. This layer is more recurring than Capital or underwriting, making it especially important for the group's earnings quality.
Alternatives are the yellow flag. Revenue fell to NIS 31.2 million from NIS 44.3 million, segment profit fell to NIS 2.5 million, and profit attributable to shareholders almost disappeared at only NIS 0.2 million. The company explains the decline by a change in fund mix and success-fee recognition timing. The amount not recognized as income already stands at NIS 76.7 million, including NIS 63.2 million in investment funds, NIS 5.1 million in real-estate partnerships, NIS 4.4 million in hedge funds and NIS 4.0 million in mutual funds. That is economic optionality, not guaranteed income.
Cash Flow Allows Distribution, but the Dividend Pulls the Debate Forward
Operating cash flow reached NIS 145.1 million versus NIS 11.7 million in the parallel quarter. That is a strong figure, and it matters more than reported profit because it means the quarter did not stay only in accounting profit. The company also reduced short-term bank credit to NIS 56.9 million from NIS 121.1 million at the end of 2025, while cash rose to NIS 275.4 million.
All-in cash flexibility after the quarter's actual cash uses looks good: after positive net investing activity of NIS 9.5 million and negative financing activity of NIS 89.1 million, mainly bank-credit repayment and leases, cash still increased by NIS 65.5 million. But the distribution does not disappear just because it had not all been paid by the end of March. The board declared a NIS 50 million dividend in March that was paid in April, and on May 27 approved an additional NIS 70 million dividend. Since the beginning of 2026, the company has already marked NIS 120 million for shareholder distribution.
On a solo basis, the company presents NIS 385 million of net financial assets as of the end of March. That supports distribution capacity, but also explains why recurring profit matters so much. A high dividend is an advantage only if the business regenerates cash. If Capital, trading and funds maintain the pace, the distribution looks like cash return from a strengthening platform. If alternatives remain weak and Capital returns to lower profitability after the one-time item, the dividend will look more like cash pulled forward from a good period.
The coming quarters have three proof points. The first is Capital, because the company has already written that the backlog should support the second quarter. The second is alternatives: DataCom 1 may generate material income in the second half of 2027 or in the first half of 2028, and Tevel and Atlantis are in advanced talks to obtain bank financing, but until that happens NIS 76.7 million of variable consideration remains outside profit. The third is IBI SMART, which needs to show real cross-sale and not only trading-account openings.
Short interest stood on May 20 at 2.93% of float, and SIR of 7.31 days is above the sector average of 2.56 days. This is not a thesis by itself, but it says the market still leaves room for doubt about earnings quality. A strong second quarter in Capital and trading, together with signs of recovery in alternatives, can change that interpretation. A quarter in which profit falls after the one-time item and alternatives do not recover would strengthen the argument that Q1 was a combination of a strong market and accounting timing.
Conclusions
The first quarter improves the read on IBI, but does not turn it into a simple story. The company proved that the broad platform can generate higher shareholder profit, not only revenue and EBITDA. Even after removing the one-time Capital gain, the profit run-rate is materially higher than in the parallel quarter, and cash flow supports distribution. That is real progress versus the end of 2025.
The counter-thesis is that Q1 relied on favorable market conditions, a one-time Capital gain and strong underwriting, while alternatives contributed almost nothing and much of the future optionality remains in unrecognized success fees. That is a serious objection, and it is why the second quarter matters more than the headline of the first quarter. If Capital keeps closing transactions into profit, IBI SMART shows deeper cross-sale, and alternatives begin releasing income without relying only on future success fees, 2026 will look like a positive proof year. If not, the first quarter will be remembered as a strong quarter, but not yet as full proof of a change in the group's earnings quality.
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