Mimun Yashir: Fair-Value Income Lifted Profit, Credit Losses Define Its Quality
The consumer-credit segment more than doubled pre-tax comprehensive profit, but the improvement leaned on fair-value income, securitization and portfolio assignments while credit-loss expenses rose to NIS 73.4 million. The next proof point is lower credit losses and more recurring spread income, not just more loan-portfolio transactions.
The main article on Zur showed that consumer credit was one of the main drivers behind the jump in quarterly profit. This continuation isolates the quality of that contribution. Mimun Yashir reported first-quarter pre-tax comprehensive profit of NIS 84.1 million, compared with NIS 32.3 million in the parallel quarter, a number that looks stronger than the full-year 2025 result when viewed as a quarterly run rate. The composition is less clean: fair-value gains on car-loan and mortgage portfolios, securitization and portfolio assignments carried a large part of the improvement, while credit-loss expenses rose to NIS 73.4 million. This is not an immediate weakness call, because car-loan funding costs improved, the efficiency plan already reduced car-segment expenses, and loan originations returned in April to their pre-Operation Roaring Lion pace. The current read is sharper: the quarter improved profit, but it did not yet settle the credit-quality question. Over the next few quarters, the company needs stable credit losses, mainly in car loans and supplementary loans, alongside income that comes more from recurring spread and less from fair value and loan-portfolio transactions.
Profit rose faster than recurring income
The natural continuation of the prior analysis on growth quality is to unpack the source of first-quarter profit. Consumer-credit income rose to NIS 386.5 million, up about 29% year over year, and pre-tax profit rose by NIS 51.8 million. The issue is not the use of fair value or portfolio sales, which are part of a non-bank lender's model. The issue is their weight this quarter: car loans contributed a roughly NIS 62 million increase in fair-value income, while mortgages contributed a roughly NIS 46 million increase, including about NIS 38 million from a mortgage securitization and about NIS 8 million from marking new mortgage loans to fair value.
| Item | Q1 2026 | Q1 2025 | What it means |
|---|---|---|---|
| Consumer-credit income | NIS 386.5 million | NIS 298.7 million | Up about NIS 87.8 million |
| Pre-tax comprehensive profit | NIS 84.1 million | NIS 32.3 million | Up about NIS 51.8 million |
| Credit-loss expenses | NIS 73.4 million | NIS 44.5 million | Profit quality weakened despite the income jump |
| Increase in fair-value income from car loans and mortgages | About NIS 108 million versus the parallel quarter | Not applicable | Greater than the total increase in segment income |
The gap between the first and last line in the table explains the quality issue. The increase in fair-value income from car loans and mortgages alone was larger than the segment's total income growth. At the same time, car-loan interest and linkage income declined by about NIS 40 million, mainly because of the CPI and a provision for class actions, even though the average held car-loan portfolio grew by about NIS 1 billion. In mortgages, interest and linkage income added about NIS 9 million, driven by a roughly NIS 0.8 billion increase in the average held mortgage portfolio and a better mortgage financing spread. So the quarter does not prove only strong demand. It also shows high sensitivity to loan-portfolio pricing, discount rates and the ability to execute transactions in the market.
Credit losses show where quality still needs proof
Credit-loss expenses rose to NIS 73.4 million from NIS 44.5 million in the parallel quarter. In car loans, the credit-loss ratio rose to 4.02% from 3.18%, with two separate explanations: an expected decline in recovery rates on delinquent car loans during Operation Roaring Lion, and a sharper rise in supplementary loans, where the credit-loss ratio rose to 5.14% from 2.25% in the parallel quarter. At the same time, the average held car-loan portfolio grew by about 16%, so the company carried both more volume and a higher loss rate.
The important sentence in the disclosure is that the company usually assigns, by way of sale, about half of the car loans it originates, and credit-loss rates on assigned loans are significantly lower. For holding-company shareholders, this means that loan origination volume is not enough to judge growth quality. The key is which credit stays on balance sheet, which loans are sold out, and what happens to losses in the retained portfolio. When the loans sold out have materially lower credit losses, the unassigned portfolio becomes the central tracking item.
Mortgages also deteriorated, although from a low base. The credit-loss ratio rose to 0.3% from an unusually favorable 0.07% in the parallel quarter, mainly because the average held mortgage portfolio grew by about 43% and more borrowers entered default. This still does not prove structural damage in mortgages, because the company points to an unusually favorable comparison base and says the operation had no material mortgage impact. It does give investors a reason to demand cleaner numbers in the next quarters, especially after the securitization and lower-cost funding.
Funding opened up, credit quality has to improve with it
The constructive side of the quarter sits in funding. The Menora credit facility for real estate and mortgages was extended to the end of 2026, and the interest margins were reduced: in the fixed CPI-linked track, the spread fell to 1.75%-2.25% over the linked government-bond yield, from 2.5%-3.5% previously, and in the prime-rate track the spread fell to 0.25%-0.75%, from 0.5%-0.9%. In car loans, net financing expenses fell by about 7% despite a roughly 14% increase in utilized credit. In mortgages, net financing expenses rose by about 19%, mainly because utilized credit increased by 51%.
Access to debt markets supports growth, but it also defines the proof point. In January 2026, the company received about NIS 446 million net proceeds from an expansion of Series G bonds, and in April it completed a NIS 294.5 million commercial-paper issuance, bearing Bank of Israel interest plus 0.3% and maturing in April 2027. During the quarter, it assigned and securitized car-loan and mortgage portfolios totaling about NIS 1.415 billion and NIS 399 million, respectively, and after the balance-sheet date it assigned an additional NIS 715 million of car loans. The business knows how to fund and recycle credit portfolios. Now it has to show that lower-cost funding and market access do more than increase volume, and actually reduce the economic cost of losses.
The conclusion is narrower than reported profit
The first quarter strengthens the credit-rebound thesis, but does not fully validate it. Pre-tax profit rose sharply, funding sources look more comfortable, and in April originations returned to normal pace after an 11% decline in car loans and a 9% decline in mortgages during the operation. Credit quality has not yet closed the gap: credit losses rose faster than income, supplementary car loans weakened, and mortgages saw more borrowers enter default. The next proof point is simple and measurable: lower or at least stable credit-loss rates, less dependence on fair value and securitization, and lower funding costs that reach recurring profit rather than only the pace of growth.
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