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Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Israel Discount Bank Third Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 17, 2025. If you have not yet done so, please access the presentation on the bank's website, investors.discountbank.co.il. I would like to remind everyone that forward-looking statements for respected company's business, financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include, but are not limited to product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the company's accounting policies as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. I would like to move first to Mr. Morris Dorfman, Executive Vice President, Head, Strategic and Finance. Mr. Dorfman, would you like to begin?
Morris Dorfman: Yes. Thank you. Thank you all for joining us today. I extend my warm welcome to this investor call. Starting with Slide 2. Discount Group delivered strong Q3 results with net income of ILS 1.13 billion and ROE of 13.7%. Adjusted net income for one-offs amounted to ILS 1.25 billion, representing an ROE of 15.1%. Banking operations in Israel, comprising of Discount Bank and Mercantile recorded ILS 890 million and an ROE of 14.3%. Discount's cost efficiency ratio was 44% in Q3, while the cost-income ratio in the banking activity in Israel was slightly lower at 42.6%. Total credit in the group grew by 3.4%, accompanied by a solid credit quality metrics, while net interest income, NII, remained flat Q-o-Q. In light of these results, the Board decided to pay out 50% of Q3 net income. Moving to Slide 3. Despite 2 challenging years, Discount Bank has consistently shown double-digit ROE of 14% and stable net income. These figures exhibit the strength of bank and the resilience of the Israeli economy. At Slide 4. On the left side, 2025 GDP is now expected to grow by 2.5%. That said, Bank of Israel expects 2026 GDP to rebound notably with GDP growth at 4.7%. On the right-hand side, the job market remained resilient throughout this time, maintaining a healthy unemployment rate of 3.4%. On Slide 5, we summarized our credit portfolio growth and structure. In the third quarter, it's continuing its strong growth across most segments with a 3.4% growth rate quarter-on-quarter and 8.9% year-over-year. The corporate segment continued to show notable strength as credit grew by 5.6% quarter-on-quarter and 17.4% year-over-year. SME credit grew 1.6% and 4.6%, respectively, while household credit grew a healthy 4.3% Q-on-Q and mortgage grew by 2.2% Q-on-Q and 7.8% year-over-year.
Operator: Mr. Dorfman, we can hear you.
Morris Dorfman: Switching to Slide 6. This slide represents our credit portfolio quality. A stable economic environment is reflected in the consistent NPL ratio of 0.70%. The allowance ratio stands at 1.3% of total credit with a strong coverage ratio of 191%. On the right-hand side, credit loss expenses climbed to 28 basis points in the third quarter. The observed increase in provision is mainly due to 2 isolated corporate incidents made at Mercantile Bank amounting to approximately ILS 50 million. Excluding the Mercantile provisions, collective provisions amounted to almost 90% of all Q3 provisions, reflecting Discount's conservative stance on our credit portfolio. However, a 9-month year-over-year comparison revealed a decline in overall provisions as prior quarters exhibited comparatively lower provision levels. Moving to Slide 7 to discuss revenues. Total revenues increased by 0.9% Q-on-Q, while fee income grew by 2.5% Q-on-Q and 10.9% year-on-year, mainly from fees and commissions from financing activities. Net interest income, NII, slightly decreased by 0.2%, while CPI contribution remained stable. Ongoing pressure on lending and deposit margins is persistently eroding the bank's net interest margin. At the right-hand side, the income from regular financing activities decreased by 1.1% Q-on-Q despite a 3.4% expansion on our loan portfolio. Finance income declined primarily driven by the narrowing of credit and deposit margins. I apologize I had a problem with the line. I will move to Slide 8 to discuss expenses and cost-income ratio. Before we delve into this quarter figures, let's briefly review the bank's journey over the past decade, marked by significant improvement in its efficiency ratio from 67% to 52% post COVID and further reduction to 45 percentage following the divestiture of CAL. While they have come a far away, we think we can still improve our cost efficiency notably in coming years as we mentioned in our strategic plan announced earlier this year. Moving to Slide 9. Total expenses decreased by 3.8% quarter-on-quarter and by 1.2% year-over-year and the cost income improved to 44%. Salary expenses dropped 6% this quarter as we continue to maintain expense discipline. As previously communicated in the last quarter's report, the recently concluded wage agreement is expected to provide enhanced operational flexibility for management. Maintenance and depreciation expenses and other expenses are stable with changes mostly attributed to nonrecurring items. Moving now to Slide 10, you can observe our ample liquidity and diversified deposit base. On the left, you can see that 48% of our deposits are from our retail segment. On the right-hand side, our Tier 1 capital ratio stands at 10.47%, well above the 9.2% Bank of Israel requirements. Our liquidity ratios are well above the regulatory requirements, presenting a solid LCR of 1.7% and NSFR of 11.6%. Moving to Slide 13. I will briefly touch on our main subsidiaries, starting with Mercantile Bank that present a net income of ILS 234 million and ROE of 15.8%. The cost-income ratio stands at 37.5%. Mercantile grew its loan book by 7.6% year-over-year by a well-balanced portfolio. CAL is writing a net loss of ILS 88 million. The loss in the third quarter is attributed to the expenses related to the VAT assessment ruling, totaling ILS 137 million net and an increase in the Santam stock option provision of ILS 75 million after tax impact. As the VAT ruling loss recognized in the consolidated report in the previous quarter, CAL profit contribution amounted to ILS 40 million in this quarter. IDB New York Bank reported a net income of $24 million and ROE of 7%. The bank grew its loan book by 12.9% year-over-year and deposit by 30.9% year-over-year. To summarize my overview on Slide 12, I would like to emphasize the main takeaways from this quarter results. First, we delivered solid results with net income of ILS 1.13 billion and ROE of 13.7%. Second, our cost-income ratio dropped to 44%. Credit continues to grow at a healthy rate of 3.4% quarter-on-quarter and 8.9% year-over-year. Core Tier 1 equity remained stable at 10.5%, which allow further expansion next year, stable asset quality metrics with NPL ratio of 0.7%. The CAL sale is likely to boost our 2026 ROE by 1.2%, while stressing the Tier 1 ratio by 0.6%. And lastly, given our continued strong performance and the confidence we have in ongoing profitability, we announced a dividend payout of 50% of net income, reflecting a gross dividend yield of 5%. With this, I finish and would like to open to Q&A.
Operator: [Operator Instructions] The first question is from Priya Rathod of Jefferies.
Priya Rathod: I just have 2 questions, please. The first is on AUM, specifically for your small businesses section. There was a notable jump in AUMs quarter-on-quarter. Would you be able to give a bit more color on what is actually driving that AUM number, but then also what's driving the increase in the third quarter? The second question is on mortgages. Again, it was a really solid quarter in terms of growth in volumes, but how should we be looking at that number in the context of the sector data, particularly like the declining of new home sales? So I guess my questions are like what drove the higher mortgage volumes this quarter? And then how should we think about volumes going forward?
Morris Dorfman: I didn't get your first question, but I will answer about the mortgages question, and then maybe if you can repeat the first one. So what's happening with mortgage as you understand, the real estate sector in Israel is at the moment, it's not moving too much. But most of the mortgages that have been sold this quarter -- the last quarter are one of the houses that were bought 2 years ago. there's this model in Israel when you pay 20% in advance and 80% just when the house is finished. So most of the people that bought houses about 2, 3 years ago, they took mortgages this year. So what you see now is the movement of money of the houses that we bought a couple of years ago. But I didn't hear your question -- the first question, I didn't understand the question.
Priya Rathod: Yes. So the first question was on assets under management, AUM, particularly in the small business segment. There was quite a notable jump in AUMs quarter-on-quarter. I just wanted to ask what was -- what actually drives the AUM number and what drove the increase quarter-on-quarter?
Morris Dorfman: Well, it's -- we don't see something special about the small businesses. It's part of our strategy, so we really focus on that. I can't say there's something unique in that. It's just our focus on this sector, if I got your questions right.
Operator: The next question is from Chris Reimer of Barclays.
Chris Reimer: Sorry if this was asked already, but how do you see dividends going forward in relation to the Bank of Israel announcement on the easing of restrictions for dividends?
Morris Dorfman: Sure. So we -- of course, we had a discussion about it in our Board, and our thoughts and our decision is to be consistent in the way we pay dividends. So we thought it's better to keep the same level of dividend and not changing it every quarter. Therefore, we've chosen to pay 50%, and we plan to do it, of course, to keep the same in the future.
Chris Reimer: Got it. And regarding expenses, aside from the divestment of CAL, do you see room for cost efficiencies in other areas?
Morris Dorfman: Yes, of course, we -- well, as you know, it's part of our strategy to improve our efficiencies. So we're doing it both in bank and there's addition in -- Mercantile also working on that. And we're also examining what can be done together, Discount with Mercantile. And of course, also in IDB New York, there's also -- there's a new management team and they're working on new strategies, which will emphasize efficiency.
Operator: [Operator Instructions] There are no further questions at this time. Thank you. This concludes the Israel Discount Bank Third Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.