While many Israeli families and small businesses buckle under war-time economic strain, the nation’s largest banks are reporting record profits. In the second quarter of 2025, Bank Hapoalim alone reported NIS 2.5 billion ($740 million) in profits—up 14% from last year—while Hapoalim and Bank Leumi together raked in a record NIS 10 billion ($2.93 billion) in the first half of the year.
Critics say these gains come at the expense of ordinary Israelis, who face high borrowing costs and minimal returns on deposits. Michel Strawczynski, former Bank of Israel research director, called the disparity “unjustified,” urging a 30% tax on excess bank profits, similar to measures in Spain and Germany.
Officials are pushing for more competition in the banking sector to lower fees and interest rates, but progress has been slow. Digital banks like One Zero and Esh Bank Israel are offering higher deposit rates, though breaking the dominance of Israel’s “big five” remains difficult.
Meanwhile, small businesses continue to collapse, and households rely heavily on loans just to make ends meet. Finance Minister Bezalel Smotrich promised reforms, but experts warn change will be slow. As Strawczynski noted, “Small firms provide more jobs, but banks are reaping the profits.”
