Bank Leumi: S&P affirms stable outlook, but court approves class action over checking account interest

While credit rating agency S&P Global maintains Bank Leumi's rating outlook at "stable" and notes its resilience, the District Court approved certifying a class action lawsuit against it that could cost millions.

Bank Leumi is facing a complex picture: On one hand, a comprehensive analysis report by S&P Global published on September 22 affirms its BBB+ credit rating with a stable outlook, noting the bank's resilience and profitability. On the other hand, on that exact same day, the District Court approved certifying a class action lawsuit against the bank (and other banks) alleging failure to pay interest on positive checking account balances.

Bank Leumi received a divided picture regarding its status this week. On September 22, international credit rating agency S&P Global published a comprehensive analysis report affirming the bank's BBB+ credit rating with a "stable" rating outlook. The report praises Leumi's position as a market leader in Israel, its large and stable deposit base, and its strong profitability. However, on that exact same day, the bank reported a significant legal development: The Central District Court approved a motion to certify a class action lawsuit against it and other banks, opening a new front of uncertainty.

Financial resilience vs. geopolitical and sectoral risks

S&P's analysis report dives deep into Leumi's numbers and points to several strengths. According to the analysts, "the strong brand and large, diversified deposit base represent positive credit factors." S&P expects the bank's capital metrics to remain adequate, with a risk-adjusted capital (RAC) ratio in the range of 7.6%-8.0% through year-end 2028. The rating agency further expects return on equity (ROE) to reach 12.9%-14.3% in 2026.

Alongside the strengths, S&P does not ignore the risks. Geopolitical and security risk in Israel is cited as a key risk factor, with analysts noting that "security risk remains elevated following the escalation in the Iranian conflict in early 2026." In addition, the report highlights the bank's high exposure to the real estate and construction sector, described as "larger than peers" and representing a "key risk." S&P estimates non-performing loans (NPLs) will remain relatively low at around 0.8% through 2028, compared to 0.7% at year-end 2025, but notes that the real estate credit portfolio is "unseasoned" and that new projects may rely on overly optimistic price assumptions.

Class action over checking account interest

Concurrently with S&P's cautiously optimistic report, the bank was notified of the approval to certify a class action lawsuit against it. The motion, originally filed on June 4, 2023, claims that banks should have paid customers daily interest on positive checking account balances, or alternatively actively informed them of the option to deposit funds into a daily interest-bearing deposit. The court certified the lawsuit as a class action for the period between April 2022 and May 2025.

The financial implications of the lawsuit, if accepted, are unknown at this stage and are expected to be material for the entire banking system. Certification of the lawsuit adds a layer of regulatory and legal risk to the bank's operations at a time when it is already managing a challenging economic and security environment. Investors will now monitor the development of both narratives in parallel: operational and financial resilience on one hand, and exposure to legal and sectoral risks on the other.