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3 Significant accounting judgements, estimates and assumptions in applying the Group’s
accounting policies (continued)

Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are described below. The Group based its assumptions and estimates on parameters available when the Consolidated
financial statements were prepared. Existing circumstances and assumptions about future developments, however, may
change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected
in the assumptions when they occur.

Impairment losses on financial assets (Note 4 and Note 5)
The measurement of impairment losses under IFRS 9 across all categories of financial assets requires judgement. These
estimates are driven by a number of factors, changes in which can result in different levels of allowances.

The Group’s ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice
of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and
estimates include:
• The estimation of the amount and timing of future cash flows and collateral values when determining impairment losses
• The Group’s internal credit grading model, assigns grades for corporate facilities, and this was the basis for grouping PDs
• The Group’s criteria for assessing if there has been a significant increase in credit risk and if so, allowances for financial
assets should be measured on a LTECL basis and the qualitative assessment
• Development of ECL models, including the various formulae and the choice of inputs
• Determination of the existence of associations between macroeconomic scenarios and, economic inputs, such as
unemployment levels and collateral values, and the effect on PDs, EADs and LGDs
• The inclusion of overlay adjustments based on judgement and future expectations

Other assumptions
Net pension asset/liability (Note 10)
In conducting valuation exercises to measure the effect of all employee benefit plans throughout the Group, the Banks’
independent actuaries use judgement and assumptions in determining discount rates, salary increases, NIS ceiling increases,
pension increases and the rate of return on the assets of the Plans.

Goodwill (Note 9 (a))
The Group’s Consolidated financial statements include goodwill arising from acquisitions. In accordance with IFRS 3, goodwill
was reviewed for impairment, as at September 30, 2025 using the ‘value in use’ method. This requires the use of estimates for
determination of future cash flows expected to arise from each CGU and an appropriate perpetuity discount rate to calculate
present value.

Deferred taxes (Note 11)
In calculating the provision for deferred taxation, management uses judgement to determine the probability that future
taxable profits will be available to facilitate utilisation of temporary tax differences which may arise.

Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the
most significant effect on the amounts recognised in the Consolidated financial statements.