Leumi Mortgage Bank Ltd., which holds 25% of the country's mortgages, the second largest market share, today published its financial report for 2011. Leumi Mortgage Bank, under the management of CEO Shuki Burshstein, reported a profit of NIS 203 million, a 15% rise over 2010. Return on equity was 7.6%. Net financing rose 16%, reaching NIS 471 million. This is the last report that Leumi Mortgage Bank will make as an independent bank, before merging with Bank Leumi (TASE: LUMI) during 2012.
In response to the question of what will happen to apartment prices, Burshstein does not have a clear-cut answer. "There will be no dramatic fall in prices," he says, and here the uncertainty begins: "It is extremely difficult to say what will happen in the future, since on the one hand we are in the midst of a global crisis that is harming the Israeli economy, and growth has slowed, but on the other hand, there is natural population growth, and people have a real need for a place to live. How will this balance out? I cannot estimate."
Won't the supply of apartments cause prices to fall?
"Supply of housing units is rising because housing starts are increasing. We have been hearing from contractors, and seeing in second-hand deals, that there has been a minor reduction of a few percent in prices. But we must look at where we started: there was a seven-month inventory, and now there is an 11-13 month inventory. Is the rise in supply strong enough to put pressure on prices? It is hard to predict."
It has been claimed that there will be fewer housing starts due to contractors' financing difficulties, and that eventually prices will once again rise.
"I do not foresee another significant rise in prices because there is a limit to how much ordinary people can pay for an apartment."
In 2011, the bank's mortgage portfolio rose 10%, reaching NIS 56 billion. In 2011, Leumi Mortgage Bank's new loans reached NIS 12.3 billion, compared with NIS 14.6 billion in 2010, a 16% decline.
Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012