Banks' consumer lending still booming

Irit Avissar

Israeli banks' household loan portfolios have swelled, provoking a warning from the Supervisor of Banks.

The steep rise in the banks' consumer credit portfolios continued in the first quarter of 2017. The banks' first quarter results show that the volume of consumer loans granted by the five largest banks grew by NIS 2.5 billion to NIS 140.4 billion in three months, and by nearly NIS 8 billion over the past year, a 6% rise.

Supervisor of Banks Dr. Hedva Ber warned at a press conference yesterday against the sharp increase in consumer loans, and called on the banks to "balance the pendulum," and spread the growth in their loan portfolio between businesses and householder "so that we don't leverage them too much." It will be interesting to see in the coming quarters whether the banks get the message and slow down this growth, since Ber warned that if the rapid growth rate in consumer credit continues, "We'll intervene. We have many tools, and we won't hesitate to use them."

As of the end of the first quarter, the "pendulum" is still on the side of household loans. While the banks' total credit portfolio grew by 0.6% in the first quarter, loans to households were up 1.8%.

Mizrahi-Tefahot takes its foot off the gas

Another interesting feature is the lack of uniformity between the banks. The biggest growth last year was at Mizrahi Tefahot Bank (TASE:MZTF) and Israel Discount Bank (TASE: DSCT), which each had 11% growth rates. At the same time, it appears that Mizrahi-Tefahot Bank has taken its foot off the gas; its consumer credit portfolio grew by less than NIS 200 million, amounting to 1% growth, in the first quarter. Managed by Eldad Fresher, Mizrahi-Tefahot announced a strategic plan several months ago for restraining its retail credit and focusing on the business sector.

On the other hand, under the management of CEO Lilach Asher-Topilsky, Discount Bank is continuing its aggressive policy in this sector, with its consumer loan portfolio growing 3% to NIS 26.5 billion in the first quarter. Bank Leumi (TASE: LUMI) is renewing its activity in this sector, with its portfolio growing by NIS 1 billion, a 2.6% increase. Under the management of president and CEO Rakefet Russak-Aminoach, Bank Leumi's consumer loan portfolio was almost unchanged last year, following problems with its equity that the bank had to solve. Having now reached its equity targets, Bank Leumi has resumed its growth in this aspect, too.

For its part, under the management of CEO Arik Pinto, Bank Hapoalim (TASE: POLI) is not taking part in the consumer loan frenzy. Bank Hapoalim was the only one with no growth in household loans in the first quarter and moderate growth of only 2.3% over the past 12 months. Sources associated with the bank said that it was being selective in general with its loans, especially in this sector. Pinto told "Globes" two months ago that the increase in provisions for credit losses in this sector should be a warning sign.

Published by Globes [online], Israel Business News - www.globes-online.com - on May 25, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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