The banks’ aggregate profit from credit cards was 25.3% higher in 2005 than in 2004, amounting to NIS 404 million. The banks’ aggregate revenue from credit cards was 9.35% higher in 2005 than in 2004, amounting to NIS 2.44 billion, and the banks’ revenue from credit cards accounted for 7% of total revenue in 2005.
All of Israel’s large banks, except for Mizrahi Tefahot Bank (TASE:MZTF), have holdings in credit card companies. Bank Hapoalim (LSE: BKHD; TASE: POLI) owns Isracard Ltd.; Bank Leumi (TASE: LUMI) owns Leumi Card; Israel Discount Bank (TASE: DSCT) owns 51% and First International Bank of Israel (TASE: FTIN1;FTIN5) owns 20% of Israel Credit Cards-Cal (ICC-Cal). Mizrahi Bank is in the final stages of a tender to issue a branded credit card to be called “Mizrahi Card”, and may become a partner in a credit card company of its choice.
Bank Hapoalim has the highest revenue and profit from credit cards, because there is no competition for clearing Isracard transactions. Bank Hapoalim has 43% of the banks’ aggregate revenue from credit cards and 51% of their aggregate profits. Bank Hapoalim made NIS 1.05 billion revenue from credit cards in 2005, compared with NIS 943 million in 2004, and posted a profit of NIS 207 million in 2005, up 19% on 2004. Isracard contributed NIS 120 million to this profit.
Bank Hapoalim’s financial report states that a fifth of revenue comes from customers of banks that are not part of the Hapoalim group, and from foreign tourists.
Bank Leumi, which has been weak in the credit card market since losing Visa ICC-CAL to Discount Bank a few years ago, managed to close the gap in 2005. Bank Leumi’s revenue from credit cards rose 11% in 2005, over 2004, to NIS 628 million, and its profit rose from NIS 70 million in 2004 to NIS 102 million in 2005.
Discount Bank’s revenue from credit cards grew 4.5% in 2005, over 2004, to NIS 648 million, and its profit rose 26% to NIS 63 million. Credit cards contributed 13.7% of Discount Bank’s profit, the highest proportion in the banking system. Visa ICC-CAL is expected to lose some First International Bank customers over the coming years, because a condition for First International Bank’s acquisition of Bank Otsar Hahayal Ltd. from Bank Hapoalim, First International must stop giving preference to Visa ICC-CAL over Isracard.
Mizrahi Bank and First International Bank earn little from credit cards. Mizrahi Bank’s profit rose from NIS 17 million in 2004 to NIS 19 million in 2005, while First International Bank’s profit rose from NIS 11 million in 2004 to NIS 13 million in 2005.
Published by Globes [online], Israel business news - www.globes.co.il - on April 20, 2006
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