A strategic shifting of gears by Bank Hapoalim (TASE: POLI) credit card subsidiary Isracard Ltd., under CEO Dov Kotler, may be paying off. Isracard posted a net profit of NIS 56 million for the third quarter of 2009, 4% more than the NIS 54 million for the corresponding quarter of 2008.
Isracard reported growth in both credit card transactions and in the number of cards issued. However, revenue fell 1% to NIS 416 million for the third quarter from NIS 422 million for the corresponding quarter. Isracard was able to report a net profit because a new deal required smaller payments to banks, primarily Bank Hapoalim.
Isracard is Israel's largest credit card company in terms of market share. The company issues its own credit cards, as well as Poalim Express, Europay Israel, and Aminit cards.
Credit card transactions rose 3% to NIS 21.9 billion for the third quarter from NIS 21.4 billion for the corresponding quarter. The number of credit cards issued rose 4% to three million at the end of September from 2.9 million a year earlier.
Isracard attributes the decline in revenue to a drop in interest income. However, a 14% drop in payments to the banks affiliated with the company, mostly Bank Hapoalim, to NIS 114 million for the third quarter from NIS 133 million for the corresponding quarter, enabled Isracard to improve its profitability. Essentially, without lower payments to the banks, net profit would have fallen.
Expenses before payments to the banks and fees to the card issuing companies rose 3% to NIS 189 million for the third quarter from NIS 184 million for the corresponding quarter.
"During the third quarter, particular attention was placed on non-bank credit as the company's important growth engine," said Isracard chairwoman Irit Izakson, commenting on a policy that "Globes" reported on in August. "As part of this policy, we completed our "Haver" (membership) project, issuing more than 100,000 credit cards, which are characterized by heavy transaction turnover. We successfully launched a program of granting loans independently of credit cards. At the end of the quarter, we also launched the "Lifestyle Plus" card, with great success. We intend to continue and develop the non-bank credit market during 2010."
Published by Globes [online], Israel business news - www.globes-online.com - on November 22, 2009
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