Credit card company Diners Israel, a joint venture of Cal (Israel Credit Cards Ltd.) and David Wiessman, is not gaining momentum. As a privately held company, Diners Israel does not publish its financial statements, but from reports that have reached "Globes" it emerges that the company's business declined in 2009. The numbers show that Diners is underperforming in relation to the credit card industry as a whole in Israel.
In contrast to the growth trend in the industry, both the number of cards held and the turnover on the cards issued have fallen at Diners. Diners' rate of provision for doubtful debts has is the highest in the industry, and four ties the average. It capital adequacy ratio under the Basel 2 rules is very low.
Diners is owned by Cal (51%) and by companies jointly owned by Wiessman and Shraga Biran (49%) Blue Square and Dor Alon. Wiessman and Biran went into partnership with Cal in 2005, and bought their stake for NIS 21.3 million.
The financials statements show that the number of active Diners cards fell 10.1% in 2009, to 213 thousand, from 237 thousand in 2008 in other words, the company lost 24,000 cards. The number of cards issued through banks fell 5% to 85 thousand. The number of cards issued other than through banks fell 13% to 130 thousand. On average, the number of cards issued by credit card companies in Israel not through banks grew 20% last year.
Cal explains the fall in the number of Diners cards issued by the marketing effort focused on issuing Mastercard cards to members of the You customer club. A spokesperson for Cal said, "Most of the non-bank Diners cards are issued through You. In contrast to previous years, when all cards issued through You were Diners cards, it was decided last year to promote Mastercard through You as well." However, Cal's response does not explain the sharp fall in the existing number of Diners cards issued.
While credit card use in Israel continued to grow in 2009, rising 4.75% in comparison with 2008, Diners posted a sharp fall. The transaction turnover by Diners customers fell 8% to NIS 5.2 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 11, 2010
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