The effects of the restrictions imposed to curb the coronavirus pandemic in Israel and the decline in economic activity left their mark on the results of credit card company Isracard. The company's second quarter net profit was down by 50%.
Isracard, headed by CEO Ron Wexler, posted a 14% decline in revenue for the second quarter, in comparison with the second quarter of 2019, to NIS 477 million. For the first half year, which includes January and February when the pandemic had not yet hit Israel, Isracard had revenue of NIS 999 million, 9.7% less than in the corresponding period of 2019.
The downturn was especially in the tourism, aviation, culture and hospitality sectors. With the removal of the lockdown, there has been a degree of recovery on some of them.
Transaction turnover on credit cards issued by the company fell by 14.5% in the second quarter in comparison with the second quarter of 2019 to NIS 35.5 billion. In the first half, turnover dropped by 6.8% to NIS 75 billion. The company raised its credit losses expense to NIS 66 million in the second quarter to NIS 66 million, which compares with NIS 39 million in the corresponding quarter of 2019.
Alongside the decline in activity, Isracard also reports a decline in operating expenses. Total expenses excluding credit losses were NIS 323 million in the second quarter of 2020, down from NIS 406 million (excluding severance payments) in the corresponding quarter.
Net profit was NIS 64 million in the second quarter of 2020, down 17.9% in comparison with the second quarter of 2019. For the first half year, Isracard posted a profit of NIS 74 million, which compares with a profit of NIS 152 million in the first half of 2019.
"In the past few months we have been acting to assist small businesses - during the quarter we launched a quick and easy digital solution for small businesses enabling them to sell online within minutes, without the need to set up a website," said Wexler.
"In the second quarter and in the first half year we saw a substantial decline in transaction turnover on credit cards. Since the lockdown was lifted, however, we have seen recovery in the scope of activity, although it is still lower than last year," he added.
Published by Globes, Israel business news - en.globes.co.il - on August 12, 2020
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