Rebranding still weighs on credit card co Max

Max commercial / Photo: PR

Regulatory changes and the name change from Leumi Card to Max are still having a negative impact on the credit card company's results.

Credit card company Max (formerly Leumi Card), managed by Ron Fainaro, reported a NIS 27 million profit for the third quarter of 2019, half of the profit it posted in the third quarter of 2018. Profit in the first three quarters of the year, excluding a one-time NIS 50 million item in the first quarter for a bonus paid to company employees when the company was sold, totaled NIS 102 million, 35% less than the NIS 158 million profit in the corresponding period last year. If the one-time expense is not excluded, Max's profit is NIS 64 million. Warburg Pincus holds 75% of Max's shares, Clal Insurance and Menora Mivtachim Insurance 10% each, and the Allied group 5%.

"The period of the report clearly reflects the cost of establishing ourselves as an independent financial entity and the founding of Max. Despite these costs, in addition to building a new brand and independent growth infrastructure, we have achieved growth by changing our credit portfolio's composition, with substantial growth in credit for small businesses and the successful launch of three new clubs," Fainaro said. "At the same time, we are still working on the development of innovative and groundbreaking products that will challenge the market and provide us with a growth engine."

Max's reports show a small, 0.5% increase in revenue, which reached NIS 1 billion in the first nine months of the year. The company's revenue was down 1.1% in the third quarter, being affected by a regulatory measure reducing the issuance commission to which the credit card companies are entitled that went into effect this year. At the same, Max's expenses jumped, which the company attributed mostly to "a rise in payments to banks after the new issuance agreement with the banks took effect and an increase in the company's credit losses resulting mainly from a change in the make-up of its credit portfolio."

Looking ahead, Max says that it is "focusing on continued development and enhancing its consumer and business credit capabilities, in addition to development of additional lines of business and growth engines, taking into account the regulatory changes and lower profit margins in some of the company's spheres of activity" and "the marketing and selling of insurance products."

Published by Globes, Israel business news - en.globes.co.il - on November 17, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Max commercial / Photo: PR
Max commercial / Photo: PR
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