Israel's Banking System - First Half of 2012

All Press Releases In Subject:
The Banking System

Summary of Developments


During the first half of 2012, the banking system continued to maintain its resilience and stability, against the background of uncertainty in the global and domestic economies, regional geopolitical developments, and the low interest rate environment. Negative developments in the capital markets and the slowdown in domestic activity also influenced corporate risk, which remains high, although it is lower than it was during the height of the crisis (2008–09).


Balance-sheet credit increased by 3 percent, similar to the GDP growth rate. Retail credit continued to expand, particularly housing credit, the growth rate of which accelerated beginning in the second quarter as a result of the resurgence in the housing market. Credit to the business sector did not grow, particularly in light of the reduction in credit to the financial services industry. During the reviewed period, there was a decline in borrower concentration in the credit portfolio, but it remains high.
The core tier 1 capital ratio of the five banking groups increased from 7.9 percent to 8.3 percent as a result of the new capital targets, and as of June 2012, the core capital ratio in all of the banking groups was not less than 8.0 percent. The increase in the ratio is the result not only of the accumulation of profits and the non-distribution of dividends, but also the halt in growth of business sector credit.


The profitability of the banking groups in the first half of 2012 was similar to the long-term average, and was characterized by relatively high variance between the groups.



Israel's Banking System - First Half of 2012 - Figures