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This survey details main developments in Israel’s banking system in the first half of 2024. The economic effects of the war slackened during this time but uncertainty about economic developments remained, for reasons including the ongoing warfare, its spread onto additional fronts, and the budget deficit. At the beginning of January 2024, the Monetary Committee announced a rate cut of 0.25 percent; from then on, it left the rate unchanged at 4.5 percent. After the GDP growth rate recovered in the first quarter of the year, growth slowed considerably in the second quarter. The inflation rate leveled off during the first half and the NIS depreciated against the USD and the EUR.
The banking system maintained its strength in the first half of 2024. Capital and liquidity ratios remained high for reasons including strong system profitability relative to previous years, occasioned largely by growth of the credit portfolio, a decrease in credit-loss provisions, and an upturn in the inflation environment. The growth rate of the credit portfolio resembled that observed in 2023, reflecting a slower pace than in previous years. Portfolio quality remained strong.