Subscribe to Print Edition | Sat., November 22, 2008 Cheshvan 24, 5769 | | Israel Time: 20:19 (EST+7)
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Banks collected over NIS 3 billion in Q1 service fees
By Tal Levy and Sharon Shpurer
Tags: בריטניה, טרור, פקיסטאן 

The first quarter of 2008 was a disappointing one for Israel's banks: Income shrank in many segments and Bank Hapoalim admitted to huge losses on derivatives. But two areas showed handsome growth: income from service fees and wage costs.

The banks' sorry showing screamed in red from their reports last week: First International Bank of Israel did best with a "mere" 27% slide in profit compared with the same period of 2007, and the worst hit was Bank Hapoalim, which lost more than NIS 1.5 billion, in large part due to misguided investments in derivatives.

The five big banks' first-quarter income from financing tumbled by 63% against the parallel quarter to a combined NIS 2 billion, brought low in large part by Bank Hapoalim actually reporting a loss in this item. But the five big banks' first-quarter income from service fees grew by 6% against the parallel quarter to NIS 3.1 billion. That does not necessarily mean that the banks raised their fees: It could also be due to an increase in the number of banking transactions their customers carried out.
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The banking watchdog at the Bank of Israel, Roni Hizkiyahu, intends to reduce the number of fees the banks can charge, to help the public compare banks. The new list of fees will come into force in July.

Bank Hapoalim came a cropper in the quarter but still, four of the five big banks were profitable. The combined profit of Leumi, Mizrahi-Tefahot, Discount Bank and FIBI came to NIS 774 million, and if Bank Hapoalim hadn't decided to dump its portfolio of mortgage-based assets at a massive loss, it would have netted NIS 809 million by itself.

Another reason for the banks' poor showing is wage costs, which increased by an average of 15.8% to total NIS 4.1 billion in the quarter. Yet again Bank Hapoalim can claim the blame in large part, because of costs on a voluntary retirement program.
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