Bank Hapoalim boycotts Channel 14/Channel 14
The storm of sanctions imposed by the White House at the beginning of this month on four Israeli citizens from Judea and Samaria is also putting the local banks, who are forced to react and freeze their accounts, and their investors into a spin.
The banks, which had already managed to return to a work routine free from the public spotlight after a year in which they struggled with the attempts of elected officials to impose binding measures on them regarding interest rates and taxes on their profits, continued under the unflattering spotlight again.
The effect of the American sanctions on the banks themselves is almost non-existent, but it is possible that the turmoil surrounding them led to a stronger reaction even from the weakening of the Israeli economy, from which the banks are fed, and even from the announcement of the downgrade of the credit rating by the American rating agency Moody's (see table).
The Economic Committee discussion yesterday.
The guest of honor was Yanon Levy (center), the settler whose account was frozen/Knesset Spokespersons, Knesset Spokespersons, Dani Shem and Tab
The Knesset's Economic Committee, for example, concluded its discussions on the subject yesterday (Wednesday) by demanding answers from the Bank of Israel on the subject, and the Finance Committee already began to take advantage of the negative drift towards the banks, along with the timing of the war and the expected deficit, to discuss the law to increase taxation on bank profits.
All of these were part of pushing the banking sector shares down in the last day, with a 1.6% drop in the Tel Aviv Banks Index, which has dropped about 0.65% since October 7 and about 5.14% since the beginning of the year. This is compared to an increase of 8.2% and a decrease of 0.68 % for the same periods in the Tel Aviv 35 index and an increase of 8.76% alongside a decrease of 0.03% in the Tel Aviv 125 index.
Among the only bank stocks that showed an increase were Hapoalim and Mizrahi, which rose by 5.06% and 6.48%, respectively, since October 7 , while International and Discount led the declines in the sector with 7.14% and 8.46%, respectively, for the same period.
The downgrading of the credit rating, which was supposed to deal a blow to the local banks as well, actually led the latter to increases since then, which stood at about 2.5% (including the weighting of the decline experienced during yesterday's trading day.) It should be noted that the local banking sector was praised in the report, as well as its supervision.
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The stocks are going down, but not because of the rating or the sanctions/image processing, system voila!
The declines experienced yesterday in bank stocks, however, do not necessarily come as a response to political events.
Alon Glazer, VP at Leader Capital Markets and a bank analyst, explains: "In my opinion, there is no drama surrounding today's declines.
There is volatility, with an increase yesterday and a decrease today.
"The issue of the excess tax on the banks that was brought up for discussion in the finance committee is already known and, in my opinion, is also priced in the share price. In my estimation, there is a likelihood that the excess tax law will be passed, but its effect on the banks will not be dramatic. At the most, they will earn a little less for about two years.
"The sanctions themselves also, in my opinion, Without any influence on the local banks, when the latter are not clever with the US authorities".
Glazer
"The high interest rate will make it difficult for a long list of borrowers to meet their obligations"/Leader Capital Markets
So why are the banks recording declines anyway?
"The main effects on their incomes, in my opinion, will be from provisions for credit losses which are expected to be significant. I am also less optimistic going forward, and in my opinion, against the background of the sharp growth in credit, the high interest rate (which makes it difficult to repay loans) and the effects of the war, it will be difficult for the banks to avoid an increase in provisions.
"To summarize This: the banks are after years of sharp growth in credit, and we, at Leader Capital Markets, estimate that against the background of the war and its economic effects, we will see a significant increase in their credit losses.
"The high interest rate may continue to support the financing income of the banks, but at the same time it will make it difficult for a long list of borrowers to meet their obligations.
"I also think that there will be negative news that the market does not yet anticipate, because we have not yet experienced the full effects of the war, such as the increase in the defense budget, in the deficit, and so'".
More on the same topic:
banks
Credit Rating
Sanctions
Bank Hapoalim
National Bank
Bank Mizrahi Tefahot
the international Bank
Discount Bank