On video: Nir Kipnis in an opinion column on the cancellation of the establishment of the front emergency room on Sderot in Warah/Still photo: Reuven Castro, Reuters and Flash 90
Banks show another year of record profits, but it's not necessarily bad
This is the season of bank reports and this morning Bank Hapoalim's report for the last quarter of 2023 and for the entire year was published.
How much money did the bank make last year?
7.4 billion shekels, I wish for all of us.
The assumption is that the other major banks: Leumi, Mizrahi-Tefahot, International and Discount will also publish reports showing profits of many billions, just like in 2022.
Why?
Because in the Israeli economy it's like in a casino: the house always wins, the bank always wins, whether it's in times of slowdown and recession or times of abundance and prosperity.
It is very easy to rub our eyes in amazement at these fantastic numbers and lament that "everyone is a thief", as we, who only know such amounts from media reports, like to do.
Perhaps that is why bank profits have become the ultimate red sheet:
as soon as the results are published, the countdown can begin, until some MK who wants to show that he is fighting for the public will submit an urgent proposal for discussion in the finance or economy committee and ask to tax the banks, encourage competition, privatize more the financial services, etc. And
yet, despite popular opinion in the public, a profitable banking system like Israel's is not painted in black and white - and the public certainly has quite a few reasons to want the banks to make a profit.
A porthole in the bank.
A service that has disappeared from our lives and for a large age group in the population is irreplaceable/ShutterStock
We are also shareholders
Let's start with the fact that we also profited.
Really, each and every one of our esteemed readers pocketed money as a result of the record profits of the banks.
How?
Most of the bank shares in Israel are in the hands of the public.
That is, whether you like it or not, we invest in them through savings products such as provident funds and training funds, and of course through pension funds.
That is, a tiny fraction of profit enriched us as well.
Maybe not a lot, maybe not enough, but the public also has a share in the dividend.
A second point is that even before the proposals to impose exceptional taxation on them, the profits of the banks, like the profits of all of us, are taxed.
That is, the State of Israel shares in the profits through its taxation mechanisms.
Although what she does with the money, at least according to quite a few sections of the state budget in question, is horrible and terrible, but that is already a subject for another debate.
The important thing is that part of the bank's great profit, in the end, returns to the public even before all the social activity in which it boasts.
And what's more: there are still quite a few entities in Israel that make huge profits, some of them at the expense of the public, but when you check them, you find very little profit.
Take for example the food importers, those who raise our prices (sometimes for no good reason other than greed).
When pressed, they exhibit a relatively low gain voltage of a few percent per cycle.
This is true, but only until you check the salary expenses and find out that in a large part of them, the profits may be low, but the road to them is lined with celebrations.
This cannot happen in banks.
Why?
There is a salary limit.
Although it itself has become a subject of debate, on the grounds that it keeps senior and talented people away from the system who can earn a higher salary elsewhere.
This is true - and yet, there has not yet been a senior manager born who would refuse to have a period as CEO of a bank on his resume (even as a stepping stone to a more rewarding position) and in any case, the huge profits presented by the banks in Israel for the second year in a row, are evidence that the "starvation wages" of About 2.5 million shekels a year, brings to senior positions people who are able to lead the financial system from strength to strength.
When was the last time you checked who gives you more, in order to make an informed financial decision?/ShutterStock
Instead of crying, start comparing
Don't get me wrong: there are very solid claims that can and should be made to the banking system.
For example, the fact that the interest rate on public deposits, which in my opinion is still lower than it should have been, was improved only after an explicit threat from the supervision of the banks, backed by the governor of the Bank of Israel, according to which he will not continue to block the various legislative initiatives designed to restrict the banks' steps and harm their profits.
Also on the subject of service, the banks (in general) deserve a sharp criticism.
The fact that they made an entire age group of customers, some of them incapable of adapting to digital service platforms, at a loss - is by their hands alone.
It's a shame that the supervision of the banks did not sharpen its teeth, which it rarely reveals in the face of the crazy closing of bank branches - ostensibly in the name of "advance", in fact to profit from real estate as well, not only commissions.
But even after deducting these two profit centers (the difference the amount of which is not justified between the right interest and the mandatory interest and the realization of real estate assets through closing branches) of the banks' profits, these remain very high.
Why?
Mainly thanks to us or because of us, depending on which way you look.
Financial conservatism is inherent in us.
It may be that the trend is changing, but in the meantime even the middle generation of 40-60 year olds, the one who manages most of the money in the economy, did not face the competition in the financial sector, which the regulator worked on.
Even in a reality where you can get banking services from new entities, or quasi-banking services from a large number of entities: virtual banks, credit companies and fintech companies, most of us still belong to the branch where our parents took us to open our first bank account at the age of 16. Sometimes we rebel, sober up and bargain , but usually only those who get into trouble with their bank initiate a switch to another bank.
All the rest, as long as we don't discover some injustice in the form of a sky-high fee, we will be born and die (financially) in the same bank, often even in the same branch.
Want an example?
Please: How many of you have any shekel deposits?
Now, how many of you have recently entered the comparative table published by the Bank of Israel to check whether you can benefit from a better interest rate at the bank or at another financial service provider?
Come on, let's continue: who of you can tell me how much a simple banking operation costs him (line fee)?
How many fees did he pay on his checking account in the last month? How much does his fixed credit limit cost - and how much will he be charged if he exceeds it?
The reason I ask all these unpleasant questions is because, by law, we receive the full information about them - every The data above appears on the pages that the banks send us every month.
When I ask friends why they don't follow, check and compare, I usually get the answer (and for the avoidance of doubt, I'm no better than the others. That is - the one who rejects Momo rejects) "Leave it, it's better not to know" Well, if this is the approach, which is somewhat reminiscent of the one taken by those who have stopped watching the news "because of the situation", why do we remember to pay attention only to headlines that testify to record profits for the banks?
By the way, the disclosure law on commissions and interest that came into effect this year requires the banks to update us once per month for the fees collected in the last month, and starting in June they will have to update by message also about the interest rates, which may help us stop the suppression.
Silicon Valley Bank that collapsed.
Proof that sometimes a greedy but conservative banker is better than an adventurous banker/ShutterStock
The forecast for the coming years
It is dangerous to be a prophet in this place, and yet I will take the risk: even in the coming years, which will be marked by licking the wounds of the Israeli economy as a result of the October War, the banks will continue to profit, we will continue to be shocked by the fantastic profit line, but sleep in guarding our financial assets on the way to wise consumerism.
The ones who will wake up will be some populist MKs, who will speak highly of "removing regulatory barriers", sometimes out of spite and sometimes out of closeness to some entity in the gray market who wants to become a provider of legitimate financial services.
Say, does it matter, as long as someone gives me better interest rates? Apparently you are right, in fact the state that gives licenses to all those entities will have to take responsibility for them in the event of a fall. What will the cost of the rescue be? We don't know.
In other words: beyond the fact that I am a bad financial consumer (I am the first to admit this), I know the elected officials of the Israeli public And some of the people who send them to the Knesset, I prefer a conservative banker, even if he is a little greedy, over someone who turned a successful chain of exchanges into a fintech company (and just to be clear, most fintech companies are not only strictly kosher, but also innovate wonderful) that one day her clients will stand in front of the locked doors of her offices...
Therefore, when the bank reports are published, while many see the sting, it is worth remembering and reminding that their enormous profits also have honey.
More on the same topic:
profits
Bank Hapoalim
Discount Bank
Mizrahi Bank
the international Bank
The supervision of banks
Bank of Israel