Credit card companies have more cards than residents in the country, and profits are jumping accordingly

During the second quarter of this year, concurrently with the end of Operation "Lion's Roar", the Israeli public stormed the malls, flights, and vacations. The result is evident in the financial reports published in recent days by the three largest credit card companies, which show a nice aggregate increase of 5% compared to the same quarter last year in revenues from credit card and loan operations. Added to this is an improvement in their profits, also against the backdrop of significant one-time write-offs they made last year.

It also emerges from the reports of the companies Isracard, Max, and Cal that the number of their active cards grew by 6% cumulatively to a total of 12.5 million — more than the number of residents in Israel.

1. The public is "swiping" more

From the companies' reports, it appears that the public is "swiping" much more with credit cards, and the transaction volume of the three totaled 162 billion shekels in the quarter, an increase of 10% from the same quarter last year.

In the credit companies, they explain that this is a combination of three factors: inflation, meaning the rise in the price of products and services, which leads to transactions in higher amounts, alongside growth in economic activity and increased use of credit cards over cash — a trend that has been intensifying in recent years.

In terms of the number of cards, Isracard, under the management of Itamar Forman, leads with 4.8 million active cards, followed by Cal, managed by Yafit Griani (4.2 million cards), and Max, headed by Sagit Dotan (3.5 million).

In the year that ended in June, the companies issued a million new credit cards, of which about 800 thousand are active. Part of the growth is influenced by the struggle between the three aviation clubs, which grant benefits to purchasers of their credit cards: Fly Card (Isracard), Flyoll (Cal), and Max Travel (Max).

While most credit cards are still issued by banks, the rate of issuing non-bank credit cards such as aviation clubs is growing, against the backdrop of increasing competition for market share.

At Max, the rate is the highest — 52% of the cards they issued are non-bank, at Cal it is 46%, and at Isracard 33% of the cards (an increase from 30% of them a year ago).

3 numbers on the credit card companies' reports (Isracard, Cal, and Max):

• About 12.5 million: active cards in the 3 companies, growth of 6%.

• 264 million shekels: aggregate profit, compared to a loss of 137 million shekels in the same period.

• 162 billion shekels: transaction volume in the 3 companies, growth of 10%.

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2. Who earned the most

Three credit companies recorded an aggregate net profit of 264 million shekels in the quarter, after they presented an aggregate loss in the same period due to an accounting provision. The most profitable was Cal (104 million shekels, of which 18 million shekels was a one-time compensation from El Al), followed by Isracard and Max (80 million shekels each). In the summary of the half-year, Cal earned 182 million shekels, Max 160 million shekels, and Isracard 125 million shekels.

In the same quarter last year, the three presented an aggregate loss of 137 million shekels, mainly due to large provisions for the VAT assessment ruling (concerning the expenses of Israelis on credit cards abroad). Against the losses of Isracard and Max (about 210 million shekels), Cal presented a profit of 73 million shekels.

3. The dream of banking has moved away

As mentioned, the aggregate revenues of the credit companies grew at a nice rate in the past quarter. Revenues from the traditional credit card activity field stood at 1.6 billion shekels, while revenues from interest (net) totaled 735 million shekels.

Isracard recorded the highest revenues in the second quarter (954 million shekels, an increase of 11%), followed by Cal (843 million shekels, growth of 7%) and Max (621 million shekels, an addition of 3%).

Total private and commercial credit provided by the companies grew to 38 billion shekels in the half-year summary, but still constitutes only about 2% of the credit to the public (net) of the banks, totaling 2 trillion shekels.

In this context, it can be noted that the dream of entering the banking field among credit companies has moved away for the time being. This is after Isracard, controlled by the Delek Group of Yitzhak Tshuva, recently gave up on acquiring the digital bank Ash.

At Cal, controlled by Discount Bank, they are waiting for the approval of the Competition Authority in the coming weeks for its sale to the Union Group of the Horesh family and Harel. Even after the deal is executed, it is unclear when and if the new owners will want to introduce it into the banking field.