Isracard is streamlining – the profit will improve by NIS 60 million to NIS 260-300 million a year

Isracard’s board of directors approved the efficiency plan that will result in savings of NIS 55-65 million per year. Assuming that this will indeed be the amount, Isracard is expected to reach an annual profit of NIS 260-300 million.

As part of the efficiency plan, there will be, among other things, a reduction of about 12% of the position of jobs in the company, about 250 jobs. The cost of implementing the program is estimated at NIS 30-35 million. The company’s management updates that the reductions are part of an overall plan of focusing and developing growth engines. According to the managers of Isracard – the first fruits of the strategic plan are already visible on the ground, including double-digit growth in credit portfolios for private customers and the business sector, a decrease in various operating expenses and business focus.

On the background of the presentation of the program, Ran Oz, CEO of Isracard said: “In accordance with the group’s strategy and developments in the competitive market in which we operate, we are making the company more flexible, efficient and focused. This is so that we can lead Isracard to a significant competitive advantage and lead the market. Unfortunately, as part of this process, reducing the status of the employees is a reality.”

Isracard recently published reports for the third quarter – the company admittedly received a blow due to the change in the agreement with Bank Hapoalim (for expansion), but given the increase in credit card activity at the same time as the increase in loans, it seems that the company may close the decrease that occurred earlier than expected, especially against the background of the expected efficiency as stated today, But it was known and clear that you would leave soon. In practice, she wasn’t really a surprise. It is required.

It is interesting to see that since the report on the agreement with workers that harmed the company’s business, the stock has recovered. The agreement lowered the stock by about 20%, since then the company has recovered most of the decline and is trading about 8% below the price before the report on the agreement with Poalim:

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Isracard, which charges an average interest rate of slightly over 10%, above Max with an interest rate of 9.7% and below Kel with an interest rate of 11% (the figures are expected to rise), the income in the third quarter is about NIS 701 million compared to revenues of NIS 585 million in the corresponding quarter last year – an increase of 19.8% The income from credit card activities in the third quarter of 2022 grew by about 15% to about NIS 558 million, compared to about NIS 485 million in the corresponding quarter last year. Bisrachart explains that the growth was mainly due to an increase of about 13% in the turnover of credit cards issued by the group to a quarterly record of about NIS 55 billion, alongside an increase in revenues attributed to outbound and inbound tourism, which was reflected, among other things, in an increase in commissions from foreign exchange transactions.

Net interest income in the third quarter of 2022 grew by approximately 36% to approximately NIS 148 million, compared to approximately NIS 109 million in the corresponding quarter last year, as a result of the increase in interest rates in the economy and an increase in the balance of consumer and commercial credit portfolios over the past year to a total of approximately 1.38 billion shekels, while the balance of consumer credit recorded an increase of approximately 886 million shekels and the balance of commercial credit recorded an increase of approximately 493 million shekels.

In the third quarter, Isracard recorded a net profit of NIS 60 million, compared to a net profit of NIS 99 million in the corresponding quarter last year. The company explains that the decrease in profit in the quarter was mainly due to From the increase in payments to banks, which is mostly attributed to the new agreement with Bank Hapoalim, From the aforementioned increase in expenses for credit losses, an increase in payments to international organizations and clubs against the background of the increase in the scope of the group’s activities and an increase in salary expenses.

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