Large Israeli banks' efficiency deteriorates further in Q4'21

Large Israeli banks saw their cost-to-income ratios deteriorate in the fourth quarter of 2021, compared to the previous three-month period, S&P Global Market Intelligence data shows.

Most large Middle East-based banks saw their efficiency deteriorate, with Israel-based Israel Discount Bank Ltd., F.I.B.I. Holdings Ltd. and Mizrahi Tefahot Bank Ltd. topping a ranking of cost-to-income ratios.

Israel Discount Bank's ratio rose 8.62 percentage points on a quarterly basis to 70.48%. Its expenses increased to 1.94 billion shekels from 1.66 billion shekels, while total income grew to 2.72 billion shekels from 2.67 billion shekels. Net income attributable to shareholders fell to 529 million shekels from 722 million shekels.

F.I.B.I. Holdings' and Mizrahi Tefahot Bank Ltd.'s ratios rose by 2.03 percentage points to 59.46% and by 7.65 percentage points to 58.86%, respectively.

Rounding out the top five were Jordan-based Arab Bank Group with 54.91% and Israel's Bank Hapoalim BM with 52.09%.

YOY change

On an annual basis, 13 of the sampled banks improved their efficiency, with Emirates NBD Bank PJSC posting the steepest decline in the ratio of 6.62 percentage points to 34.84%.

United Arab Emirates peers Abu Dhabi Commercial Bank PJSC and First Abu Dhabi Bank PJSC improved their ratios year over year to 34.43% and 25.49%, respectively. The other UAE-based bank in the list, Dubai Islamic Bank PJSC, had a ratio of 28.85%, up 5.43 percentage points on a yearly basis.

Saudi lenders The Saudi National Bank and Arab National Bank posted the sharpest increases of 10.47 percentage points to 38.93% and 9.62 percentage points to 42.49%, respectively.

Qatar Islamic Bank QPSC had the lowest ratio of 19.94%, and Qatar National Bank QPSC had the second-lowest ratio of 21.94%.

By geography, Israel had the highest average cost-to-income ratio of 53.19% for full year 2021, although it was down from 56.51% a year prior.

Jordan placed second after seeing its average ratio rise to 50.02% from 49.40%, followed by Kuwait, whose ratio increased to 44.75% from 43.60%.

Qatar was the most efficient with a ratio of 23.32%, down from 24.67% a year prior.

As of May 2, US$1 was equivalent to 3.37 Israeli shekels.