Figures published today by the Bank of Israel show that the balance of debt owed by households rose NIS 7.5 billion to NIS 511 billion, a 1.3% increase, in the first quarter. NIS 6 billion of the increase in debt is owed to the banks, and NIS 1.6 billion to financial institutions.
Supervisor of Banks Hedva Ber recently warned against the rapid increase in consumer credit, saying "we have reached the point where we have to be careful." Ber warned that the Bank of Israel Banking Supervision Department would not stand idly by if this persisted, and declared, "If we think that the problem is continuing and growing, we'll intervene. We have many tools, and we won't hesitate to use them."
Analysis of the figures published today shows that ordinary consumer credit for non-housing purposes rose even faster, from NIS 137 billion at the end of 2016 to NIS 137 billion at the end of the first quarter, a NIS 3 billion rise (2.5%). Housing credit (including loans not for the purpose of buying housing, but for which housing is collateral) also continued to rise, with debt in this category being up NIS 3 billion to NIS 325 billion.
The most prominent trend in business sector credit in the first quarter was in corporate bonds issues on the Tel Aviv Stock Exchange. According to the Bank of Israel, the private sector issued NIS 17 billion in bonds in the first quarter, double the NIS 8.5 billion issued in the fourth quarter of 2016. Real estate and construction companies stood out in this category, accounting for 46% of the total amount raised. Bond issues in April totaled NIS 3.4 billion.
Despite the growth of corporate debt, the spread between the return on the (linked )Tel Bond 60 Index and the return on linked government bonds narrowed by 0.35% between November 2016 and March 2017. It widened by 0.04% in April, reaching 1.12%.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 15, 2017
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