Credit card company Max ends 2019 with a net profit of NIS 110 million

Credit card company Max ends 2019, a simple year in which it set off independently and disconnected from Leumi Bank, with a net profit (excluding one-off effects) of NIS 110 million - a decrease of 38% compared to 2018. In addition, revenues increased by 0.3% to NIS 1.3 billion, despite the decrease in cross-commissions in early 2019 and the increase in the company's funding sources, with Max's interest income jumping 22.5% to NIS 409 million, but at the same time, a sharp 248% increase in financing expenses from NIS 27 million In 2018 to NIS 94 million in 2019 due to the separation from Bank Leumi.
The 22.5% jump in gross financing income to NIS 409 million is exceptional and results from an improvement in the average interest rate due to a change in the credit mix for private individuals (providing more credit for any purpose at the expense of more solid credit for car purchases) and an increase in business credit. The consumer credit portfolio totaled NIS 5.6 billion at the end of 2019, an increase of 2.2% compared to the end of 2018, but the mix changed, as mentioned, with a reduction in the least profitable credit for vehicles for more profitable credit for every purpose.
Max's average interest rate actually fell in the last month of 2019 compared to the last month of 2018, and stood at 7.9% compared to 8.8% in the last month of 2018. This is partly due to Max's entry into stronger competition for the strong customers, when Calcalist revealed a move a few months ago Of Max where she pledged to offer cheaper credit than would receive strong customers with higher credit ratings than the banks.
The average interest rate for the entire 2019 was 7.8% compared to 7.4% in 2018. Business credit grew 70% to NIS 392 million and the average interest rate was 6.4% in December 2019 compared to 6.1% in December 2018. Credit loss expenses increased 22% to NIS 139 million due to the change in risk mix. The Board of Directors has approved a distribution of a dividend of NIS 250 million after the equity ratio target of 10% was approved.
Max's active banking cards grew only 0.5% to 1.43 million, while active non-bank cards saw a much sharper 13.5% increase to NIS 749 million. Eliminating the impact of canceling Max and Shufersal's customer club that passed two years ago so Max gradually lost card holders - the increase in the number of non-bank cards would have stood at 31% mainly thanks to Fox Club and the new SkyMax Club.
Ron Fainro, CEO of Max, said: "Beyond the decline in the cross-market impact that has affected the market as a whole, Max has faced unique influences last year that were unmatched by any other player in the industry, with significant increases in financing costs and massive investment in building a brand new brand. These changes amounting to more than NIS 85 million, together with the effects of entering into a new and long-term IPO operation with Leumi, resulted in a lower net profit in this transition year than the company achieved in recent years - a decline we anticipated in our multi-year plan. "