Various Rating Actions Taken On Israeli Banks On Sovereign Downgrade; All Outlooks Negative

On Oct. 1, 2024, we lowered our sovereign ratings on Israel to 'A/A-1' from 'A+/A-1' on heightened geopolitical risk. The outlook on the long-term ratings is negative. In our view, this indicates a weaker likelihood of timely and sufficient extraordinary government support to Israeli banks. We are therefore lowering our long-term issuer credit ratings on Bank Hapoalim B.M., Bank Leumi le-Israel B.M., and Mizrahi Tefahot Bank Ltd. We also affirmed our ratings on Israel Discount Bank Ltd. (IDB) and its core subsidiary, Israel Discount Bank of New York (IDB NY). The outlooks on all these banks remain negative. MILAN (S&P Global Ratings) Oct. 9, 2024--S&P Global Ratings today took rating actions on the following Israeli banks (for full details, please

...The deterioration of Israel's fiscal profile could indirectly affect the banking sector. A lessening of the government's fiscal space would limit its ability to further support the economy in future. The government has already absorbed some of the economic shock related to the conflict and has been proactive in extending support to areas and sectors that have been affected, directly or indirectly. Ultimately, this has reduced the negative spillover effect on the banking system. The resilience of banks' performance over the past 12 months was also supported by the low unemployment rate (about 3.2% in April) and by the containing of the impact on real estate sector activity of the shortage of workers. As of the second half of 2024, the systemwide nonperforming loan (NPL) ratio was low at 1%, while resilient revenues enabled banks to build large provisions buffers. Return on equity averaged about 15% at the end of June 2024. Our current base case already captures a significant deterioration...

Ratings Action