Israel’s two largest banks published financial statements this week showing both raking in record numbers of shekels. Behind the soaring financials stand millions of Israelis, whose sky-high interest payments, credit fees and other charges have fueled the unprecedented payday for lenders.

Not only have the banks posted massive financial gains on mortgage payments and superfluous fees and by avoiding paying interest on money deposited by customers, but they have done it all despite the nation being mired in war and economic hardship.

Why this anomaly? For starters, the banks are designed to serve the prime business interest of maximizing profits for themselves. But it’s also simply because they can, thanks to a weak regulatory environment allowing banks to run roughshod over their customers.

“The banks have exploited the war situation,” Gali Ingber, head of finance studies at the College of Management Academic Studies, told The Times of Israel. “During this challenging period, most customers were not available to deal with banking issues or their savings plans, as a large part of the population was serving in the army and reserve duty to defend the country, and thousands of others were evacuated from southern and northern communities grappling with the impact of the war.”

“This has allowed the banks to continue to act like a pig,” she added.

On Tuesday, Bank Leumi, Israel’s second-largest lender, announced that its profits in 2024 had soared to a record of almost NIS 10 billion ($2.8 billion), as it cashed in on high interest rates paid by mortgage and loan holders, and its credit and loan operations flourished.

The country’s largest financier, Bank Hapoalim, said this week that it earned a whopping profit of NIS 7.64 billion ($2.1 billion) last year, besting records set in 2022 and then in 2023, as borrowing costs for mortgage and loan holders remained high and helped propel income from net interest and credit fees.

Data shows that large numbers of Israelis spend more than they earn each month, with more than one-third of households in 2024 stuck in a chronic

© The Times of Israel