Max Credit Card Company Reports 30% Surge in Auto Loan Portfolio in Q2

Max, an Israeli credit card company controlled by Clal Holdings and managed by Sagit Dotan, reported a 13% increase in net profit for the second quarter of 2024, reaching approximately 80 million shekels compared to 71 million shekels in the same period last year. This growth excludes a one-time 131 million shekel provision related to a VAT ruling on foreign currency fees. For the first half of the year, net profit rose by about 7% to 160 million shekels. The company led the industry in efficiency, with a return on equity of 14% in the first half, slightly below last year's 14.1%.

The profit increase was driven by growth in credit card transaction volumes and a 13.6% annual expansion of the interest-bearing credit portfolio, which reached around 14 billion shekels. The standout growth area was the auto loan portfolio, which surged 30% year-over-year to 5.1 billion shekels, accounting for roughly 37% of the total credit portfolio. The remaining credit portfolio, excluding auto loans, grew by 5.7% to 8.8 billion shekels, with the business credit segment increasing by 11.7% to 1.25 billion shekels. Traditional credit card transaction revenues showed modest growth of 2%, reaching 399 million shekels, affected by the "Roaring Lion" military operation and economic slowdown during part of the quarter and Passover.

Foreign currency commission revenues declined from 54 million shekels to 48 million shekels due to reduced outbound tourism amid regional tensions with Iran. Despite this, total issuance volume for domestic and international purchases rose by 9.1% to about 40 billion shekels. A strategic milestone was reached as half of Max's active cards (1.77 million, an 8.5% annual increase) are now non-bank cards, the highest share in the industry, surpassing competitors Cal (42%) and Isracard (30%). To counter fierce competition, especially after Isracard acquired the frequent flyer club from Cal, Max increased sales and marketing expenses by 12% to 137 million shekels and promoted its SkyMax card, which surpassed 100,000 cards issued.

However, Max's payment processing segment faced a 5% revenue decline to 121 million shekels and a 7% net profit decrease to 39 million shekels due to intense competition. For the first half, payment processing profits fell 9%. Despite macroeconomic uncertainties, Max maintained strong credit quality, reducing net write-offs to 1.02% from 1.25% last year and non-accrual loans to 1.01% from 1.19%. Credit loss provisions decreased by 7% to 40 million shekels, and operating expenses dropped by 5% to 247 million shekels. Overall expenses remained stable at 510 million shekels, enabling Max to sustain its leading net profit in the sector.