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<\/div>\nIsrael\u2019s financial system shows \u201chigh resilience\u201d despite the country\u2019s military conflicts and ongoing geopolitical uncertainty that have persisted for more than a year, the Bank of Israel said in a report on Tuesday.<\/p>\n<\/div>\n
The banking sector\u2019s profits have been boosted by high interest rates, cushioning them over the final six months of last year from macroeconomic risk that kept Israel\u2019s economic activity below the long-term trend and led to higher government financing costs, a higher risk premium and credit rating downgrades.<\/p>\n
The central bank cautioned of a possible deterioration should there be renewed fighting in Gaza and, as U.S. President Donald Trump\u2019s tariffs raise risks to growth, it warned of the risks attached with \u201cdeglobalisation.\u201d<\/p>\n
In its Financial Stability report for the second half of 2024, the central bank said credit repayment delinquency rates remained stable and historically low, while banks\u2019 loan loss provisions also decreased.<\/p>\n
\u201cThe resilience of major financial institutions remained high, with improvements in capital ratios for both banks and insurance companies, which were already high,\u201d Tuesday\u2019s report said.<\/p>\n
Israel\u2019s economy is forecast to have grown 0.6% in 2024, with Israel\u2019s wars against Palestinian militant group Hamas in Gaza and Hezbollah in Lebanon weighing on growth. Israel has since forged ceasefire deals with both Hamas and Hezbollah.<\/p>\n
The central bank said that towards the end of the year Israel\u2019s risk premium and debt financing costs declined somewhat, reflecting a moderation in geopolitical risk assessments and improved sentiment in local markets.<\/p>\n
In the fourth quarter, Tel Aviv shares rose but remained low in dollar terms relative to global share indices.<\/p>\n
\u201cAlong with the reduced potential of a negative impact on stock prices due to risk absorption, the financial system\u2019s vulnerability from asset price channels declined to a medium-high level compared to the first half of the year,\u201d the central bank said.<\/p>\n
Starting in 2025, the report will be published annually instead of semiannually, the bank said.<\/p>\n
(Reporting by Steven Scheer; editing by Barbara Lewis)<\/p>\n<\/div><\/div>\n
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