Bank of J'lem: Foreigners still buying Israeli homes

The Bank of Jerusalem, which saw net profits jump 30 percent in 2005, expects another good year in 2006 as Diaspora home-buying in Israel continues to rise despite higher interest and mortgage rates. "In 2005, the Bank of Jerusalem handled more than NIS 130 million in mortgages to foreign residents, up at least 40% from a couple years ago," said Stuart Hershkowitz, head of the Bank of Jerusalem's international department. "In 2006, the number of foreign residents buying property in Israel will continue to be on the rise, as the recent trend is not connected to economic reasoning." Hershkowitz noted that the majority of foreign buyers were not looking for lucrative investments but, rather, were seeking closer ties with Israel. "About 70% do not even rent out their apartments in Israel,"Hershkowitz said. Although property prices have gone up, this has only happened in certain areas such as Caesarea, Herzliya Pituah or Rehavia in Jerusalem, which have attracted much interest by foreigners, Hershkowitz said. On Sunday, the bank reported a net profit rise of 30% to NIS 38.3m. from NIS 29.5m. in 2005, with fourth-quarter net profit rising to NIS 10.4m. from NIS 7.5m. 2004. The bank, which specializes in providing private banking services to high net worth foreign residents, saw a rise of 10.6% in net profits from its private mortgage business to NIS 27.1m. in 2005 from NIS 24.5m. Revenue after provisions for bad debts in 2005 increased 15% year-on-year to NIS 221.2m. as net return on equity rose to 10% from 8.2%. Year end deposits at the bank were NIS 6.4 billion compared with 6.1b. in 2004. Provisions for bad debt fell 34% to 11.3m. from NIS 17.5m. in 2004. "We have managed to maintain our profit while deepening our operations in specific niches, in the capital market, the retail market and private banking," said CEO David Baruch.