Financial statements were affected in 2022 by several key factors, including interest rate hikes that continued to rise in the first quarter of 2023, the Ukraine-Russia War that led to oil and gas shortages and rising food prices and the proposed legal reforms which accelerated the trend of falling profits.
The increase in interest rates benefited the banks, which ended 2022 with record profits of NIS 24 billion.
On the other hand, it hurt the profitability of other sectors, primarily insurance companies that suffered losses estimated at billions of shekels.
Losses recorded by insurance companies were caused by stock market declines due to the increase in interest rates and the war in Ukraine. It had a negative impact both on the construction companies that suffered price drops and on real estate investment companies that had to forego hundreds of millions of shekels from revaluation of properties and their decrease in value.
The retail sector and food chains also earned less due to fewer sales and less buying activity. Fashion chains lost money on winter clothes since the season was relatively warm.
Hotels, tourism industry recovers along with Bezeq
On the other hand, hotels, especially those in the Fattal chain, recorded a recovery, and the communications industry, led by Bezeq, recorded profits.
Those who benefited from the crisis were the energy companies, led by Yitzhak Tshuva’s Delek Group and Ratio Energies. These companies which invested in the local Leviathan and Tamar gas fields are recording profits of hundreds of millions of dollars due to increasing gas prices worldwide. There has also been an upward trend in energy stocks in the first quarter of 2023.
In the background of all this are the legal reform proposals that were partially addressed in reports for 2022. On March 29, shares on the TASE registered declines and the dollar strengthened against the shekel in light of the background tensions with Biden and his demand to shelve legal reform at any cost.
According to stock exchange data, the Tel Aviv 35 stock index recently fell by 2% and the Tel Aviv 90 fell by 7%.