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The financial reports published by the major banks contain infinite interesting details on the sector's weak results but one sentence left out of Bank Leumi's reports may demonstrate something about the entire sector. Banks usually include in their notes on provisions for doubtful debt that they were "conservative in accordance with past policy".

Leumi left the standard sentence out, saying the conservatism still stands but the state of the economy and the uncertainty concerning coming quarters create a huge question mark around the term "conservative."

In the first half of the year, the banks set aside NIS 2.5 billion in doubtful debt, compared to NIS 1.3 billion in the same period of 2001. Despite the additional NIS 1.2 billion, Bank Leumi feels that bandying around the term "conservative" when the end of the recession is nowhere in sight and the state of many borrowers could deteriorate, is basically false representation.

Not that it bothered the rest of the banks to declare themselves conservative.

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Reading the notes on some of the accounting-technical factors that adversely affected the banking sector's results is slightly dizzying. The banks have two or three good reasons and convincing explanations that all boil down to technicalities. The banks cannot be suspected of making excuses because there really were unusual events in the first half of the year: inflation skyrocketed 6.3 percent, the bond market collapsed, interest on the shekel leaped from a 3.8 percent start to the year to 7.1 percent in June and 9.1 percent in July. For institutions whose product is money, the changes are dramatic.

If we add on the fact that financial accounting really is complex and complicated, the banks are left no choice but to cite these changes, some of which distort results.

There is only one problem with these technical explanations: in future financial reports, when these technical factors work in the banking sector's favor, it is not certain they will be given commensurate eminence. We have learned that when banks lose money, or only make a little, the reasons are technical. When they earn a pretty penny, it's good management.