The most interesting thing about the financial reports published by the First International Bank of Israel yesterday was the doubtful debts column - a figure that is usually released only in yearly reports. The publication of doubtful debt figures in yesterday's third quarter report provides an up-to-date picture of the state of the bank.

The bank's doubtful debts have risen from NIS 1.2 billion at the end of 2000 to NIS 2.7 billion at the end of September 2001. In other words, the economic crisis that has developed over the past year and which has been compounded by the terrorist attacks on the United States has more than doubled the bank's doubtful debts.

Doubtful debts are debts that do not generate revenues, debts that are overdue and debts that are under special review because of a deterioration in the financial situation of the debtors. The doubtful debt column is particularly interesting because it presents problems in the pipeline; in fact, one could describe them as a potential crisis-in-the-making.

But the doubtful debt column isn't the only interesting figure in the bank's quarterly report. A close look reveals that FIBI's liquidity ratio, the proportion of the total assets of a bank held in cash in proportion to its risk assets, dropped to 9 percent, the minimum required by the Bank of Israel. FIBI has taken steps to raise warrants to improve its liquidity ratio.

These figures are interesting, firstly, because they reflect the decline in FIBI's business - for years, FIBI had the top credit portfolio and the best equity ratio out of all the big banks. Secondly, because it would appear that after a period of being out of sync, the banks are coming down to earth.

The third quarter 2001 is the watershed between a period of prosperity and continuous growth, and the downturn the banks are headed for.

Damages already incurred and registered by FIBI can be seen in the clause `provisions for doubtful debts' which have soared 162 percent, totaling NIS 228 million, compared with NIS 87 million in the first nine months of 2000. The bank reported that the provisions were the direct outcome of the slowdown in the economy and in international markets, and resulted primarily from credit extended to the construction, communications and commercial sectors.

The most significant jump in provisions for doubtful debt was in the third quarter, when provisions jumped to NIS 143 million, compared to NIS 28 million in the parallel quarter last year. So, did everything change in one quarter?

The technical explanation for the sharp rise in provisions for doubtful debts is that the Supervisor of Banks ordered an increase in such provisions. But, a more substantial influence was the September 11 terrorist attack on the United States. Not only because it caused direct damages to several of the bank's clients, but because it sharpened recognition that there is an international crisis, that it will take time for both the local and the global economies to recover and that it would be prudent to put aside optimistic forecasts and wishful thinking and to adopt a more pessimistic attitude, until the next boom begins.