JERUSALEM: The coronavirus crisis has had minimal impact on the stability of the Israeli financial system due regulatory moves such as loan repayment deferrals, the Bank of Israel said on Monday.

Israel has extended its third and latest lockdown until at least Friday as high levels of COVID-19 infections persist, despite the country's rapid vaccine rollout.

The Israeli central bank said in its semi-annual financial stability report that giving banks the option to defer loan repayments by businesses and households had "prevented the initiation of many debt restructuring procedures".

It said outstanding credit in deferral status at the end of November was 51.8 billion shekels ($16 billion), accounting for 8.5% of total household credit, and 14.3 billion shekels for businesses, about 2.9% of total credit to the sector.

Based on Tax Authority data, the volume of business closures declined markedly during the crisis, the report said, although this could worsen as many businesses received state grants.

It also said that credit suppliers' loan loss provisions have increased while profitability of insurance companies was hurt, but financial firms' ability to absorb these losses stemmed from their capital adequacy ratios prior to the crisis.

"The banking system was able to continue providing credit and supporting economic activity, while maintaining capital ratios that were higher than the regulatory requirements."

The Bank of Israel said steps such as foreign exchange and government and corporate bond purchases had allowed the "capital market to operate with stability in the financial asset indices relative to the many risk factors, and to support economic activity even under conditions of tremendous uncertainty."

Meanwhile, interest rates on credit have stayed low.