Barkat Capital: Why the managed book is bigger than the balance sheet, and what really belongs to shareholders
Barkat ended 2025 with NIS 1.882 billion of managed utilized credit versus only NIS 958 million that remained on balance sheet, but that gap is not a hidden shareholder asset. It is driven mainly by NIS 924 million of derecognized loans, so the real question is which part of the economics remains as equity, fees, and continuing involvement.
The main article already argued that Barkat now operates a credit platform that is larger than its reported balance sheet, and that 2026 is still a funding-year test. This follow-up isolates the accounting layer of that argument, because this is exactly where readers can make the wrong shortcut: a managed book of NIS 1.882 billion does not mean shareholders own NIS 1.882 billion of assets. It combines three very different layers: signed facilities, managed credit that has actually been drawn, and the portion that still remains inside the balance sheet after derecognition.
By the end of 2025, the numbers already make that distinction very clear. Managed credit facilities reached NIS 3.921 billion, managed utilized credit reached NIS 1.882 billion, but the utilized credit that stayed on balance sheet was only NIS 958 million. The gap, NIS 924 million, is not marginal. It is almost half of the managed utilized book.
And this is not a presentation quirk. It is the point. The company states that three loans met the derecognition conditions, so the principal funded in those deals was removed from the balance sheet against loans received in a similar amount. That means the economic activity may be large while the accounting asset base is much smaller, and certainly much smaller than a superficial reading might imply for common shareholders.
- Almost half of managed utilized credit is already off balance sheet. Out of NIS 1.882 billion of managed utilized credit, NIS 924 million was derecognized.
- The derecognized layer is concentrated. The NIS 924 million relates to only 3 projects, with another roughly NIS 1.7 billion of unused facilities behind them.
- The shareholder anchor is far smaller than the headline book. Equity attributable to shareholders stood at NIS 128.1 million at year-end 2025, against a NIS 1.055 billion balance sheet and NIS 927.3 million of liabilities.
Three Different Layers, Not One Number
The right way to read Barkat is not to choose one number and let it stand in for everything else. The filing effectively presents four different layers of the same machine:
| Layer | 2025 | What it measures | What it does not mean |
|---|---|---|---|
| Managed credit facilities | NIS 3,921 million | Total signed credit commitments, including projects that are not yet fully drawn | Not a balance-sheet asset, and not cash that already belongs to shareholders |
| Managed utilized credit | NIS 1,882 million | Credit actually advanced across all managed loans | Still not the same thing as what sits on the company's balance sheet |
| Utilized credit on balance sheet | NIS 958 million | The nominal layer that still remains inside the company's books | Not the full scale of the activity the company manages |
| Loans given on balance sheet, carrying amount | NIS 966.4 million | The reported loan asset in the consolidated statements | Still not the same thing as value directly accessible to shareholders |
This chart shows two things at once. First, Barkat did not only grow. It also changed the shape of that growth. The gap between utilized credit that stayed on balance sheet and utilized credit that was derecognized widened from NIS 485 million at the end of 2023, to NIS 730 million at the end of 2024, and to NIS 924 million at the end of 2025. Second, the company no longer looks like a lender that lives only through its own balance sheet. Almost half of managed utilized credit now sits outside it.
The same picture is even more pronounced at the facility level. Out of NIS 3.921 billion of managed facilities, NIS 2.662 billion belongs to the derecognized layer, while only NIS 1.260 billion belongs to facilities that remain on balance sheet. In other words, a large part of future scaling capacity already sits in an off-balance-sheet architecture.
That is a key distinction, because the headline phrase "managed book" sounds like an expanded version of the balance sheet. It is not. It is an operating-scale number, not an ownership number. It shows that Barkat can originate, structure, deploy, and manage far more credit than its own balance sheet would suggest. It does not show that all of that principal belongs to shareholders.
What Was Derecognized, and What That Really Means
To understand the gap, it helps to pause on the accounting logic without getting lost in jargon. The company tests each new loan to see whether it has substantially transferred the risks and rewards of the financial asset, or whether it retains only limited continuing involvement. When those conditions are met, the loan can leave the balance sheet, and the matching funding does not remain presented as ordinary debt of the company in the same way.
Put more simply, a derecognized loan is not a loan that disappeared from the business. It is a loan the company still manages inside its operating system, but not in the same accounting form as a standard on-balance-sheet loan. That is why the operating headline can stay large while the balance sheet stays smaller.
The 2025 numbers show how material that is. The company concluded that at year-end it had 3 loans that met the derecognition conditions. Those loans, roughly NIS 924 million, are no longer included in the loan asset line because they were netted against loans received in a similar amount. That almost fully explains the gap between NIS 958 million of utilized credit on balance sheet and NIS 1.882 billion of managed utilized credit.
There is another, less comfortable implication here. The off-balance layer does let Barkat manage more volume without inflating the balance sheet to the same degree, but it is also concentrated. The NIS 924 million relates to just 3 projects, with another roughly NIS 1.7 billion of unused facilities behind them. So the platform is real, but a meaningful part of the gap still rests on a small number of large transactions.
What Really Belongs to Shareholders
This is where the discussion has to move from the language of "book" to the language of "capital layer." At the end of 2025, Barkat had total assets of NIS 1.055 billion, total liabilities of NIS 927.3 million, and equity attributable to shareholders of NIS 128.1 million. That is the layer that actually belongs to common shareholders.
So even before touching the NIS 924 million that was derecognized, shareholders do not "own" the NIS 966.4 million of reported balance-sheet loans in any simple or direct sense. Most of the balance sheet is debt funded. Once the derecognized layer is added back into the discussion, the gap only becomes sharper: for every NIS 1 of equity, Barkat manages roughly NIS 14.7 of managed utilized credit, but that is not NIS 14.7 of net shareholder asset. It is a credit machine that produces economics for shareholders through spread capture, fees, and risk management.
The filing also gives one important clue about the economics that remain inside the company from the derecognized layer. In 2025 total financing income was NIS 107.2 million, of which NIS 5.284 million was recognized as fees from derecognized loans. That is a crucial point. It shows that the NIS 924 million does not come back into the income statement as if it were a regular on-balance-sheet book. The economics that remain to the company from that layer run through fees and servicing, not through full ownership of the principal.
| Value layer | 2025 | What it means for shareholders |
|---|---|---|
| Equity attributable to shareholders | NIS 128.1 million | The residual layer that actually belongs to them after liabilities |
| Total assets on balance sheet | NIS 1,055.4 million | The size of the balance sheet, not the size of the shareholder claim |
| Liabilities on balance sheet | NIS 927.3 million | The reason equity is much smaller than total assets |
| Fees from derecognized loans | NIS 5.284 million | An example of the economics the company keeps from the off-balance-sheet layer without owning the principal on balance sheet |
Even the 22% equity-to-balance-sheet ratio shown under the bond covenants is not a shortcut to what belongs to shareholders. That is a contractual definition that adds certain items into "equity" and excludes cash and non-recourse loans from the covenant "balance sheet." It matters for covenant compliance, but it is not the same thing as the ordinary common-shareholder equity line, which stood at NIS 128.1 million.
What Still Cannot Be Measured Precisely
The filing explains well enough why NIS 924 million left the balance sheet, but it does not provide a full quantitative bridge from that number to the economics that remain in each of the 3 projects. The accounting policy does make clear that if the company retains continuing involvement, it recognizes an asset and liability only to that extent, and that if it continues collecting cash flows for a third party it recognizes servicing income over the service period. What is missing is a project-by-project breakdown: how much of the NIS 924 million remains as economic exposure, how much is reflected as servicing-type income, and how much is simply managed volume that no longer belongs on balance sheet.
That matters because without that bridge, an investor cannot translate the "managed book" precisely into return-on-equity terms. The direction is clear enough: Barkat is building a platform that manages more volume than its own balance sheet. But on the current disclosure, each shekel inside that NIS 924 million cannot be treated as having the same economic quality as a shekel of credit that still sits on balance sheet.
The conclusion is not that the NIS 1.882 billion is unreal. Quite the opposite. It shows that Barkat's platform is already materially larger than the balance sheet that reports it. But that is exactly why the number has to be handled carefully. It measures underwriting, structuring, and management capacity, not net shareholder-owned asset value.
Anyone reading Barkat only through the balance sheet misses the scale of the machine. Anyone reading it only through the managed book misses the fact that a much smaller layer actually remains with shareholders as direct capital and exposure. At the end of 2025, what really belongs to them is not NIS 1.882 billion of principal. It is NIS 128.1 million of equity, plus the stream of fees and spreads the company can capture from a credit system that is bigger than itself.
So the next test is not only whether the managed book keeps growing. The test is whether Barkat can show that off-balance-sheet volume is turning into income, diversification, and capital economics that genuinely improve the common-shareholder slice, and not only the activity headline.
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