Transcript FIBI FIRST INTERNATIONAL BANK OF ISRAEL Overview 30.09.14 FIBI FIRST INTERNATIONAL BANK OF ISRAEL Net Profit and ROE (NIS Millions) 8.7% ROE 9.0% Average capital 6,648 Equity capital (tier 1) to risk components ratio *8.6% 6,988 6,624 6,890 9.93% *

FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Overview 30.09.14
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Net Profit and ROE (NIS Millions)
8.7%
ROE
9.0%
Average
capital
6,648
Equity capital (tier 1) to risk
components ratio
*8.6%
6,988
6,624
6,890
9.93%
* Assuming equity capital (tier 1) to risk components ratio of 9.35% (the Israeli Other 4 leading Banks average) as of 30.09.14, the
ROE is 8.8% in 1-9/14 and 9.3% in Q3/2014.
2
** The 1-9/14 Net profit includes amortization of 39 NIS Millions, reflecting a 0.8% annual reduction on the ROE.
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Statements of income 1-9/2014 – 1-9/2013
(NIS Millions(
Interest income and non-interest financing , net (Without the
effect of initial implementation of FAS 91)
FAS 91 effect on interest income
(Income) Expenses from credit losses (0.02% income provision
rate)
Commissions (Without the effect of initial implementation of FAS 91)
FAS 91 effect on commissions
Other Income (including sale of FIBI London )
Gross Change
change in %
1-9/2014
1-9/2013
1,694
65
1,793
-
)99(
65
)8(
65
)73(
1,101
1,050
51
)79(
-
)79(
60
44
16
36.4%
2,849
2,137
712
2,822
2,106
716
27
31
)4(
1.0%
1.5%
)0.6%(
)5.5%(
4.8%
Total income (after expenses from credit losses)
Total operating and other expenses
Profit before taxes
Provision for taxes on profit (Last year includes a decrease in
the provision for tax as a result of the increase in the tax rate on
deferred tax balances 22 NIS millions)
The bank’s share in VISA CAL profit
Net profit
ROE
Equity capital (tier 1) to risk components ratio (end of period)
299
295
4
1.4%
28
426
8.3%
9.93%
23
429
8.7%
10.11% )*(
5
)3(
21.7%
)0.7%(
Bank of Israel average interest rate
0.72%
1.52%
(0.8%)
(*) Equity capital Basel III at 31.12.13
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Explaining of the main changes in net profit
1-9/2014 - 1-9/2013 (NIS Millions(
positive influences
1-9/2014
1-9/2013
Gross
change
Net change
88
Income from credit losses compared to expenses provisions last
year
Increase in commissions*
Fas 91 effect on commissions
Gain on sale of FIBI London shares
Increased realized gains from bonds and shares
Increased in banks share in profit of VISA CAL
(*) excluding FAS 91 effect and income from credit card
8
(65)
73
57
1,022
958
64
41
(79)
-
(79)
(50)
31
-
31
26
202
187
15
9
28
23
5
5
4
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Explaining changes in net profit
1-9/2014 - 1-9/2013 (NIS Millions(
Negative influences
1-9/2014
1-9/2013
Gross
change
Net change
(91)
Interest income, net (excluding FAS91 effect)
FAS 91 effect on interest income
Net decrease in the reconciliations to fair value of derivative
instruments
1,505
65
1,564
-
(59)
65
(35)
42
(11)
36
(47)
(30)
The effect of last year increase in tax rate on deferred tax
balances
An increase in operating and other expenses
(22)
(2,137)
(2,106)
(31)
(19)
107
136
(29)
(17)
Decrease in other income*
Other influences
(10)
Total decrease of 3 Nis millions in net profit
(*) excluding the exercise of FIBI London and including credit card commissions
5
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Operating & Other Expenses
(NIS Millions)
1-9/2014
1-9/2013
*
* Including amortization of 39 NIS Millions in 1-9/14.
6
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Statements of income 7-9/2014 – 7-9/2013
(NIS Millions(
Gross
Net
change change
Q3/2014
Q3/2013
564
560
4
3
22
-
22
14
Interest income and non-interest financing , net (Without the
effect of initial implementation of FAS 91)
FAS 91 effect on interest income
(Income) Expenses from credit losses (income 0.02% provision
rate)
Commissions*
FAS 91 effect on commissions
Other Income
Total income (after expenses from credit losses)
Total operating and other expenses
)11(
21
)32(
(21(
341
)27(
43
954
711
314
74
927
686
27
)27(
)31(
27
25
17
)17(
)20(
18
16
Profit before taxes
243
241
2
2
104
93
11
11
139
148
(9(
(9(
12
146
8.6%
0.50%
1
144
9.0%
1.25%
11
2
11
2
Provision for taxes on profit (Last year including a decrease in
the provision for tax for the effect of the increase in the tax rate
on deferred tax balances 16 NIS millions)
Profit after taxes
The bank’s share in profit of VISA CAL
Net profit
ROE
Bank of Israel average interest rate
)0.75%(
* Without the effect of initial implementation of FAS91 and credit card commissions.
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Consolidated Operational Efficiency Ratio
Total Operating Expenses to Total Income
Total Operating Expenses / Total Income (After Expenses for credit losses)
Total Operating Expenses / Total Income (Before Expenses for credit losses)
74.6%
72.9%
%
Total Operating Expenses
%
Total Income
75.2%
75.0%
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
FIBI Strategic Assets & Liabilities Structure
(NIS Billions)
capital to risk
assets Total
ratio
30.09.14
31.12.13
14.56%
14.78%
FIBI Strategic Assets & Liabilities composite (*)
30.09.14 (NIS Billions)
Credit to the Public
equity capital
(tier 1) to risk
components
ratio
9.93%
10.11%
Deposits to
Credit Ratio
126.9%
129.7%
Liquid Assets
to Deposits
Ratio
Public
Deposits
88.7
State of Israel Bonds 8.1
Gov. & Bank Bonds
2.4
35.3%
69.9
Bank of Israel Deposits 20.8
38.4%
Capital Notes 5.6
capital
available for
Investments to
investment
capital Ratio
Corporate Bonds (foreign &
Israel currency) 0.9
29.9%
(*) illustration – not to scale
28.2%
Capital Available for
Investment 5.2
Structures, Hedge funds
&Stocks 0.6
Market risk in VAR(0.03)
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Statement Of Changes in Equity 1-9/2014
(NIS Millions(
Balance At 31/12/13 Total Shareholders Equity
(Including non-controling interests(
7,120
Net Earnings
426
Net profit Attributed to non-controlling interests
17
Change in capital reserve
)5(
Dividend
)230(
Balance At 30/9/14 Total Shareholders Equity
(Including non-controling interests(
7,328
The Highest dividend yield in the Israeli banking system
Dividend yield of 3.5% in 2013, and 5% in 2014 (Includes 55 Nis Millions dividend after 30.9.14).
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FIBI
Credit to the Public by segments
FIRST INTERNATIONAL
BANK OF ISRAEL
(NIS Millions)
Change in %
30.9.14
31.12.13
30.9.13
Private + Retail
(Households)
16,864
16,390
Mortgage
18,184
17,427
30.6.14
30.9.13
16,048
3.0%
5.0%
17,354
2.1%
4.8%
)20%(
Total private clients
35,048
33,817
33,402
2.5%
4.9%
Corporate
22,098
21,946
20,383
5.8%
8.4%
Commercial + Small
12,762
Business
12,943
13,110
0.0%
(2.7%)
Total Credit to the
Public
66,706
66,895
3.1%
4.5%
8.8%
8.8%
Our share in local
activity (average for
the period)
69,908
)24%(
)30%(
)26%(
30.9.13 – )(
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Expenses for Credit Losses to Credit to the
Public Ratio
*
*In Q1/2013 the Bank has implemented a one time regulatory provision on its mortgage portfolio which sets the credit losses expenses ratio at
0.35% of the mortgage credit balance (24 NIS million(. Excluding this one time provision, the group’s ratio in 2013 was 0.11%.
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FIBI
Deposits from the Public breakdown by segments
FIRST INTERNATIONAL
BANK OF ISRAEL
(NIS
Millions(
Gross Change
Compared to
30.9.14
Change in %
31.12.13 30.9.13
31.12.13
30.9.13
31.12.13
30.9.13
)13%(
Total private
clients
48,397
50,049
49,633
)1,652(
)1,236(
)3.3%(
)2.5%(
)29%(
Corporate
29,147
27,999
24,686
1,148
4,461
4.1%
18.1%
Commercial +
Small
Business
11,193
11,074
11,061
119
132
1.1%
1.2%
Total
88,737
89,122
85,380
)385(
3,357
)0.4%(
3.9%
)58%(
30.9.13 – )(
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Client assets portfolio (deposits & securities)
present Continued growth (average balances, NIS Billions)
326
291
Increase of 12% (35 NIS Billions) in client assets portfolio
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Equity capital (tier 1) ratio
*
-0.65 %
-0.61 %*
*
-1.3
-0.56 %
14.30%
**
14.57%
13.42%
*
%
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Deposits
from the
public to
credit to the
public
Total operating
expenses /
Revenue (before
credit losses
expenses)
9.93%
1 126.9% 1
75.2%
4 )0.02%( 1
90.9%
1 ***5.0%
9.39%
3 109.3% 4
63.4%
2
0.03%
3
57.3%
5 ***2.07%
9.44%
2 114.9% 3
74.7%
3
0.00%
2
72.5%
3
-
9.30%
4 122.2% 2
82.0%
5
0.09%
5
65.5%
4
-
9.01%
5 102.7% 5
61.0%
1
0.02%
4
78.4%
2
0.87%
9.35%
118.3%
70.3%
equity capital
(tier 1) to risk
components
ratio
Other 4 leading
Banks Average
FIBI is demonstrating relative strength in
main financial ratios 1-9/2014
(income)
Expenses for
credit losses to
credit to the
public*
0.03%
NPL-Provision
for credit losses
to total impaired
credit (without
mortgages)
64.9%
Dividend yield
(according to
24.11.14)*
-
*In annual terms.
** Calculated only on the balance sheet credit.
*** Including dividend paid on the last 12 months and 55 NIS millions that was declared after 30.9.14 in FIBI, and 117 NIS millions in Poalim
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FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
Subsidiaries net profit
Specialization

Net profit
1-9/2014
Nis
Millions
ROE
equity capital
(tier 1) to risk
components
ratio
Retail customers

Commercial/ Corporate

Defense forces
personnel

Factoring

Capital Markets, Trust &
Custody services

Private & affluent
banking

Retail customers

Teachers sector

Israeli-Arab sector
Growth centers
•
51.6
6.2%
9.8%
•
•
35.8
11.1%
16.2%
•
•
31.9
9.0%
14.7%
•
•

Ultra orthodox sector
26.2
9.6%
12.5%
Extension of the
agreement with Hever
Renewal of activities
with Small Business
Fund
Expansion activities
with private and
institutional clients
Developing wealthy
clients branches
Winning in the
teachers loans tender
Growth at the IsraeliArab sector
Increasing network
coverage in the ultra
orthodox sector
including new
branches opening 17
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
n
1-9/2014
n
Highlights for 1-9/2014
Net profit of 426 NIS million and ROE of 8.3%.
Assuming adjustment of equity capital (tier 1) to risk components ratio to the Israeli
banking industry average, the ROE is 8.8%
Net profit
n
Q3/2014
n
n
Fair Value of
derivatives
Substantial
Macro &
Accounting
effects
Income from
interest & zero
inflation
FAS 91
n
n
n
n
Net profit of 146 NIS million and ROE of 8.6%.
Assuming adjustment of equity capital (tier 1) to risk components ratio to the the
Israeli banking industry average, the ROE is 9.3%
The reduction of the Interest rate also affected the expense for fair value of
derivatives
Compared with 1-9/13 Expense for reconciliation to fair value of derivatives for 19/14 decreased income by ~ 47 NIS Million.
Interest income was influenced by the reduction in the bank of Israel interest rate
of 0.8% in the period.
Zero inflation resulted in a decrease in income from CPI-linked position. The
group reduced its CPI-linked position.
Financing income increased by ~ 65 NIS million and reduced income from
commissions by ~79 million, resulting in a decrease in net income of 9 million
18
FIBI
FIRST INTERNATIONAL
BANK OF ISRAEL
n
An 4.5%increase in the credit portfolio compared to 9/13 and 3.1% compared
to 6/14
Continued customer’s
activity growth in
capital markets
n
Client assets portfolio (deposits & securities) present continued growth of 35
NIS Billion (12%)
Growth in operating
income
n
An increase of 4.8% in income from commission (adjusted to FAS 91), due to an
increase in clients activity )mainly in capital markets)
n
Focus in growth segments (Ultra-Orthodox, teachers, security forces, Arab sector)
Factoring - the leading bank in the system
Continued growth in
all credit segments
Continued
growth in
activity
Subsidiaries
Moderate increase in
operating expenses
n
n
n
Moderate
increase
in
operating
expenses
Highlights for 1-9/2014
n
n
Consistent cost
cutting and
Budgetary restraint
n
n
n
Operating expenses growth rate of only 1.5% in comparison to 1-9/13, mainly
resulted by an increase in the VAT rate and in commissions to s from capital markets
Divestment of FIBI London in Order to focus on core banking activities in Israel
increased net profits by 26 NIS Millions.
Reduction of several management team members across the group
re-organization of all customer portfolio activities, including all dealing rooms, under
one division in order to create a customer centric attention and a one stop shop
customer experience
Merger between 2 regional headquarters in FIBI
Optimization and modifications of the group’s branch network, focused on reducing
branch numbers while taking into account current demographical trends
Continued reduction of total real estate areas in the headquarters and branch
network
19
FIBI
High financial
stability
FIRST INTERNATIONAL
BANK OF ISRAEL
Highlights for 1-9/2014
High equity
capital
(tier 1)
Equity capital (tier 1) (under Basel III) – 9.93%higher then Bank of Israel target
Deposits to credit
ratio
credit portfolio
quality and
diversification
n
Decrease in
provisions for
credit losses
n
NPL (excluding
mortgages)
The Highest dividend yield in the
Israeli banking system
n
n
n
Deposits to credit ratio – 126.9%
Problematic debt collection revenue brought register for credit income from credit
losses - (0.02%) while 1-9/2013 provision rate amounted to 0.13%.
Ratio of credit loss allowance to total impaired credit is the highest in the system –
90.9% (excluding mortgages), 108.7% including mortgages.
Dividend of 285 NIS million in the 1-9/2014, including 55 NIS millions declared
after 30.9.14.
Dividend yield of 3.5% in 2013, 5% in 2014
20