The information contained in this presentation

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2 The information contained in this presentation 1. has been prepared by Bank Leumi leisrael B.M. (the Bank ); 2. is provided to you solely for your information and is not to be copied or distributed to any other person; 3. does not purport to be allinclusive or to contain all the information that may be relevant in making any decision concerning an investment in the securities of the Bank.; 4. no representation or warranty, expressed or implied, is made by any person as to the accuracy or completeness of any of the information or opinions contained herein. In particular, no representation or warranty is given as to any forward looking information, which is based, inter alia, on forecasts of the future regarding various matters related to economic developments in Israel and abroad, and especially to the foreign exchange and capital markets, legislation, directives of regulatory bodies, the behavior of competitors, technological developments, personnel issues, etc. and is subject to uncertainty and changes in circumstances. Actual results may differ materially from those included herein due to a variety of factors. For more information on the meaning of forward looking information, we would refer you to the Bank s most recent published Consolidated Financial Statements; 5. does not constitute an offer or invitation to purchase or subscribe for any securities, nor does it constitute advice; 6. should not form the basis of or be relied upon in connection with any contract or commitment whatsoever. 2

3 The Israeli economy Consumption based growth in 2015 Fiscal performance on track with longterm debt reduction GDP (rate of change, real terms) Current account surplus Government budget deficit 2.6% 3.7% (2.7%) 2.5% % of GDP 4.2% (2.7%) 3.0% 3.7% (2.9%) No net foreign debt; high FX reserves Government debt 65% 66% Annual Average 66% Inflation remains very low Unemployment low; labor force participation rising Unemployment CPI, yearend change Shekel / USD average exchange rate 5.9% (0.2%) % 5.2% Additional Data 0.7~0.2% 0.5~1.5% Shekel / EUR average exchange rate Bank of Israel average interest rate 0.6% 0.1%0.2% % Source: Central Bureau of Statistics, Leumi forecast 3

4 Net profit and RoE NIS millions Reported Net Profit and ROE Proforma Net Profit and ROE* 11.9% 7.7% 7.7% 1,456 2, % 2, % 1, % 10.4% Q Q M M M M 2015 *Expenses for arrangements with foreign authorities *Profit from the sale of shares in Israel Corp. *Gains on sale of investments by Israel Corp. *Provision for bonus (1,009) (25) 638 (116) *Please see footnote 1 on p. 6 of Financial Statements (English) Sept. 30,

5 Principal Results NIS millions 9M M 2014 Δ% Net Interest income 5,391 5,561 (3.1) Noninterest income 4,752 3, Total Income 10,143 9, Expenses/ income in respect of credit losses (166) 11 + Operating & other expenses (6,518) (7,298) (10.7) Pretax profit 3,459 2, Provision for tax (1,189) (1,034) 15.0 Profit after tax 2,270 1, Share of bank in associated companies (45.2) Netprofit attributable to noncontrolling interests (27) (5) Net Profit ROE 2, % 1, %

6 Net interest income NIS millions Interest margin BoI average interest rate 2.01% 0.72% 1.88% 0.13% 5,561 5,391 9M M

7 Low provision rate reflects high quality credit portfolio NIS millions 0.51% 1, % % year average: 0.27% 0.19% 0.11% % M

8 Low NPL ratio; declining problem debts NIS millions NPL Ratio: 2.9% 2.1% 1.7% 1.5% 10,931 9,801 9,551 9,505 6,013 4,480 3,712 3,440 1,749 1,874 2,681 1,855 3,169 3,447 3,158 4, Impaired Substandard Special mention 8

9 Diversified credit portfolio with focus on higher RoE segments Growth of loan portfolio by segment 20109M 2015 CAGR Composition of loan portfolio by segment 9M 2015 Households (incl mortgages) 10% 30% 10% 2% Small businesses 7% 15% 20% 22% Private banking 10% 1% Corporate banking Commercial banking 4% Commercial banking Financial mgmt & others Households 43% Corporate Corporate banking 5% Mortgages Small businesses Private banking 57% Retail 9

10 Quality credit portfolio Credit to groups of borrowers whose indebtedness exceeds 15% of the Bank s capital Groups of borrowers 2 1 % of capital 37.6% 18.0% Total debts of large borrowers, groups of borrowers and banking groups of borrowers whose debts exceeds 10% of the Bank s capital (BoI limit of 120% of capital) % of capital 48.1% 18.0% 14.7% 11.4% 10

11 Total noninterest income mainly affected by capital market activities; commission revenue stable NIS millions 2,425 1,374 1, ,258 1,275 1, , ,040 1,040 1,033 1,054 1,051 1,035 1, Q1, 14 Q2, 14 Q3, 14 Q4, 14 Q1, 15 Q2, 15 Q3, 15 Total noninterest income Noninterest financing income & other income Commissions 9M M 2014 Δ Δ% Operating Commissions 3,099 3,113 (14) (0.4) Noninterest financing income 1, Other Income Total 4,752 3,

12 Commission revenue stable and diverse NIS millions 9M M 2014 Δ% Securities transactions* Account management (8.7) (5.7) Reduction resulting mainly from the sale of Leumi Switzerland in March 2015 Credit cards Credit handling Conversion differences Financing transactions Other fees Total 3,099 3,113 (0.4) *Includes financial product distribution commissions 12

13 Noninterest financing income NIS millions Net income (expense) in respect of derivative instruments and net exchange rate differences Profits from the sale of availableforsale bonds, net Profits from investments in shares including dividends, excluding Israel Corp., Mobileye, Partner and Tower Net profits in respect of loans sold Realized and unrealized profits from adjustments of tradable bonds and shares to fair value, net 9M 2015 (124) M 2014 (183) Profit from the sale of shares in Israel Corp. 811 Profit from the sale of shares in Mobileye Profit from the sale of shares in Partner and Tower 169 Total 1,

14 Total operating and other expenses NIS millions 7,298 6,518 9M M 2015 Salaries 2,982 2,842 4,019 Bonus ,123 Postretirement defined and other benefit expenses Total salaries and related expenses 4,019 4,123 3,279 2,395 9M M 2015 Total salary & related expenses Maintenance of buildings & equipment, depreciation & other (includes expenses for arrangements with foreign authorities: 9M 2014 (1,009); 9M 2015 (25) 14

15 Strong liquidity NIS billions Deposits and Credits Offbalance sheet securities portfolio including mutual funds 120% 119% 120% % Deposits of the public Credit to the public Deposits /Credits 15

16 Leumi is highly liquid, also in comparison to local and international peers Loan to deposit ratio* Itau Unibanco Holdung SA Banco de Chile Banco de Mizrahi Credito de Tefahot Bank Inversiones Nedbank Group Bank Hapoalim First Rand US Bancorp Bank Leumi Israel Discount Bank Komercni Banka AS First International Bank Of Israel LCR ratio** Leumi Hapoalim Mizrahi Discount First International Bank of Israel Consolidated Source: *Bloomberg, June 30, 2015 **Financial Statements, September 30,

17 Capital Capital to risk weighted assets, % Basel III CAR Tier Capital development, NIS billions

18 Successfully executing strategy Focus on Israel Leading the digital revolution and transforming the bank for the future First of the Israeli banks to reach settlement with DOJ and NYDFS regarding US customers Executing nonbank holdings strategy Continuing streamlining, including merger of AI Bank into retail division and headcount reduction Strong focus on business development Leading market share in the Israeli banking system in middle market credit and deposits from the public 18

19 What s next: Digital Bank launch in 2016 Bringing banking to our customers No branches 24/7 Greater IT capabilities costs significantly less Less operational risks and reduced exposure to fraud Inexpensive platform simple, friendly and intuitive Simpler retail model more efficient 19

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