Bank Leumi le-israel B.M.

Transcription

1 Bank Leumi le-israel B.M. Additional Information to the Annual Consolidated Reports

2 DESCRIPTION PAGE Management's Decleration 3 Note 2 - Interest Income and Expenses 4 Note 3 - Non-Interest Financing Income 5 Note 4 - Commissions 6 Note 5 - Other Income 6 Note 6 - Salaries and Related Expenses 7 Note 7 - Other Expenses 7 Note 8 - Provision for Taxes on Operating Profit - Bank 8-11 Note 11 - Cash and Deposits with Banks - Bank 12 Note 12 - Securities - Bank Note 13 - Credit to the Public - Bank Note 14 - Credit to Governments - Bank 22 Note 15 - Investments in Subsidiaries and Affiliated Companies -Bank 23 Note 16 - Buildings and Equipment - Bank 24 Note 18 - Other Assets - Bank 25 Note 19 - Deposits of the Public - Bank 25 Note 20 - Deposits from Banks - Bank 25 Note 21 - Debentures, Bonds and Subordinated Notes - Bank 26 Note 22 - Other Liabilities- Bank 27 Note 25 - Contingent Liabilities and Special Commitments-Bank Note 26 - Liens Restrictive Conditions and Collaterals - Bank 30 Note 27 Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates Note 29 - Additional Information on Credit Risk, Credit to the Public, and the Allowance for Credit Losses Note 30 - Assets and Liabilities Classified According to Linkage Basis - Bank Note 31 - Assets and Liabilities Classified According to Maturity Date and Linkage Basis -Bank Note 32 Balances and Fair Value Assessments of Financial Instruments - Bank Cash flows generated by operating activity 61 Cash flows generated by investment activity 62 Cash flows generated by financing activity 63

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4 Note 2 - Interest Income and Expenses Bank A. Interest Income (a) Credit to the public 6,744 7,589 9,194 Credit to governments Deposits with banks Deposits with Bank of Israel and cash Interest income from securities borrowed or purchased under agreements to resell Bonds (b) Total Interest Income 7,313 8,508 10,627 B. Interest Expenses(a) Deposits of the public (795) (2,158) (4,110) Deposits from governments (4) (5) (7) Deposits from banks (48) (91) (93) Debentures, bonds and subordinated notes (699) (283) (425) Interest expense from securities loaned or sold under agreements to repurchase (3) (9) (13) Total Interest Expenses (1,549) (2,546) (4,648) Total included in interest income 5,764 5,962 5,979 C. Details of the net effect of hedging derivative financial instruments on interest income and expenses (c) Interest income (46) (45) (d) (49) (d) Interest expenses D. Details of interest income on accrual basis from bonds Held to maturity Available for sale Held for trading Total included in interest income (a) Including effective component of hedge relationships. (b)including interest in respect of mortgage-backed bonds (MBS) in the amount of NIS 130 million ( NIS 50 million, NIS 117 million). (c) Details of the effect of hedging derivative instruments on sub-sections A and B. (d) Restated -4-

5 Note 3 - Non-Interest Financing Income Bank A. Non-interest financing income from activities not for trading purposes A.1 From activities in derivative instruments Non-effective part of hedging relationships (a) Net Income (expenses) in respect of ALM derivative instruments (b) (233) 1,814 (1,427) Total from activities in derivative instruments (233) 1,824 (1,416) A.2 From investment in bonds Gains on sale of debentures available for sale Losses on sale of debentures available for sale(***) (20) (3) (16) Total from investment in debentures A.3 Exchange rate differentials,net 359 (2,303) 1,658 A.4 Gains (losses) on investment in shares Gains from sale of shares available for sale (**) Losses from sale of shares available for sale (c) (385) (21) (51) Gain from sale of shares in companies included on equity basis Dividend from shares available for sale Total from investment in shares A.5 Net profits in respect of loans sold (*) Total non-interest financing income in respect of activities not for trading purposes 1,070 (69) 904 B. Non-interest financing income from activities for trading purposes (e) Net income (expenses) in respect of other derivative instruments (1) - (3) Realized and unrealized profits (losses) from fair value adjustment of bonds for trading, net (d) (54) Realized and unrealized profits (losses) from fair value adjustment of shares for trading, net (e) (2) Total non-interest financing income in respect of activities not for trading purposes (g) Total income from Non-Interest Financing 1, (a) Excluding effective component of hedging relationships. (b) Derivative instruments which constitute part of the Bank's assets and liability management system and were not designated for hedging relationships. (c) During 2015 loans were sold in the amount of NIS 283 million (2014 NIS 12 million, ). (d) Including exchange rate differences resulting from trading activity. (e) Of which part of the profits (losses) of NIS (36) million (2014 and NIS 33 million and NIS 25 million, respectively), relating to bonds held for trading still held as of balance sheet date. (f) Of which part of the profits (losses) of NIS (62) million (2014 and NIS 58 million and NIS 76 million, respectively), relating to shares held for trading still held as of balance sheet date. (g) For interest income from investment in bonds held for trading, see Note 2. (*) in respect of loans sold in amount of NIS 291 million ( NIS 344 million). -5-

6 Note 4 - Commissions Bank (a) 2013(a) Ledger fees (c) Conversion differences Handling of credit Commissions for distribution of financial products (b) Foreign trade activities Income from transactions in securities and certain derivative instruments Credit cards Management fees and commission on life insurance and home insurance Net income from servicing credit portfolios Commissions on financing transactions Other commissions Total operating commissions 2,900 2,850 2,864 (a) Reclassified pursuant to the first-time implementation of the directives of the Supervisor of Banks on the format of the statement of profit and loss for a banking corporation. (b) Mainly distribution fees of mutual funds. (c) Reclassified. Note 5 - Other Income Bank (a) 2013(a) Profit from the realization of aasets received for settlement of loans Profits from severance pay funds Capital gain from sale of buildings and equipment Capital loss from sale of buildings and equipment (2) (1) (3) Other, net (b) Total other income (a) Reclassified pursuant to the first-time implementation of the directives of the Supervisor of Banks on the format of the statement of profit and loss for a banking corporation. (b) Reclassified. -6-

7 Note 6 - Salaries and Related Expenses Bank (c) (c) Salaries 2,743 2,283 2,543 Expenses deriving from share-based payment transacions - (1) 1 Severance pay, provident fund, training fund, pension, vacation and long service bonus Special benefits in respect of dismissal (a) National Insurance and VAT on salaries Defined benefit Defined deposit (b) (b) Long- term - Jubilee benefits (358) Other post-employment benefits and non-pension post retirement benefits Total salaries and related expenses 4,301 4,084 4,057 Of which: salaries and related expenses abroad (a) Expenses related to early retirement of employees as part of the plan for structural change in the Bank. (b) Restated pursuant to retroactive implementation of US GAAP on employee rights (c) Restated pursuant to implementation of the directives of the Supervisor of Banks on capitalization of costs of in-house development of software Note 7 - Other Expenses Bank Marketing and advertising Legal, audit and professional consultants (c) (c) (c) Communications - postage, telephone, delivery services, etc Computers (a) Office expenses Insurance Training Commissions Loss in respect of assets received in settlement of loans Other (b) Total other expenses 1,014 1,101 1,233 (a) The item includes outsourcing expenses and does not include the Bank's computer expenses as the Operations Division is a part of the Bank and its expenses are recorded and classified under the various expense headings (b) Regarding directors' fees of the Bank included in this item, see Note 33.C. (c)including expenses in respect of the investigation by US authorities, of about NIS 46 million ( NIS 256 million, NIS 236 million) -7-

8 Note 8 - Provision for Taxes on Operating Profit - Bank A. Composition Current taxes: In respect of current year (1) 9 (54) 101 In respect of prior years 1,480 1,205 1,322 Total current taxes Add (deduct) changes in deferred taxes: In respect of current year (*) 49 - (140) In respect of prior years (*) (305) (118) (135) Total deferred taxes 1,175 1,087 1,187 Provision for taxes on income Deferred tax: Creation and reversal of temporary differences (2) 49 - (140) Change in tax rate (*) Total deferred taxes (*) Restated.B Statutory tax rate applying to a banking corporation 37.71% 36.21% 35.53% Tax at the statutory tax rate (*) Tax (tax saving) resulting from: Other non-deductible expenses (109) (6) 28 Income of foreign consolidated companies Income of Israeli consolidated companies (18) (38) (10) Depreciation adjustment differences (27) - - Tax exempt and at preferred rates 49 - (140) Timing differences for which deferred taxes have not been recorded 9 (54) 101 Change in deferred taxes due to change in tax rates (*) 1,175 1,087 1,187 Taxes in respect of prior years Other Provision for taxes on operating profit (*) Restated See the annual financial report for the consolidated note. -8-

9 Note 8 - Provision for Taxes on Operating Profit - Bank (cont d) (G) A. Components of deferred tax assets and deferred tax liabilities are as follows: 31 December December December December 2014 Average tax rate in percent Deferred tax assets From allowance for credit losses 1,125 1,054 37% 38% From provision for unutilized vacations and long service bonuses % 38% From excess of provision for severance pay and pension over funds allocated(*) 2,886 2,837 37% 38% From interest not credited to current income % 38% From tax deductions carried forward % 38% From activity abroad % 38% From securities From Adjustments of depreciable non-monetary Assets % 38% Other from non-monetary assets % 25% Total 4,339 4,381 Deferred tax reserve From securities (50) - 43% 0% From investments in investee companies (14) (181) 11% 22% From the adjustment of depreciable non-monetary assets (113) (96) 30% 28% Other from non-monetary assets (11) (11) 17% 17% Total (188) (288) Deferred taxes receivable, net 4,151 4,093 Deferred taxes included: "In "Other assets (*) 4,249 4,195 "In "Other liabilities (98) (102) Deferred tax assets, net 4,151 4,093 (*) Restated -9-

10 Note 26 - Provision for Taxes on Operating Profit - Bank (cont d) B. Movement in deferred tax assets and liabilities relating to the following items: For the period ended 31 December 2015 Allowance for credit losses Provision for vacation and bonuses Surplus of funds over reserve for severance pay and pension Balance of deferred tax asset (liability) at 1 January , , Changes charged to profit and loss 87 (111) 288 (13) Changes charged to equity - - (199) - Effect of the change in the rate of tax (16) (4) (28) - Effect of the change in the rate of tax on Equity - - (12) - Balance of deferred tax asset (liability) at 31 December , ,886 8 Deferred tax asset 1, ,886 8 Balances available for offsetting Deferred tax asset at 31 December Deferred tax liability Balances available for offsetting Deferred tax liability at 31 December Interest not charged to annual income For the period ended 31 December 2014 Allowance for credit losses Reported amounts Provision for vacation and bonuses Surplus of funds over reserve for severance pay and pension Interest not charged to annual income Balance of deferred tax asset (liability) at 1 January , Changes charged to profit and loss (18) Changes charged to equity Effect of the change in the rate of tax Business Combinations Balance of deferred tax asset (liability) at 31 December , , Deferred tax asset 1, , Balances available for offsetting Deferred tax asset at 31 December Deferred tax liability Balances available for offsetting Deferred tax liability at 31 December

11 Note 8 - Provision for Taxes on Operating Profit (cont d) Dedictions carried forward for tax purposes Foreign operation Securities Investments in investee companies Adjustment of depreciable nonmonetary assets Other monetary items Other nonmonetary items Total (181) (51) ,093 (2) (2) (36) 167 (62) (13) (212) - - (1) (49) (12) - 4 (50) (14) (113) , , (90) , (50) (14) (113) - (11) (188) (90) (98) Dedictions carried forward for tax purposes Foreign operation Securities Investments in investee companies Adjustment of depreciable nonmonetary assets Other monetary items Other nonmonetary items Total (106) (41) ,482 (18) (1) 42 (173) (10) (49) (181) (51) , , (186) 4, (181) (96) - (11) (288) (186) (102) -11-

12 Note 11 - Cash and Deposits with Banks - Bank 31 December December 2014 Cash and deposits with central banks 49,975 41,289 Deposits with commercial banks (a) 8,953 15,987 Total 58,928 57,276 Including: cash and deposits with central and commercial banks for original periods not exceeding three months 55,943 53,145 (a) After deduction of provision for doubtful debts. See the annual financial report for the consolidated note

13 Note 12 - Securities - Bank 31 December December 2014 Accumulated Amount Amortized Amount Amortized Accumulated other comprehensive income (loss) in cost in cost other comprehensive income (loss) profits losses balance (In shares profits losses Fair balance (In shares Fair sheet cost) value sheet cost) (a) (a) value 1.Securities available for sale: Debentures and bonds - The Government of Israel 28,156 27, (6) 28,156 12,630 12, (2) 12,630 Foreign governments 7,210 7,208 5 (3) 7,210 3,996 3,990 8 (2) 3,996 Israel's financial institutions Foreign financial institutions 6,104 6, (18) 6,104 5,216 5, (2) 5,216 Asset-backed (ABS) or Mortgagebacked securities (MBS) 6,463 6, (53) 6,463 5,505 5, (43) 5,505 Others in Israel (1) (4) 906 Others abroad 1,415 1, (17) 1,415 1,034 1, (6) 1,034 49,968 49, (98) 49,968 29,352 28, (59) 29,352 Shares of Others companies and mutual funds (b) 1,736 1,736 1,736 1,736 1,736 1,736 1,736 1,736 1,736 1,736 Total securities available for sale 51,704 51, (c) (112) 51,704 31,063 30, (c) (70) 31,063 (c) (c) 31 December December 2014 Amount Amortized Amount Unrealized Unrealized Unrealized Unrealized Unrecognized in cost profit from losses from in cost profit from losses from balance (In shares adjustments adjustments Fair balance (In shares adjustments adjustments Fair sheet cost) to fair value to fair value value sheet cost) to fair value to fair value value (a) (a) 2.Securities held for trading: Debentures and bonds - The Government of Israel 6,663 6, (10) 6,663 7,900 7, (6) 7,900 Foreign governments 3,057 3,086 - (29) 3, Israel's financial institutions (1) (1) 374 Foreign financial institutions (1) (1) 235 Asset-backed (ABS) or Mortgagebacked securities (MBS) (7) 751 1,374 1,371 8 (5) 1,374 Others in Israel (2) 319 Others abroad (7) (9) ,307 11, (55) 11,307 11,118 11, (24) 11,118 Shares (80) 609 1,488 1, (27) 1,488 (d) (d) (d) (d) Total securities held for trading 11,916 12, (135) 11,916 12,606 12, (51) 12,606 Total securities 63,620 63, (247) 63,620 43,669 43, (121) 43,669 (a) Such quotations do not necessarily reflect the price which will be obtained upon sale of securities in large volumes. (b) Including NIS 138 million with respect to shares which have no readily available fair value, which are presented at cost (31 December NIS 503 million). (c) Regarding securities available for sale, total other income- unrealized profits (losses) are included in shareholders' equity in the item "adjustments in respect of presentation of securities available for sale according to fair value", except securities intended as hedging instruments for hedging fair value. (d) Reported in the profit and loss statement but not yet realized. Securities lent amounting to NIS 111 million (31 December NIS 335 million) are shown under Credit to the Public. See the annual financial report for the consolidated note.

14 Note 12 - Securities - Bank (cont'd) 31 December 2015 Amortized Book value cost Profits Losses Fair value 3. Bonds available for sale Pass-through securities: Securities guaranteed by GNMA Securities issued by FNMA and FHLMC 998 1,014 - (16) 998 Total 1,788 1,810 - (22) 1,788 Other mortgage-backed securities (including CMO and STRIPPED MBS) Securities issued by FNMA, FHLMC, or GNMA, or guaranteed by these entities 2,372 2,384 2 (15) 2,372 Other mortgage-backed securities (1) 304 Total 2,676 2,689 3 (16) 2,676 Asset-backed securities (ABS) CLO debentures 1,999 1, (16) 1,999 Total 1,999 1, (16) 1,999 Total asset-backed bonds available for sale 6,463 6, (54) 6,463 * Amounts charged to capital reserve as part of the adjustments of securities available for sale to fair value. Other comprehensive accumulated profit (loss)* -14-

15 Note 12 - Securities - Bank (cont'd) 31 December 2014 Amortized Book value cost Profits Losses Fair value 3. Bonds available for sale (cont'd) Pass-through securities: Securities guaranteed by GNMA Securities issued by FNMA and FHLMC 1,399 1,415 - (16) 1,399 Total 1,399 1,415 - (16) 1,399 Other mortgage-backed securities (including CMO and STRIPPED MBS) Securities issued by FNMA, FHLMC, or GNMA, or guaranteed by these entities 1,378 1,389 1 (12) 1,378 Other mortgage-backed securities (2) 724 Total 2,102 2,110 6 (14) 2,102 Asset-backed securities (ABS) CLO debentures 2,004 1, (12) 2,004 Total 2,004 1, (12) 2,004 Total asset-backed bonds available for sale 5,505 5, (42) 5,505 * Amounts charged to capital reserve as part of the adjustments of securities available for sale to fair value. Other comprehensive accumulated profit (loss)* -15-

16 Note 12 - Securities - Bank (cont'd) 31 December 2015 Unrealized Unrealized profits from losses from Amortized adjustments adjustments Fair Book value cost to fair value* to fair value* value 4. Debentures for trading Pass-through securities Securities guaranteed by GNMA Securities issued by FNMA and FHLMC Other securities Total Other mortgage-backed securities (including CMO and STRIPPED MBS) Securities issued by FNMA, FHLMC, or GNMA, or guaranteed by these entities (3) 408 Other mortgage-backed securities Total (3) 501 Asset-backed securities (ABS) Credit for purchase of vehicles (1) 67 Other credit to private persons Others (2) 148 Total (3) 242 Total asset-backed securities for trading (6) 751 *These profits (losses) were charged to profit and loss account. -16-

17 Note 12 - Securities - Bank (cont'd) 31 December 2014 Unrealized Unrealized profits from losses from Amortized adjustments adjustments Fair Book value cost to fair value* to fair value*value 4. Debentures for trading (cont'd) Pass-through securities Securities guaranteed by GNMA Securities issued by FNMA and FHLMC Other securities Total Other mortgage-backed securities (including CMO and STRIPPED MBS) Securities issued by FNMA, FHLMC, or GNMA, or guaranteed by these entities (4) 775 Other mortgage-backed securities (1) 107 Total (5) 882 Asset-backed securities (ABS) Credit card debtors Lines of credit for any purpose secured by dwelling Credit for purchase of vehicles Other credit to private persons Credit not to private persons CLO debentures Others Total Total asset-backed securities for trading 1,374 1,372 7 (2) 1,374 *These profits (losses) were charged to profit and loss account. -17-

18 Note 12 - Securities - Bank (cont'd) 31 December 2015 Less than 12 months More than 12 months Total Unrealized Unrealized Unrealized losses from losses from losses from Fair adjustments Fair adjustments Fair adjustments value to fair value value to fair value value to fair value 5. Additional details of asset-backed securities available for sale for which are included unrealized losses from adjustments to fair value Mortgage-backed securities (MBS) 1,749 (22) - - 1,749 (22) Other mortgage-backed securities (including REMIC, CMO and STRIPPED MBS) 2,003 (15) - - 2,003 (15) Asset-backed securities (ABS) 1,682 (16) - - 1,682 (16) Total 5,434 (53) - - 5,434 (53) 31 December 2014 Less than 12 months More than 12 months Total Unrealized Unrealized Unrealized losses from losses from losses from Fair adjustments Fair adjustments Fair adjustments value to fair value value to fair value value to fair value Additional details of asset-backed securities available for sale for which are included unrealized losses from adjustments to fair value Mortgage-backed securities (MBS) - - 1,346 (16) 1,346 (16) Other mortgage-backed securities (including REMIC, CMO and STRIPPED MBS) 352 (4) 730 (11) 1,082 (15) Asset-backed securities (ABS) 898 (4) 472 (8) 1,370 (12) Total 1,250 (8) 2,548 (35) 3,798 (43)

19 Note 12 - Securities - Bank (cont'd) Less than 12 months 31 December 2015 More than 12 months Unrealized losses Unrealized losses Fair Fair value 0-20% 20-35% More than 35% Total value 0-20% 20-35% More than 35% Total bonds The Government of Israel 14,969 (6) - - (6) Foreign governments 5,062 (3) - - (3) Israel's financial institutions Foreign financial institutions 3,837 (18) - - (18) backed securities (ABS) or 1,682 (16) - - (16) backed securities (MBS) 3,752 (37) - - (37) Others in Israel 126 (1) - - (1) Others abroad 653 (8) (9) - (17) Shares 135 (8) - - (8) 91 (6) - - (6) Total securities available for sale 30,216 (97) (9) - (106) 91 (6) - - (6) Less than 12 months 31 December 2014 More than 12 months Unrealized losses Unrealized losses Fair Fair value 0-20% 20-35% More than 35% Total value 0-20% 20-35% More than 35% Total bonds The Government of Israel 6,855 (2) - - (2) Foreign governments 3,325 (2) - - (2) Israel's financial institutions Foreign financial institutions 1,333 (2) - - (2) backed securities (ABS) or 898 (4) - - (4) 472 (8) - - (8) backed securities (MBS) 352 (4) - - (4) 2,076 (27) - - (27) Others in Israel 300 (4) - - (4) Others abroad 172 (1) - - (1) 40 (5) - - (5) Shares (11) - - (11) Total securities available for sale 13,240 (19) - - (19) 2,978 (51) - - (51) -19-

20 Note 13 - Credit to the Public - Bank A. Additional information on the method of calculating the credit loss allowance in respect of debts* and on debts* on which it was calculated 31 December 2015 Credit loss allowance Credit to the public Banks and Commercial Residential Other private Total governments Total Recorded debt balance of debts*: Examined on an individual basis 109, ,672 9, ,081 Examined on a collective basis 14,680 80,616 27, , ,851 Of which the allowance was calculated by extent of arrears 1,014 80,616-81,630-81,630 Total debts* 124,526 80,616 28, ,523 9, ,932 Credit loss allowance by debts*: Examined on an individual basis 1, , ,974 Examined on a collective basis ,086-1,086 Of which the allowance was calculated by extent of arrears Total Credit loss allowance 2, , , December 2014 Credit loss allowance Credit to the public Banks and Commercial Residential Other private Total governments Total Recorded debt balance of debts*: Examined on an individual basis 109, ,597 16, ,065 Examined on a collective basis 13,716 74,239 25, , ,708 Of which the allowance was calculated by extent of arrears - 74,239-74,239-74,239 Total debts* 123,427 74,239 26, ,305 16, ,773 Credit loss allowance by debts*: Examined on an individual basis 1, , ,960 Examined on a collective basis ,161-1,161 Of which the allowance was calculated by extent of arrears Total Credit loss allowance 2, , ,121 * Credit to the public, credit to governments, deposits in banks and other debts, excluding bonds and securities borrowed or purchased under agreements to resell. ** Including balance of allowance in excess of that required by the extent of arrears method calculated on a collective basis in the amount of NIS 310 million ( million)

21 Note 13 - Credit to the Public - Bank B. Debts* and off-balance sheet credit instruments 1. Change in balance of credit loss allowance 31 December 2015 Credit loss allowance Credit to the public Banks and Commercial Residential Other private Total governments Total Balance of credit loss allowance at beginning of year 2, , ,588 Expenses in respect of credit losses (146) (1) 149 Accounting write-offs (375) (10) (545) (930) 0 (930) Collection of debts written off in previous years Net accounting write-offs 8 (10) (215) (217) 0 (217) Balance of credit loss allowance at end of year 2, , ,520 Of which in respect of off-balance sheet credit instruments December 2014 Credit loss allowance Credit to the public Banks and Commercial Residential Other private Total governments Total Balance of credit loss allowance at beginning of year 2, , ,388 Expenses in respect of credit losses (144) Accounting write-offs (287) (7) (489) (783) - (783) Collection of debts written off in previous years Net accounting write-offs 169 (7) (155) 7-7 Balance of credit loss allowance at end of year 2, , ,588 Of which in respect of off-balance sheet credit instruments * Credit to the public, credit to governments, deposits in banks and other debts, excluding bonds and securities borrowed or purchased under agreements to resell

22 Note 14 - Credit to Governments - Bank 31 December December 2014 Credit to the Government Credit to foreign Governments Total credit to Governments See the annual financial report for the consolidated note

23 Note 15 - Investments in Subsidiaries and Affiliated Companies -Bank Reported Amounts 31 December December 2014 Companies Companies included on included on equity basis Subsidiaries Total equity basis Subsidiaries Total A. Investments in shares stated on equity basis (including other assets and goodwill) ,554 10,686 1,435 10,117 11,552 Other investments: Convertible securities - 1,853 1,853-1,961 1,961 Shareholders loans Total other investments - 1,853 1,853-1,973 1,973 Total investments ,407 12,539 1,435 12,090 13,525 Including - Post-acquisition profits 121 4,889 5, ,202 4,966 Post-acquisition changes in shareholders equity: Adjustments in respect of presentation of securities available for sale at fair value,net - (46) (46) Adjustments in respect of companies included on equity basis, net 30 (304) (274) 12 (193) (181) Details regarding goodwill: Period of amortization 0-20 years 0-20 years Original amount, net Unamortized balance Details on book value and market value of quoted securities: Book value ,318-1,318 Market value ,566-2,566 See the annual financial report for the consolidated note B. Group s equity in profit of companies included on equity basis (in Bank - subsidiaries and affiliates) Bank Group s equity in operating profits of companies included on equity basis (Bank - affiliated companies) 864 (85) 151 Provision for deferred taxes (44) (45) 21 Group s equity in operating profits of companies included on equity basis (Bankaffiliated companies) net of tax effect 820 (130)

24 Note 16 - Buildings and Equipment - Bank Buildings and Equipment, furniture real estate (a) and motor vehicles (b) Software (b) Total Cost As at 31 December ,829 2,676 4,435 9,940 Additions Disposals (121) (122) (1,306) (1,549) Merger of Leumi Mortgage Bank As at 31 December ,740 2,681 3,531 8,952 Accumulated Depreciation As at 31 December ,450 2,199 3,735 7,384 Current year provision Recognized losses from impairment Disposals Merger of Leumi Mortgage Bank (87) (119) (1,203) (1,409) As at 31 December ,433 2,210 2,822 6,465 Balance after depreciation as at 31 December , ,487 Balance after depreciation as at 31 December , ,556 (a) Including installations and leasehold improvements. (b) Reclassified See the annual financial report for the consolidated note

25 Note 18 - Other Assets - Bank 31 December December 2014 Deferred tax asset, net (a) - (see note 26) 4,249 4,196 Excess of funds allocated for severance pay over provision (see note 15) 1,134 1,158 Assets transferred to ownership of the Group as a result of settlement of problem loans 4 6 Excess of advance tax payments over current provisions Expenses to be amortized on issuance of debentures,bonds and subordinated notes Accrued income Prepaid expenses Other receivables and prepayments Total other assets 6,349 5,923 (a) Including customers' options (b) Restated pursuant to a change in the method of accounting for accumulating employee rights,, and retroactive implementation of the directives of the Supervisor of Banks on capitalization of in-house software development Note 19 - Deposits of the Public - Bank Types of deposits by location raised and type of depositor 31 December December 2014 in Israel On demand Non-interest bearing 70,720 53,886 Interest bearing 79,783 55,294 Total on demand 150, ,181 *Fixed term 149, ,198 Total deposits in Israel ** 300, ,379 *of which: non-interest bearing deposits 70,720 53,886 Outside israel On demand - - Non-interest bearing - - Interest bearing - - Total on demand - - *Fixed term - - Total deposits outside israel - - *of which: non-interest bearing deposits - - Total deposits of the public 300, ,379 **of which: Deposits of private persons 132, ,702 Deposits of institutional entities 57,090 30,978 Deposits of corporations and others 111, ,699 Note 20 - Deposits from Banks - Bank 31 December December 2014 in Israel commercial banks: Demand deposits 2,857 3,163 Time deposits 3,382 5,200 Acceptances central banks: Demand deposits - - Time deposits - - Outside israel commercial banks: Demand deposits - - Time deposits - - Acceptances - - central banks: Demand deposits - - Time deposits - - Acceptances - - Total deposits from banks 6,703 8,

26 Note 21 - Debentures, Bonds and Subordinated Notes - Bank Bank Average Internal maturity (a) yield rate (a) 31 December Years % Debentures and bonds (b): In Israeli currency linked to the CPI ,023 - In Israeli currency Unlinked ,159 - Subordinated notes(b): In Israeli currency Unlinked 3.7 (c) 3.4 4, In Israeli currency linked to the CPI 3.0 (c) ,581 5,001 Total debentures, bonds and subordinated notes 21,308 5,953 (a) The average duration is the average of the payment periods, weighted according to the payment flow discounted at the internal rate of return. The internal rate of return is the rate of interest discounting the value of the anticipated future flow of payments to the amount included in the balance sheet. (b) The unamortized balance of discount less premium on debentures and on subordinated liability notes has been deducted from the amount of the debentures. (c) The average duration as of the date of change in interest is based on a calculation of the effective average life as calculated for purposes of Exhibit D, in unlinked subordinated notes is 0.2 years, in those linked to the CPI is 3.07 years

27 Note 22 - Other Liabilities- Bank Bank 31 December December 2014 Deferred tax liability, net see Note Excess of current provisions for taxes over advance payments Excess of provisions for severance pay and penesions over amounts funded 8,871 9,046 Provisions for unutilized vacations and long service bonus Deferred income Other provisions in respect of employee rights Allowance for credit losses in respect of off-balance sheet items Accrued expenses in respect of salaries and related expenses Accrued expenses in respect of salaries and related expenses Payables in respect of credit cards 5,025 4,783 Accrued expenses Market value of securities sold short Other payables and credit balances 947 1,039 Total other liabilities 18,712 18,445 (1) Restated pursuant to a change in the method of accounting for accumulating employee rights, and retroactive implementation of the directives of the Supervisor of Banks on capitalization of in-house software development

28 Note 25 - Contingent Liabilities and Special Commitments-Bank 31 December 31 December Balance of Contract balances allowance for credit losses Contract balances Balance of allowance for credit losses A. Off-balance sheet financial instruments Balances of contracts or their stated amounts as at the end of the year Transactions in which the balance reflects a credit risk: Documentary credits 1, ,083 3 Credit guarantees 5, , Guarantees to apartment purchasers 19, , Other guarantees and liabilities 16, , Unutilized credit card facilities (a) 13, , Other unutilized revolving credit facilities and credit facilities in accounts o 13, , Irrevocable commitments to provide credit which has been approved and n 19, , Commitments to issue guarantees 14, , Unutilized facilities for activity in derivative instruments 4,115-5,533 - Approval in principle for a guaranteed rate of interest 3,874-4,565 - a) Of which: non unrealized credit exposures in respect of commitments to provide liquidity to securitization) structures under the aegis of others totaled NIS 234 million (on 31 December 2014).(NIS 233 million This commitment is only extended in a state of financial difficulties which do not permit securitization. The liquidity framework is not currently in use and has not been used in the past. The line supplied by the Bank constitutes a small part of total liquidity lines to those entities. The Bank does not provide any other type of support to these entities B. Off-balance sheet commitments for transactions based on extent of 31 December December 2014 Balance of credit from deposits on collection basis (b) Israeli currency unlinked Israeli currency linked to the CPI 2,039 3,087 Foreign currency Total 2,520 4,062 Cash flows in respect of collection commissions and interest margins on activities based on the extent of collections as at 31 December One to Three to Five to Ten to More than Total Total Up to one year three years five years ten years twenty years twenty years CPI linked sector (c) Cash flows of futures contracts Expected future cash flows after management estimate of early repayments Discounted expected future cash flows after management estimate of early repayments (d) Unlinked shekel sector Cash flows of futures contracts Expected future cash flows after management estimate of early repayments Discounted expected future cash flows after management estimate of early repayments (d) (a) Credits and deposits from deposits for which their return to the depositor is conditional on collection of the credits, (or deposits), with a margin or collection fee, (instead of a margin). (b) Standing loans and related Government deposits totaling NIS 146 million, (NIS 204 million last year), were not included in this table. (c) Including foreign currency sector. (d) The discounting was made at the rate of 2.73% ( %). See the annual financial report for the consolidated note. -28-

29 Note 25 - Contingent Liabilities and Special Commitments-Bank (cont'd) B. Off-balance sheet commitments for transactions based on collection (cont'd) Information on loans granted during the year by mortgage banks: Loans from deposits on collection basis (11) 32 Standing loans (10) 15 C. Other contingent liabilities and special commitments: (1) Long-term rental contracts - rental of buildings, equipment and motor vehicles and maintenance in respect of commitments payable in following years First year Second year Third year Fourth year Fifth year After five years Total (2) Commitments to purchase securities (3) Commitments to invest in and acquire buildings and equipment (4) Future deposits Transactions with depositors for purposes of receipt of large deposits at various future dates and at fixed interest rates determined in advance as of the date of the commitment Details of amounts of future deposits and deposit dates as determined in the terms of the First year 3 12 Second year - 3 Third year - - Fourth year - - Fifth year - - Sixth and subsequent years - - Total future deposits

30 Note 26 - Liens Restrictive Conditions and Collaterals - Bank Sources of securities received which the Bank may sell or pledge, by fair value, excluding setoffs: Securities received in securities borrowing transactions against cash 1,764 2,000 1,360 Uses of securities received as collateral and securities of the Bank, by fair value, excluding setoffs: Securities loaned in securities lending transactions against cash 938 1,

31 Note 27B Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates - Bank a. Scope of Activity 31 December 2015 Foreign Contracts in Contracts in Interest contracts currency respect of respect of Shekel - index Other contracts shares goods and others (1) Amount of derivative instruments a) Hedge derivative (a) Forward contracts Swaps - 2, Total - 2, Of which: Swap contracts in which the banking institution agreed to pay a fixed rate of interest - 2, b) ALM derivative (a) (b) Futures contracts - 14, , Forward contracts 12,525 14, , Exchange-traded options Put options ,797 11, Call options ,292 11, Other options Put options - 10,797 15,484 3, Call options - 8,037 16,055 3, Swaps ,075 28,668 27, Total 13, , , , Of which: Swap contracts in which the banking institution agreed to paya fixed rate of interest - 137,618 c) Other derivatives (a) Swaps Total d) Credit derivatives and Spot contracts Credit derivatives in which the banking institution is a guarantor - Credit derivatives in which the banking institution is a beneficiary 40 Foreign exchange spot contracts 9,015 Total - - 9, Total 13, , , ,193 1,037 (a) Except credit derivatives and Spot contracts. (b) Derivatives constituting part of the Bank's system of management of assets and liabilities, not intended for hedging. -31-

32 Note 27B Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates Bank (cont'd) (a) Scope of activity (cont'd) 31 December 2015 Foreign Contracts in Contracts in Interest contracts currency respect of respect of Shekel - index Other contracts shares goods and others (2) Gross fair value of derivative instruments a) Hedged derivatives (a) Gross positive fair value Gross negative fair value b) ALM derivatives (a) (b) Gross positive fair value 344 6,370 3,174 1, Gross negative fair value 392 5,944 3,278 1, c) Other derivatives (a) Gross positive fair value Gross negative fair value d) Credit derivatives Credit derivatives in which the banking institution is a guarantor Gross positive fair value - Gross negative fair value - Credit derivatives in which the banking corporation is a beneficiary Gross positive fair value - Gross negative fair value 1 e) Total Gross positive fair value (c) 344 6,371 3,174 1, Fair value amounts offset in the balance sheet (*) Book value of assets in respect of derivative instruments 344 6,371 3,174 1, *Of which: book value of assets in respect of derivative instruments not subject to a master netting arrangement or similar arrangements Gross negative fair value (c) 392 6,090 3,278 1, Fair value amounts offset in the balance sheet (*) Book value of liabilities in respect of derivative instruments 392 6,090 3,278 1, *Of which: book value of liabilities in respect of derivative instruments not subject to a master netting arrangement or similar (a) Except credit derivatives. (b) Derivatives constituting part of the Bank's system of management of assets and liabilities, not intended for hedging. (c) See the annual financial report for the consolidated note. -32-

33 Note 27B Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates Bank (cont'd) (a) Scope of activity (cont'd) 31 December 2014 Foreign Contracts in Contracts in Interest contracts currency respect of respect of Shekel - index Other contracts shares goods and others (1) Amount of derivative instruments a) Hedge derivative (a) Forward contracts Swaps - 2, Total - 2, Of which: Swap contracts in which the banking institution agreed to pay a fixed rate of interest - 2, b) ALM derivative (a) (b) Futures contracts - 12, , Forward contracts 12,108 25, , Put options Call options ,647 12, Put options Call options - 12,962 30,369 2, Swaps - 10,494 28,740 2, Total ,544 30,182 24, Of which: Swap contracts in which the banking institution agreed to paya fixed rate of interest - 129, c) Other derivatives (a) Swaps Total d) Credit derivatives and Spot contracts Credit derivatives in which the banking institution is a guarantor - Credit derivatives in which the banking institution is a beneficiary - Foreign exchange spot contracts , Total , Total 12, , , ,725 1,518 (a) Except credit derivatives and Spot contracts. (b) Derivatives constituting part of the Bank's system of management of assets and liabilities, not intended for hedging. -33-

34 Note 27B Derivative Instrument Activity - Scope, Credit Risks and Repayment Bank (cont'd) (a) Scope of activity (cont'd) 31 December 2014 Foreign Contracts in Contracts in Interest contracts currency respect of respect of Shekel - index Other contracts shares goods and others (2) Gross fair value of derivative instruments a) Hedged derivatives (a) Gross positive fair value Gross negative fair value b) ALM derivatives (a) (b) Gross positive fair value 241 7,857 6,726 1, Gross negative fair value 254 7,454 5,781 1, c) Other derivatives (a) Gross positive fair value Gross negative fair value d) Credit derivatives Credit derivatives in which the banking institution is a guarantor Gross positive fair value Gross negative fair value Credit derivatives in which the banking corporation is a beneficiary Gross positive fair value Gross negative fair value e) Total Gross positive fair value (c) 241 7,859 6,726 1, Fair value amounts offset in the balance sheet Book value of assets in respect of derivative instruments (*) 241 7,859 6,726 1, * Of which: Book value of assets in respect of derivative instruments not subject to a master netting arrangement or similar Gross negative fair value (c) 254 7,620 5,781 1, Fair value amounts offset in the balance sheet Book value of liabilities in respect of derivative instruments (*) 254 7,620 5,781 1, * Of which: Book value of liabilities in respect of derivative instruments not subject to a master netting arrangement or similar (a) Except credit derivatives. (b) Derivatives constituting part of the Bank's system of management of assets and liabilities, not intended for hedging. (c) See the annual financial report for the consolidated note. -34-

35 Note 18B Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates Bank (cont'd) (b) Credit Risk in Respect of Derivative Instruments According to Other Party to the Contract 31 December 2015 Governments Stock Dealers/ and Central exchanges Banks brokers Banks Others Total Balance sheet balances of derived assets from derivative instruments (1) 169 6,616 1, ,519 11,179 Gross amounts that not offset in the balance sheet: Mitigation of credit risk in respect of financial instruments - 2,926 1, ,831 Mitigation of credit risk in respect of cash collateral received ,079 Net amoount of assets in respect of derivative instruments 169 2, ,609 5,269 Off-balance sheet credit risk in respect of derivative instruments (3) - 3,522 1, ,939 9,752 Mitigation of off-balance sheet credit risk ,392 2,902 Net off-balance sheet credit risk in respect of derivative instruments. - 3,152 1, ,547 6,850 Total credit risk in respect of derivative instruments 169 6,111 1, ,156 12,119 Book balance of liabilities in respect of derivative instruments (2) 194 6,395 1, ,677 11,064 Gross amounts that not offset in the balance sheet: Financial instruments - 2,926 1, ,831 Cash collateral pledged Net amount of liabilities in respect of derivative instruments 194 3, ,862 5,794 (1) Net accounting arrangements do not exist. (2) Of which a balance sheet amount of stand-alone derivative instruments in the sum of NIS 11,030 million (31 December 2014 NIS 15,497 million) included under other assets. (3) Off-balance sheet credit risk in respect of derivative instruments (including in respect of derivative instrument with negative fair value) as calculated for purposes of limitations on debts of borrowers. (c) Repayment Dates - Nominal Amounts: Balances as at end of the year 31 December 2015 Up to Three One year After three months to to five five months one year years years Total Interest contracts: Shekel - index 2,384 2,416 5,537 2,775 13,112 Other 30,712 72, ,598 82, ,729 Foreign currency contracts 170,959 67,569 26,352 9, ,413 Contracts in respect of shares 90,066 24, ,196 Contracts in respect of commodities and others ,039 Total 294, , ,437 94, ,

36 Note 27B Derivative Instrument Activity - Scope, Credit Risks and Repayment Dates Bank (cont'd) (b) Credit Risk in Respect of Derivative Instruments According to Other Party to the Contract (cont'd) 31 December 2014 Governments Stock Dealers/ and Central exchanges Banks brokers Banks Others Total Balance sheet balances of derived assets from derivative instruments (1) 304 9,394 2, ,443 16,707 Gross amounts that not offset in the balance sheet: Mitigation of credit risk in respect of financial instruments - 3,486 1, ,509 Mitigation of credit risk in respect of cash collateral received - 1, ,424 Net amount of assets in respect of derivatives instruments 304 4,893 1,011-3,566 9,774 Off-balance sheet credit risk in respect of derivatives instruments (3) - 4,013 1, ,487 8,783 Mitigation of off-balance sheet credit risk ,011 1,380 Net off-balance sheet credit risk in respect of derivative instruments. - 3,767 1, ,476 7,402 Total credit risk in respect of derivative instruments 304 8,660 2, ,042 17,176 Book balance of liabilities in respect of derivative instruments (2) 328 8,565 2, ,232 15,532 Gross amounts that not offset in the balance sheet: Financial instruments - 3,486 1, ,509 Cash collateral pledged Net amount of liabilities in respect of derivatives instruments 328 4,384 1, ,254 9,072 (1) Of which a balance sheet amount of stand-alone derivative instruments in the sum of NIS 11,030 million (31 December 2014 NIS 15,497 million) included under other assets. (2) Off-balance sheet credit risk in respect of derivative instruments (including in respect of derivative instrument with negative fair value) as calculated for purposes of limitations on debts of borrowers. (c) Repayment Dates - Nominal Amounts: Balances as at end of the year (cont'd) 31 December 2014 Up to Three One year After three months to to five five months one year years years Total Interest contracts: Shekel - index 1,296 3,203 5,696 2,375 12,570 Other 17,869 75, ,929 87, ,436 Foreign currency contracts 212,553 90,443 19,590 17, ,315 Contracts in respect of shares 92,154 16,928 1, ,724 Contracts in respect of commodities and others 1, ,516 Total 324, , , , ,