Overview 31/03/2011
GDP Rate of Growth 5.10% 5.20% 4.00% 4.60% 5.00% 0.70% 2006 2007 2008 2009 2010 2011 * 2 * Forecast
Bank of Israel Interest Rate * and the Rate of Inflation ** Bank of Israel Interest Rate Rate of Inflation 4.0% 3.8% 3.90% 3.80% 3.4% 2.5% 2.70% 2.50% 2.00% 1.25% 2007 2008 2009 2010 Q1 2011 3 * Bank of Israel Interest rate for the last month of the Year / Period ** Yearly basis - Forecast
Country Ratings MOODY S FITCH S & P Long Term A1 A A Short Term P1 F1 A1 Outlook Stable Stable Stable 4
Israeli / Foreign Investments US$ millions Foreign Investments in Israel Israeli Investments Abroad 23,866 22,961 16,797 10,429 11,871 14,233 12,446 8,844 9,950 6,827 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 In 2006: Acquisition of Iscar by Berkshire - Hathaway In 2006: Acquisition by Teva 5
Financial Reports 31/03/2011
Ownership Structure Bino/Liberman Group E - 20.94, V - 20.94 E - 79.06, V - 79.06 E - 0, V 0 (stocks dormant) The Public FIBI Holding Company Ltd. FIBI Investment House Ltd. E + V 20.02 E + V - 53 E + V - 26.45 Israel Discount Bank E 73.79 V 73.33 E 100 V 100 E - 51 V - 51 E - 100 V - 100 E - 100 V - 100 E - 100 V - 100 E - 75 V - 75 E - 100 V - 100 E - 100 V - 100 E - 28.2 V - 21 E - 100 V - 100 The First Int l & Co. Underwriting and Investments Ltd. Modus-Selective Investments Management & Advice Ltd. International Leasing Ltd. Israel Credit Cards Ltd. First International Issues Ltd. 7 E - % Share in Equity V - % Voting Rights
First International Bank Group First International Bank - Corporate + middle market banking - Private + affluent banking - Capital & Money Markets - 80 branches Retail Bank Cluster - Capital Markets, Trust & Custody - Private + affluent banking - 7 branches - Since 2004 International - Retail - Branches: 19 - Since 2008 - Key Audience: Teachers - Retail /Commercial - Branches: 48 - Since 2006 - Key Audience: Military Personnel - Retail/Commercial - Branches: 20 (as for 20/01/2011) - Since 1977 - Key Audience: Ultra Orthodox - Business / Corporate Banking - Since 1982 - Private Banking - Since 1984 8
Shareholders The Liberman family The Liberman family has enjoyed sustained success in both Australia and Israel for over 50 years. Jack Liberman, an astute Australian businessman and entrepreneur, along with his children, built a large and diversified investment company (JGL Investments PTY Ltd.). The family, together with the Bino Group, in a long-term partnership, hold a controlling interest in both FIBI Holdings and Paz Oil Company Ltd. ( Paz ), Israel s leading petrol player. 9 9
Shareholders Mr. Zadik Bino Mr. Zadik Bino is a highly reputable businessman with broad business interests in Israel. In a banking career spanning over 25 years, Mr. Zadik Bino filled senior positions in the local banking sector, which included CEO of Bank Leumi of Israel and Chairman of the Board of Directors and CEO of The First International Bank of Israel. Mr. Zadik Bino was also a member of the Advisers Committee and the Committee for Banking Matters of the Bank of Israel. Since 1989, Mr. Bino has devoted himself to his family's private business interests in Israel and abroad. Through the years, the Bino Group has engaged in the execution, development and nurturing of various investments. Besides banking, the main investments of the Bino family is in Energy (through a 45.5% holding in Paz oil Company Ltd. - a listed company which is Israel s largest supplier of refined petroleum products, and which owns the Ashdod Refinery). Since acquiring the controlling interest in FIBI Holdings and the Bank in 2003, both Mr. Zadik Bino and his son, Mr. Gil Bino, serve as members of the Board of Directors of FIBI and the Bank. On June 2010 Mr. Gil Bino was appointed as FIBI s chairman instead of Mr. Zadik Bino. The controlling interest in FIBI and in the Bank is held by the Bino Family (Mr. Zadik Bino and his three children). 10 10 10
First International Bank of Israel - FIBI Universal bank with strong niche position in capital markets, foreign exchange and foreign trade Domestic subsidiaries target focused audiences: affluent banking (UBank), security sector - retail banking (Otsar Hahayal), ultraorthodox Jews (PAGI), and teachers (Massad) Foreign subsidiaries in London (commercial banking) and Zurich (private banking) Branches: 174 in Israel (including subsidiaries) Equity: NIS 5.7 Billion 5 th largest banking group in Israel 11
Bank Ratings Moody s Midrug Israel Bank Deposits foreign & domestic, long & short term A3 prime-2 Midrug Aa1 Financial Strength BFSR D+ Outlook Stable Issuer Subordinated Notes Ma a lot - S&P AA / Negative AA - / Negative 12
Net Operating Earnings and ROE NIS Millions 13.5% 9.7% 140 8.5% 129 183 Q4/2010 Q1/2010 Q1/2011 13
Statements of income Q1/11 Q1/10 NIS Millions 31/03/2011 31/03/2010 Net change Earnings from financing operations before provision for doubtful debts 596 550 42 Interest collection - 22 (14) Credit lost income (doubtful debts) 36 (20) 32 Operating commissions 369 360 6 Income from sales of shares (& dividend) 31 1 19 Other income 2 4 (1) Operating & other expenses 739 697 28 Operating earnings before taxes 295 220 Provision for taxes 119 100 Operating earnings after taxes 176 120 56 The banks net equity in operating results of investee companies 15 21 (6) Exterior share holders & extraordinary profit (8) (12) 4 14 Net earnings 183 129 54
Ratio of Provision for Doubtful Debts to Credit to the Public Other 4 Leading Banks FIBI 1.75% 1.34% 0.53% 0.91% 0.85% 1.28% 1.10% 0.92% 0.99% 0.62% 0.72% 0.53% 0.33% 0.76% 0.75% 0.43% 0.27% 0.42% 0.28% 0.39% 0.44% 0.18% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1/11-0.23% 15
Total Credit Risk according to the new orders (NIS millions) Balance for date 31/03/2011 31/12/2010 Change Defective credit risk 1,236 1,325 (89) Inferior credit risk 502 553 (51) Credit risk subject to special supervision 1,009 974 35 Off-balance sheet credit risk * 400 353 47 Total problematic credit risk according to the new orders 3,147 3,205 (58) * After accounting deductions and before credit lost provision 16
Operating & Other Expenses NIS Millions Q1/2010 Q1/2011 697 739 383 447 135 136 168 144 Total Operating Expenses Salaries & Related Expenses Maintenance, Depreciation, Premises & Equipment Other Expenses 17
Operating Income and Expenses Operating Expenses Operating Income Income / % Cost Ratio % Adjusted Income / Cost Ratio % % Total income after provision to doubtful debts / expenses adjusted Ratio Total income before provision to doubtful debts / expenses adjusted Ratio Operating Expenses & Income Adjusted * Operating Expenses & Income 52.4 % 54.4 % 122.6 % 136.2 % 54.4 % 125.5 % 131.1 % 52.2 % 54.4 % 18 Financing Income excluding provisions for decline in value, clarification 8 position, interest collection of problematic debts and fair value of derivative instruments, operating income excluding dividend, realization or decline in value of shares and severance pay fund gains; expenses excluding severance pay fund effects, special provisions, bonus and strike effects
Capital Adequacy Ratio Basel II Core 1 capital Core 2 capital FIBI 4 top Banks * ** Capital Adequacy 14.30% 13.42% 14.57 % * Core 1 Capital Adequacy * ** * 19 * Poalim & Mizrahi average
Changes in Assets, Deposits & Credit to the Public (NIS Billions) Assets Shareholders equity Credit to the public Deposits from the public 72.7 61.6 44.3 92.5 86.5 72.2 75.8 52.2 55.6 104.6 98.9 82.8 79.9 61.3 60.3 100.7 100.6 80.2 79.8 63.5 63.3 4.181 4.74 5.486 5.491 6.165 5.787 5.7 2005 2006 2007 2008 2009 2010 Q1/2011 20
Capital Adequacy Bazel II 12.70% Core capital Bazel II 8.19% Deposits from the Public 79.8 NIS Billion Credit to the Public 63.3 NIS Billion Deposits / Credit Ratio 126.3% Bonds-State of Israel: 9.1 NIS Billion 21 Liquid Assets 35.0% Capital Investments 43.4% Of capital available for Investments Gov. & Bank Deposits 2.5 NIS Billion Capital Notes 4.9 NIS Billion Capital available for Investments 3.8 NIS Billion Cash/Deposits-Bank of Israel: 14.1 NIS Billion Bonds-Foreign states: 0.6 NIS Billion Deposits in Banks: 4.7 NIS Billion Bonds-Banks: 1.2 NIS Billion NIS+Forex Corporate Bonds: 0.8 NIS Billion Structure Products, Hedge Funds & Stocks:0.8 NIS Billion Credit Risks in VAR Terms: (0.04) NIS Billion
Changes in Net Profit - Subsidiaries NIS Millions Q1/2011 Q1/2010 Change 9.5 8.6 0.9 16.6 15.2 1.4 21.8 11.2 10.6 9.6 8.7 0.9 22
Banking Subsidiaries in Israel PAGI, in which FIBI has a 100% equity holding, is a retail bank with 19 branches. the majority of its clients belong to the ultra-orthodox and orthodox sectors. PAGI maintains a unique positioning as Israel s only orthodox oriented bank and its share in its target is significant. PAGI s strategy is to aggressively grow its client base, while focusing on target segments in personal, business, and institutional banking. UBANK - FIBI acquired 100% of share capital of UBANK (formerly Investec Bank (Israel) Ltd.) in December 2004. The acquisition of UBANK significantly bolstered FIBI s competitive position in private banking, capital markets and foreign currency trading. In 2007 UBANK launched an innovation in Israeli banking - dedicated branches for affluent clients. This premium service (above retail and bellow classic private banking) comprises distinctive branch design and hours of operation, along with many other attractive features. 23
Banking Subsidiaries in Israel OTSAR HAHAYAL - FIBI acquired the majority share of Otsar Hahayal in August, 2006, it now hold 73.8% of the bank. Bank Otsar Hahayal specializes in retail and small to medium-sized businesses (SMEs) and has a high proportion of current and former military and defense industry personnel within its client base. The inclusion of Bank Otsar Hahayal s operations creates a banking group with a comprehensive and diverse range of activities and earnings. FIBI has completed the process of integrating Otsar Hahayal s IT systems and is in the process of implementing a shared services model across headquarter functions. MASSAD - FIBI acquired 51% of the share capital of Massad in May 2008. Massad, is a sectorial bank, specializes in teaching personnel. FIBI completed the process of integrating Massad s IT System and is currently implementing a shared services model across headquarter support functions. Massad's identity as the teachers' bank also places it in an advantageous position in the Arab sector, and explains its success in this sector despite rising competition. 24 24 24
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