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Overview 31/12/2010. * Forecast GDP Rate of Growth 2.

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Presentation on theme: "Overview 31/12/2010. * Forecast GDP Rate of Growth 2."— Presentation transcript:

1 Overview 31/12/2010

2 * Forecast GDP Rate of Growth 2

3 3 * Bank of Israel Interest rate for the last month of the Year / Period Bank of Israel Interest Rate Bank of Israel Interest Rate * and the Rate of Inflation Rate of Inflation ** Forecast

4 Country Ratings S & P FITCHMOODYS AAA1A1 Long Term A1A1F1F1P1P1 Short Term Stable Outlook 4

5 Foreign Investments in Israel In 2006: Acquisition by Teva Israeli Investments Abroad In 2006: Acquisition of Iscar by Berkshire - Hathaway 5 Israeli / Foreign Investments US$ millions

6 Financial Reports 31/12/2010

7 Ownership Structure Bino/Liberman Group The PublicFIBI Holding Company Ltd.FIBI Investment House Ltd. Israel Discount Bank The First Intl & Co. Underwriting and Investments Ltd. Modus-Selective Investments Management & Advice Ltd. International Leasing Ltd. Israel Credit Cards Ltd. First International Issues Ltd. E , V E , V E - 0, V – 0 (stocks dormant) E + V E + V – E + V E – V – E – 100 V – 100 E - 51 V - 51 E V E V E V E V E V E V - 21 E V E - 75 V - 75 E - % Share in Equity V - % Voting Rights 7

8 -Retail /Commercial -Branches: 48 -Since Key Audience: Military Personnel -Retail -Branches: 18 -Since Key Audience: Teachers First International Bank Group First International Bank - Corporate + middle market banking - Private + affluent banking - Capital & Money Markets - 80 branches Retail Bank Cluster International - Capital Markets, Trust & Custody - Private + affluent banking - 7 branches - Since Private Banking - Since Business / Corporate Banking - Since Retail/Commercial -Branches: 20 (as for 20/01/2011) -Since Key Audience: Ultra Orthodox 8

9 Unique group services model to control expences Increasing group branches to 174 Integrated computer system Realizing synergies, restraining expenses * * * FIBIs Multi-Annual Strategic Road Map Focus on PB and Retail while Realizing Synergies Mergers and Acquisitions Multi banking group 9 * Acquisition Market share in private banking increased Number of retail customers doubled

10 174 branches Purchasing 3 new banks: to increase market share in private & commercial banking 10

11 11 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), Israels leading petrol player. 11

12 12 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 42.6% holding in Paz oil Company Ltd. - a listed company which is Israels 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. The controlling interest in FIBI and in the Bank is held by the Bino Family (Mr. Zadik Bino and his three children). 12

13 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), ultra- orthodox Jews (PAGI), and teachers (Massad) Foreign subsidiaries in London (commercial banking) and Zurich (private banking) Branches: 174 in Israel (including subsidiaries) Equity: NIS 5,787 Million (USD 1,630 Million*) 5 th largest banking group in Israel * $/NIS = as of Dec. 31,

14 Bank Ratings Moodys A 2 Bank Deposits (Long Term) P-1 Bank Deposits (Short Term) C-Financial Strength NegativeOutlook Midrug – Israel Aa1 Midrug Maa lot - S&P AA / Negative Issuer AA - / Negative Subordinated Notes 14

15 15 Core Capabilities Strategy - Main Focus Conservative capitalization levels: capital adequacy ratio of 12.50%; Core tier one adequacy ratio of 8.08%; deposit/credit ratio of 126.3% Improved credit mix: steps taken to diversify portfolio through increased penetration of middle market and more consumer credit Conservatively managed foreign proprietary trading book Upgraded scoring model and processes in anticipation of Basel II, including development of advanced credit-scoring models for risk-based pricing Risk Profile Top class reputation in private banking services, especially dealing room, specialized investment advice center and TASE futures and operations index, where FIBI is a market leader Distinctive professional standards in global capital markets, currency exchange, structured products and foreign trade Strong traditional position in corporate banking

16 16 Clients Strategy - Main Focus Corporate finance: decrease concentration of credit portfolio, increase penetration of middle market Private banking: increase market and wallet share through advisory services Extend presence in affluent and mass-affluent segments Retail banking: broaden overall footprint Measures taken to increase group efficiency, including implementation of a shared-services model Other Client-centric vs. product-oriented banking

17 17 Group Consolidation Objective: to realize synergies from three bank acquisitions Implement shared-services model, including IT systems (UBank IT systems converted in 2008, Massad and Otsar-Hahayal converted on 2010; HQ units unified: logistics, severance pay fund operations, regulatory units and parts of training and human resources operations; process to be accelerated in 2011) Cross-sell products (mortgages, structured products, advisory services, pension planning, trust, factoring) Create streamlined and effective branch network to meet growing competition in retail and private banking markets Oversee management: FIBI executive board members serve on the boards of the new subsidiaries

18 18 Net Operating Earnings and ROE NIS Millions Yearly 8.0% 9.7% * * Without Bezeq & Hot shares sale

19 19 Net Operating Earnings and ROE NIS Millions Quarterly 5.6% 8.5% 8.6% 9.7% 10.3% * * Without Bezeq & Hot shares sale

20 20 Statements of income 2010 – 2009 NIS Millions change ,1642,205 Earnings from financing operations before provision for doubtful debts 153 (268)(115)Doubtful debts 18 1,4191,437Operating commissions (210) 22313Income from sales of shares (84) 12036Other income (33) (2,741)(2,774)Operating & other expenses (115) Operating earnings before taxes 35 (371)(336)Provision for taxes (80) Operating earnings after taxes (19)6445 The banks net equity in operating results of investee companies 16(44)(28) Exterior share holders (84) Net earnings 9.7%8.0% Return on equity

21 Changes in Net Operating Earnings 20 Earnings from financing operations before provision for doubtful debts 5 Decrease in provision for doubtful debts 2 Operating income 39 Decrease in operating & other expenses 11 others 77 Total positive influences 14 Dividends from Bezeq 7 Others 21 Total negative influences Total change: 56 Million NIS Positive influences (millions NIS, after tax) Negative influences (millions NIS, after tax) 21

22 22 Ratio of Provision for Doubtful Debts to Credit to the Public Other 4 Leading BanksFIBI

23 23 Total Credit Risk in Respect of Problematic Debts (NIS millions) Change 31/12/10 Compared with 31/12/09 Balance for date 31/12/0631/12/0731/12/0831/12/0931/12/10 (98) Non income bearing debts (106) Restructured debts (26) Debts scheduled for restructuring (14) Debts temporarily in arrears (425)2,3491,6962,4301,9281,503 Debts subject to special supervision Off-balance sheet credit risk (603)4,2633,0804,0683,2642,661 Total credit risk in respect of problematic debts Total problematic debts out of total credit ratio: in 2010 – 4.07% ; in 2009 – 5.45%

24 Income by banking segments

25 Assets according to banking segments Small business 1% 25

26 26 Composition of Total Proprietary Trading Book – Composition Amount NIS Million 67% 10,616 Government & Secured by Government bonds 17%17%2,695Commercial Banks bonds 6%6%947Shares 10%1,544Other 100%15,802Total Foreign Currency Proprietary Trading Book Total Proprietary Trading Book

27 27 Operating & Other Expenses NIS Millions

28 28 Operating Expenses & IncomeAdjusted * Operating Expenses & Income Financing Income excluding provisions for decline in value, clarification 8 position 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 and special provisions Operating Income and Expenses % Operating Expenses Operating Income Income / Cost Ratio Adjusted Income / Cost Ratio 56.2% 53.6% 64.3% 55.0% 52.7% 123.9% 133.1% 126.9% 119.7% 118.7% 52.9% 108.7% % % Total income after provision to doubtful debts / expenses adjusted Ratio Total income before provision to doubtful debts / expenses adjusted Ratio

29 % 14.57% 13.42% Capital Adequacy Ratio – Basel II Overall capital Capital Adequacy Core Capital Adequacy FIBI Core capital 4 top Banks * * * * **

30 30 Changes in Assets, Deposits & Credit to the Public (NIS Billions) Credit to the public Deposits from the public Shareholders equity Assets

31 31 Deposits from the Public 80.2 NIS Billion Deposits / Credit Ratio Liquid Assets Capital Adequacy – Bazel II Core capital – Bazel II Capital Investments Credit to the Public 63.5 NIS Billion Gov. & Bank Deposits 2.3 NIS Billion 8.08% 126.3% 32.6% 65.8% Of capital available for Investments Bonds-State of Israel: 9.0 NIS Billion Cash/Deposits-Bank of Israel: 11.7 NIS Billion Bonds-Foreign states: 1.6 NIS Billion Deposits in Banks: 3.8 NIS Billion Bonds-Banks: 2.7 NIS Billion NIS+Forex Corporate Bonds: 1.5 NIS Billion Structure Products, Hedge Funds & Stocks:1.0 NIS Billion Credit Risks in VAR Terms: (0.03) NIS Billion Capital Notes 4.8 NIS Billion Capital available for Investments 3.8 NIS Billion 12.50%

32 Business focus Expanding retail banking Corporate & commercial banking Private banking & capital market Controlling group expenses 32

33 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 Israels only orthodox oriented bank and its share in its target is significant. PAGIs 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 The acquisition of UBANK significantly bolstered FIBIs 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. 33 Banking Subsidiaries in Israel

34 34 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 Hahayals operations creates a banking group with a comprehensive and diverse range of activities and earnings. FIBI has completed the process of integrating Otsar Hahayals IT systems and is in the process of implementing a shared services model across headquarter functions. Banking Subsidiaries in Israel MASSAD - FIBI acquired 51% of the share capital of Massad in May Massad, is a sectorial bank, specializes in teaching personnel. FIBI completed the process of integrating Massads 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. 34

35 35 1.Without derogating from the generality of the conditions of use specified in the First International Bank of Israel ltd. (the Bank) website, the content exhibited in this presentation has been prepared by the Bank solely for use of the Banks presentation of the quarterly and/or annual Financial reports as well as strategic updates. 2.The content contained herein is partial and may include information and/or data that have not been independently verified by any outside entity. It is further emphasized that this presentation does not constitute an offer or invitation to purchase any securities and/or investments of any kind whatsoever. 3.This presentation should not be relied upon in connection with any transaction, contract, commitment or investment. For full and complete overview of the Banks financial situation and results of operation please view the Banks quarterly and/or annual financial reports. 4.Neither the Bank nor any of its employees or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss and/or damages of any kind whatsoever arising, directly or indirectly, from any use of the content presented in this file or otherwise arising in connection with this file. 5.It is hereby emphasized that portions of the information exhibited herein are regarded as forecasts about the future prospects of the Bank and the actual results of the Bank may differ materially from those contemplated taking into account the various risk factors, including but notwithstanding, changes in legislation and governmental supervision policies, changing economic conditions and uncertainties which exist regarding the Banks business and the result of various operations. For a more accurate and detailed description see forward looking information section in the Banks financial statements.


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