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Overview 31/12/2010.

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Presentation on theme: "Overview 31/12/2010."— Presentation transcript:

1 Overview 31/12/2010

2 GDP Rate of Growth * Forecast 2

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

4 Country Ratings S & P FITCH MOODY’S A A1 Long Term F1 P1 Short Term
Stable Outlook 4

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

6 Financial Reports 31/12/2010

7 Ownership Structure Bino/Liberman Group The Public
E , V E , V E - 0, V – 0 (stocks dormant) The Public FIBI Holding Company Ltd. FIBI Investment House Ltd. E + V E + V E + V – 20.02 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 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. E - % Share in Equity V - % Voting Rights 7

8 First International Bank Group
Corporate + middle market banking Private + affluent banking Capital & Money Markets 80 branches Capital Markets, Trust & Custody Private + affluent banking 7 branches Since 2004 Retail Bank Cluster International Retail/Commercial Branches: 20 (as for 20/01/2011) Since 1977 Key Audience: Ultra Orthodox Business / Corporate Banking Since 1982 Private Banking Since 1984 Retail Branches: 18 Since 2008 Key Audience: Teachers Retail /Commercial Branches: 48 Since 2006 Key Audience: Military Personnel 8

9 FIBI’s Multi-Annual Strategic Road Map Focus on PB and Retail while Realizing Synergies
Mergers and Acquisitions Multi banking group Unique group services model to control expences Increasing group branches to 174 Integrated computer system Realizing synergies, restraining expenses Market share in private banking increased Number of retail customers doubled * * * 2003 2004 2005 2006 2007 2008 2009 2010 02/2011 * Acquisition 9

10 Purchasing 3 new banks: to increase market share in private & commercial banking
174 branches 80 48 20 7 19 10

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”), Israel’s leading petrol player. 11 11

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 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. The controlling interest in FIBI and in the Bank is held by the Bino Family (Mr. Zadik Bino and his three children). 12 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*) 5th largest banking group in Israel * $/NIS = as of Dec. 31, 2010 13

14 Bank Ratings Moody’s A 2 Bank Deposits (Long Term) P-1
Bank Deposits (Short Term) C- Financial Strength Negative Outlook Midrug – Israel Aa1 Midrug Ma’a lot - S&P AA / Negative Issuer AA - / Negative Subordinated Notes 14

15 Strategy - Main Focus Risk Profile Core Capabilities
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 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 15

16 Strategy - Main Focus Clients Other
Client-centric vs. product-oriented banking Measures taken to increase group efficiency, including implementation of a shared-services model 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 16

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 17

18 Net Operating Earnings and ROE NIS Millions
Yearly 9.7% 8.0% 568 450 * * Without Bezeq & Hot shares sale 18

19 Net Operating Earnings and ROE NIS Millions
Quarterly 10.3% 9.7% 8.5% 8.6% 152 5.6% 84 * * Without Bezeq & Hot shares sale 19

20 Statements of income 2010 – 2009 NIS Millions
change 2009 2010 41 2,164 2,205 Earnings from financing operations before provision for doubtful debts 153 (268) (115) Doubtful debts 18 1,419 1,437 Operating commissions (210) 223 13 Income from sales of shares (84) 120 36 Other income (33) (2,741) (2,774) Operating & other expenses 917 802 Operating earnings before taxes 35 (371) (336) Provision for taxes (80) 546 466 Operating earnings after taxes (19) 64 45 The banks net equity in operating results of investee companies 16 (44) (28) Exterior share holders 568 484 Net earnings 9.7% 8.0% Return on equity

21 Changes in Net Operating Earnings
Negative influences (millions NIS, after tax) Positive influences (millions NIS, after tax) 14 Dividends from Bezeq 7 Others 21 Total negative influences 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 Total change: 56 Million NIS 21

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

23 Total Credit Risk in Respect of Problematic Debts (NIS millions)
Change 31/12/10 Compared with 31/12/09 Balance for date 31/12/06 31/12/07 31/12/08 (98) 815 662 713 643 545 Non income bearing debts (106) 236 281 324 215 109 Restructured debts (26) 348 - 3 26 Debts scheduled for restructuring (14) 224 172 153 106 92 Debts temporarily in arrears (425) 2,349 1,696 2,430 1,928 1,503 Debts subject to special supervision 66 291 269 445 346 412 Off-balance sheet credit risk (603) 4,263 3,080 4,068 3,264 2,661 Total credit risk in respect of problematic debts Total problematic debts out of total credit ratio: in 2010 – 4.07% ; in 2009 – 5.45% 23

24 Income by banking segments
2006 2010 24

25 Assets according to banking segments
2006 2010 Small business 1% 25

26 Composition of Total Proprietary Trading Book – 31.12.2010
Foreign Currency Proprietary Trading Book Total Proprietary Trading Book Composition Amount NIS Million 67% 10,616 Government & Secured by Government bonds 17% 2,695 Commercial Banks bonds 6% 947 Shares 10% 1,544 Other 100% 15,802 Total 26

27 Operating & Other Expenses NIS Millions
2009 2010 27

28 Operating Income and Expenses
Total income after provision to doubtful debts / expenses adjusted Ratio % Operating Expenses Operating Income Income / Cost Ratio Adjusted Income / Cost Ratio % % Total income before provision to doubtful debts / expenses adjusted Ratio % Operating Expenses & Income Adjusted * 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 64.3% 53.6% 56.2% 108.7% 119.7% 126.9% 133.1% 118.7% 123.9% 52.9% 55.0% 52.7% 28

29 Capital Adequacy Ratio – Basel II
Core capital Overall capital FIBI 4 top Banks * * ** 14.30% Capital Adequacy 14.57% 13.42% * * Core Capital Adequacy ** 29

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

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

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

33 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 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.

34 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 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. 34 34

35 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 Bank’s presentation of the quarterly and/or annual Financial reports as well as strategic updates. 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. This presentation should not be relied upon in connection with any transaction, contract, commitment or investment. For full and complete overview of the Bank’s financial situation and results of operation please view the Bank’s quarterly and/or annual financial reports. 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. 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 Bank’s business and the result of various operations. For a more accurate and detailed description see forward looking information section in the Banks financial statements. 35

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