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FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.09.14.

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Presentation on theme: "FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.09.14."— Presentation transcript:

1 FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview

2 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 2 Net Profit and ROE (NIS Millions) * Assuming equity capital (tier 1) to risk components ratio of 9.35% (the Israeli Other 4 leading Banks average) as of , the ROE is 8.9% in 1-9/14 and 9.2% in Q3/2014. ** The 1-9/14 Net profit includes amortization of 39 NIS Millions, reflecting a 0.8% annual reduction on the ROE. Average capital Equity capital (tier 1) to risk components ratio 6, % 6, %+ ROE 8.7% 8.6%* 9.0% 6,624 6, %+

3 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 3 Statements of income 1-9/2014 – 1-9/2013 ((NIS Millions Change in % Gross change 1-9/ /2014 (5.5%) (99) 65 1, , Interest income and non-interest financing, net (Without the effect of initial implementation of FAS 91) FAS 91 effect on interest income (73)65(8) (Income) Expenses from credit losses (0.02% income provision rate) 4.8%51 1,0501,101 Commissions (Without the effect of initial implementation of FAS 91) (79) - FAS 91 effect on commissions 36.4% Other Income (including sale of FIBI London ) 1.0%272,8222,849 Total income (after expenses from credit losses) 1.5%312,1062,137 Total operating and other expenses (0.6%)(4) Profit before taxes 1.4% Provision for taxes on profit (Last year includes a decrease in the provision for tax as a result of the increase in the tax rate on deferred tax balances 22 NIS millions) 21.7%52328 The bank’s share in VISA CAL profit (0.7%)(3) Net profit 8.7%8.3% ROE (*) 10.11%9.93% Equity capital (tier 1) to risk components ratio (end of period) (0.8%)1.52%0.72% Bank of Israel average interest rate (*) Equity capital Basel III at

4 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 4 Explaining of the main changes in net profit ( 1-9/ /2013 (NIS Millions Net change Gross change 1-9/ / (65)8 Income from credit losses compared to expenses provisions last year 41 (50) 64 (79) ,022 (79) Increase in commissions* Fas 91 effect on commissions Gain on sale of FIBI London shares Increased realized gains from bonds and shares Increased in banks share in profit of VISA CAL positive influences (*) excluding FAS 91 effect and income from credit card

5 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 5 Explaining changes in net profit ( 1-9/ /2013 (NIS Millions Net change Gross change 1-9/ /2014 (91) (35) 42 (59) 65 1, , Interest income, net (excluding FAS91 effect) FAS 91 effect on interest income (30)(47)36(11) Net decrease in the reconciliations to fair value of derivative instruments (22) The effect of last year increase in tax rate on deferred tax balances (19)(31)(2,106)(2,137) An increase in operating and other expenses (17)(29) Decrease in other income* (10) Other influences Negative influences Total decrease of 3 Nis millions in net profit (*) excluding the exercise of FIBI London and including credit card commissions

6 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 6 Operating & Other Expenses (NIS Millions) 1-9/ / * * Including amortization of 39 NIS Millions in 1-9/ %

7 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 7 Statements of income 7-9/2014 – 7-9/2013 ((NIS Millions Net change Gross change Q3/2013Q3/ Interest income and non-interest financing, net (Without the effect of initial implementation of FAS 91) FAS 91 effect on interest income (21((32)21(11) (Income) Expenses from credit losses (income 0.02% provision rate) Commissions* (17)(27) - FAS 91 effect on commissions (20)(31)7443 Other Income Total income (after expenses from credit losses) Total operating and other expenses Profit before taxes Provision for taxes on profit (Last year including a decrease in the provision for tax for the effect of the increase in the tax rate on deferred tax balances 16 NIS millions) (( Profit after taxes The bank’s share in profit of VISA CAL Net profit 9.0%8.6% ROE (0.75%)1.25%0.50% Bank of Israel average interest rate * Without the effect of initial implementation of FAS91 and credit card commissions.

8 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 72.9% 74.6% Consolidated Operational Efficiency Ratio Total Operating Expenses to Total Income Total Income Total Operating Expenses % % Total Operating Expenses / Total Income (Before Expenses for credit losses) Total Operating Expenses / Total Income (After Expenses for credit losses) % % % 75.0%

9 FIBI FIRST INTERNATIONAL BANK OF ISRAEL Capital Notes 5.6 Capital Available for Investment 5.2 Public Deposits 88.7 Gov. & Bank Bonds 2.4 Credit to the Public 69.9 State of Israel Bonds 8.1 Bank of Israel Deposits 20.8 Corporate Bonds (foreign & Israel currency) 0.9 Structures, Hedge funds &Stocks 0.6 Market risk in VAR(0.03) (*) illustration – not to scale 9 FIBI Strategic Assets & Liabilities composite (*) (NIS Billions) FIBI Strategic Assets & Liabilities Structure (NIS Billions) capital to risk assets Total ratio equity capital (tier 1) to risk components ratio Deposits to Credit Ratio Liquid Assets to Deposits Ratio 14.56%14.78% 9.93%10.11% 126.9%129.7% 35.3%38.4% capital available for Investments to investment capital Ratio 29.9%28.2%

10 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 10 Statement Of Changes in Equity 1-9/2014 ((NIS Millions 7,120 Balance At 31/12/13 Total Shareholders Equity (non-controling interests (Including 426 Net Earnings 17 Net profit Attributed to non-controlling interests (5)Change in capital reserve (230)Dividend 7,328 Balance At 30/9/14 Total Shareholders Equity (non-controling interests (Including The Highest dividend yield in the Israeli banking system Dividend yield of 3.5% in 2013, and 5% in 2014 (Includes 55 Nis Millions dividend after ).

11 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 11 Credit to the Public by segments (NIS Millions) Change in % %3.0%16,04816,39016,864 Private + Retail (Households) 4.8%2.1%17,35417,42718,184 Mortgage 4.9%2.5%33,40233,81735,048Total private clients 8.4%5.8%20,38321,94622,098 Corporate (2.7%)0.0%13,11012,94312,762 Commercial + Small Business 4.5%3.1%66,89566,70669,908 Total Credit to the Public 8.8% Our share in local activity (average for the period) () – (24%) (20%) (30%) (26%)

12 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 12 *In Q1/2013 the Bank has implemented a one time regulatory provision on its mortgage portfolio which sets the credit losses expenses ratio at 0.35% of the mortgage credit balance (24 NIS million). Excluding this one time provision, the group’s ratio in 2013 was 0.11%. Expenses for Credit Losses to Credit to the Public Ratio *

13 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 13 Deposits from the Public breakdown by segments ((NIS Millions Change in % Gross Change Compared to (2.5%)(3.3%)(1,236)(1,652) 49,63350,04948,397 Total private clients 18.1%4.1%4,4611,148 24,68627,99929,147 Corporate 1.2%1.1% ,06111,07411,193 Commercial + Small Business 3.9%(0.4%)3,357(385) 85,38089,12288,737 Total () – (13%) (58%) (29%)

14 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 14 12% 8% 14% Client assets portfolio (deposits & securities) present Continued growth (average balances, NIS Billions) Increase of 12% (35 NIS Billions) in client assets portfolio

15 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 13.42% * 14.30% 14.57% 13.42% * * * *** -1.3 *** Equity capital (tier 1) ratio 15 % % % Fibi and Mizrahi as , other banks %

16 FIBI FIRST INTERNATIONAL BANK OF ISRAEL Fibi and Mizrahi as ’ other banks – *In annual terms ** Calculated only on the balance sheet credit. *** Including dividend paid on the last 12 months and 55 NIS millions that was declared after % 9.53% 9.34% 9.20% 9.01% equity capital(tier 1) to riskcomponentsratio 126.9% 106.7% 114.5% 126.2% 102.7% Deposits from the public to credit to the public 75.2% 63.2% 73.8% 84.4% 61.0% Total operating expenses / Revenue (before credit losses expenses) 90.9% 53.2% 67.4% 62.9% 78.4% NPL-Provision for credit losses to total impaired credit (without mortgages) Other 4 leading Banks Average 9.35%111.6%70.4%60.4% 16 FIBI is demonstrating relative strength in main financial ratios 1-9/2014 ***5.0% 1.56% % Dividend yield (according to )* - (0.02%) (0.01%) (0.05%) 0.07% 0.02% (income) Expenses for credit losses to credit to the public* ((0.01%

17 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 17 Subsidiaries net profit Growth centers equity capital (tier 1) to risk components ratio ROE Net profit 1-9/2014 Nis Millions Specialization Extension of the agreement with Hever Renewal of activities with Small Business Fund 9.8% 6.2% 51.6  Retail customers  Commercial/ Corporate  Defense forces personnel  Factoring Expansion activities with private and institutional clients Developing wealthy clients branches 16.2% 11.1% 35.8  Capital Markets, Trust & Custody services  Private & affluent banking Winning in the teachers loans tender Growth at the Israeli- Arab sector 14.7% 9.0% 31.9  Retail customers  Teachers sector  Israeli-Arab sector Increasing network coverage in the ultra orthodox sector including new branches opening 12.5% 9.6% 26.2  Ultra orthodox sector

18 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 18 Highlights for 1-9/2014 Q3/ /2014 Net profit n Net profit of 426 NIS million and ROE of 8.3%. n Assuming adjustment of equity capital (tier 1) to risk components ratio to the Israeli banking industry average, the ROE is 8.9% n Net profit of 146 NIS million and ROE of 8.6%. n Assuming adjustment of equity capital (tier 1) to risk components ratio to the the Israeli banking industry average, the ROE is 9.2% Income from interest & zero inflation Substantial Macro & Accounting effects n Interest income was influenced by the reduction in the bank of Israel interest rate of 0.8% in the period. n Zero inflation resulted in a decrease in income from CPI-linked position. The group reduced its CPI-linked position. n The reduction of the Interest rate also affected the expense for fair value of derivatives n Compared with 1-9/13 Expense for reconciliation to fair value of derivatives for 1- 9/14 decreased income by ~ 47 NIS Million. FAS 91 n Financing income increased by ~ 65 NIS million and reduced income from commissions by ~79 million, resulting in a decrease in net income of 9 million Fair Value of derivatives

19 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 19 Highlights for 1-9/2014 Continued customer’s activity growth in capital markets n Client assets portfolio (deposits & securities) present continued growth of 35 NIS Billion (12%) Growth in operating income n An increase of 4.8% in income from commission (adjusted to FAS 91), due to an increase in clients activity )mainly in capital markets) Continued growth in activity Subsidiaries n Focus in growth segments (Ultra-Orthodox, teachers, security forces, Arab sector) n Factoring - the leading bank in the system n Operating expenses growth rate of only 1.5% in comparison to 1-9/13, mainly resulted by an increase in the VAT rate and in commissions to s from capital markets Moderate increase in operating expenses Consistent cost cutting and Budgetary restraint Moderate increase in operating expenses n Divestment of FIBI London in Order to focus on core banking activities in Israel increased net profits by 26 NIS Millions. n Reduction of several management team members across the group n re-organization of all customer portfolio activities, including all dealing rooms, under one division in order to create a customer centric attention and a one stop shop customer experience n Merger between 2 regional headquarters in FIBI n Optimization and modifications of the group’s branch network, focused on reducing branch numbers while taking into account current demographical trends n Continued reduction of total real estate areas in the headquarters and branch network Continued growth in all credit segments n An 4.5%increase in the credit portfolio compared to 9/13 and 3.1% compared to 6/14

20 FIBI FIRST INTERNATIONAL BANK OF ISRAEL 20 Highlights for 1-9/2014 n Dividend of 285 NIS million in the 1-9/2014, including 55 NIS millions declared after n Dividend yield of 3.5% in 2013, 5% in 2014 The Highest dividend yield in the Israeli banking system credit portfolio quality and diversification n Problematic debt collection revenue brought register for credit income from credit losses - (0.02%) while 1-9/2013 provision rate amounted to 0.13%. n Ratio of credit loss allowance to total impaired credit is the highest in the system – 90.9% (excluding mortgages), 108.7% including mortgages. Decrease in provisions for credit losses NPL (excluding mortgages) High financial stability High equity capital (tier 1) Equity capital (tier 1) (under Basel III) – 9.93% higher then Bank of Israel target Deposits to credit ratio n Deposits to credit ratio – 126.9%


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