2Ownership Structure Bino-Liberman Group FIBI Investment House Ltd. As ofBino-Liberman GroupFIBI Investment House Ltd.E %V. 0%The PublicE %V %E %V %FIBI Holding Company Ltd.E. 100%V.100%Israel Discount BankThe PublicE %V %The First International Bank of Israel Ltd.E %V %E %V. 11.1%E. 68%V.66%E %V.68.68%E. 51%V.51%E. 100%V.100%E. 100%V.100%E. 100%V.100%OtsarHahayalPAGIPoalei Agudat IsraelBank Ltd.BankMassadUBank Ltd.FIBI Bank(UK) PlcFIBI Bank(Suisse)Ltd.E. 75%V. 25%E.50%V. 60%E. 100%V.100%The First Int’l& Co.Underwriting andInvestments Ltd.Modus-SelectiveInvestmentsPortfolio Ltd.Kidma –Provident FundsManagement Ltd.E. Percentage of equity share capital ownershipV. Percentage of voting power exercised at any general meeting
3First International Bank Group FIBICorporate + middle market bankingPrivate + affluent banking85 branchesRetail bankclusterU - BankInternationalCapital marketsTrust and custodyPrivate andaffluent banking6 branches (uniquebranches)MassadPAGIOtsarHahayalFIBI Bank (UK)FIBI Bank(Suisse)Focus:retailretail/commercialretail/commercialBusinessbankingPrivatePrivatebankingBranches:172047Since:200819772006Key audience:teachersultra-orthodoxdefense + military
4First 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), defense sector - retail banking (Otsar Hahayal), ultra-orthodox Jews (PAGI), and teachers (Massad)Foreign subsidiaries in London (commercial banking) and Zurich(private banking)Branches: 175 in Israel (including subsidiaries)Employees: 4,829Equity: NIS 5,491 Million (US$ Million *)5th largest banking group in Israel* $/NIS =
5Financial Strength Ratios as of 31.12.2008 The Five Leading Banking Groups by RankFirst Tier Capital Adequacy RatioCapital Adequacy RatioDeposit to Credit RatioProblem Debt to Credit RatioProvisions to Credit Ratio18.71%12.32%130.5%6.6%0.39%FIBI27.60%411.15%102.2%7.3%0.68%Hapoalim37.51%11.52%114.8%510.7%1.01%Leumi7.44%10.27%119.2%8.1%0.67%Discount6.64%11.31%104.2%8.0%0.45%MIzrahi11.6%18.5%0.72%Total
6Deposits from the Public (25% Deposits from the Public) Pre - TaxProvisionsCredit to the PublicNIS 61 BillionDeposits from the PublicNIS 79.9 BillionDeposits / Credit Ratio 131%12.3% is secured underliquid Assets(Deposits / State Bonds)NIS 238 MLiquid Assets(25% Deposits from the Public)Bonds – State of Israel NIS 9.3 BillionBonds OECD NIS 617 MillionCash/Deposits-Bank of Israel NIS 10 BillionDeposits in Banks NIS 5.2 BBonds – Banks NIS 4 BCapital Notes NIS 4.5 BNIS 86 MNIS 57 MNIS 173 MNIS 20 MNo ProvisionNIS 42 MGov. & Bank Deposits NIS 1.9 BNIS Corporate Bonds, NIS 1 BMBS Prime+AltA NIS 282 MHedge Funds & Stocks NIS 168 MCredit Risks in VAR Terms NIS 125 MStructure Products NIS 259 MFOREX Corporate Bonds NIS 655 MBEZEQ+HOT NIS 536 MCapital Investments81.7% of capital available for InvestmentsCapital available for Investments*NIS 3.7 B* Shareholder’s Equity less Liquid Assets
7Ratio of Provision for Doubtful Debts to Credit to the Public FIBI4 Other Leading Banks
8Total Credit Risk in Respect of Problematic Debts (Consolidated, NIS millions)
9Ratio of Deposits to Credit 131%* Changes in Assets, Deposits and Credit to the Public (Consolidated, NIS Billions)69.6727989925865861279758443525520082007200620052004Ratio of Deposits to Credit 131%*Total assetsCredit to the PublicDeposits from the Public(*) The average deposits/credit ratio in the five leading banking groups: 112%
10Capital Adequacy Ratio - FIBI (%) 8,0437,8287,8067,1647,163Capital Adequacy*12.3%11.4%11.6%11.7%11.4%5,4025,5075,6775,7405,690First Tier Capital Adequacy8.6%8.9%8.5%8.4%8.7%IV/07I/08II/08III/08IV/08First Tier Capital Ratio (NIS Millions)Second Tier Capital Ratio (NIS Millions)(*) Realization of the full potential for raising tier 2 capital would bring the capital adequacy ratio to 12.6%; following the report date, the Bank raised an addition NIS 355 million in capital notes
11Composition of Proprietary Trading Book (Consolidated, NIS Millions) * Including 456 Million NIS investment in BEZEQ Shares and 80 M NIS in HOT sharesboth used as collateral for credit granted
12Net Operating Earnings and ROE - Consolidated 45350316158720082007200620052.9%12.0%11.4%11.5%* Including tax returns on previous years in 2007 and revocation of the Adjustment to Inflation Law and a tax rate reduction in 2008
13Income by Customer Segments * SMALLBUSINESSPRIVATECOMMERCIALCORPORATEHOUSEHOLD* Not including the “Financial Management” & “Other” Segments
14Income to Risk Assets(*) Includes Household, private banking and SME segments; segmentation of customers and expense allocations differ from bank to bank
15Banking Subsidiaries in Israel PAGI, in which FIBI has a 68% equity holding is a commercial bank with 20 branches, and 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 segment has grown significantly.PAGI’s strategy is to aggressively grow its client base, while focusing on target segments with intensive financial activity in personal, business, and institutional banking.UBANK - FIBI acquired 100% of share capital of UBANK (formerly Investec Bank (Israel) Ltd.) in December It is maintained as an independent subsidiary. The acquisition of UBANK significantly bolstered FIBI’s competitive position in private banking, capital markets and foreign currency trading. UBank’s IT systems were fully integrated into FIBI’s at end 2008.In 2007 UBANK launched an innovation in Israeli banking – dedicated branches for affluent clients. This premium service comprises distinctive branch design and hours of operation, along with other attractive features.
16OTSAR HAHAYAL - FIBI acquired 68% of the share capital of Otsar Hahayal in August, Bank Otsar Hahayal specializes in retail and small to medium-sized businesses (SMEs) and has a high proportion of current and former Defence 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 activity and earning base. FIBI is currently in the process of integrating Otsar Hahayal’s IT systems and coordinating across headquarters support functions.MASSAD - FIBI acquired 51% of the share capital of Massad in May 2008.Massad, as a sectorial bank, specializes in teaching personnel as its client base. FIBI is currently in the process of integrating Massad’s IT System and coordinating 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. .
17Changes in Net Profit - Subsidiaries Comments% change20072008Strong growth in income(0.9)38.037.1Decrease in income from Capital Markets(13.4)78.765.3Increase in doubtful debts provisions, one-time incomes and earnings in 2007(62.5)144.752.2Increase in doubtful debts provisions(13.0)36.423.4 *Provisions for decline in value of securities(2,976)2,526(450)FIBI Bank (UK) (GBP K)Proprietary trading book losses(598)6,2865,688FIBI Bank (Switzerland) (CHF K)* Excluding employee grant paid following the sale of the bank in 2008