FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.9.15.

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Overview 30.9.15

FIBI


2

Net Profit and ROE (Millions NIS)

* Goodwill amortization amounts to 44 Million NIS and decreases ROE by 0.65% .** excluding Non-recurring events

Average capital

Common Equity capital (tier 1) to risk weighted assets ratio

6,9256,887 3.5%+

ROE

6,987

9.69%9.73%

6,652 6,7130.9%+ 3.1%+

*

**

Non-recurring events during the reporting period:

•“ZE’EVI” lawsuit affected the 3rd quarter profit by 37 million NIS (23 million NIS net

profit).

•Compensation Provision for merger of U-Bank –31 million NIS (19 million NIS net

profit). The effect in the 3rd quarter - 15 million NIS (9 million NIS net profit).

FIBI


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Statements of Income 1-9/2015 – 1-9/2014 ((Millions NIS

1-9/20151-9/2014Gross

changeChange

in %

Interest Income1,4541,603(149)(9%)

Expenses from Credit Losses35(8)43 Interest Income after Expenses from Credit Losses 1,4191,611(192)(12%)Non-Interest Income1,1711,238(67)(5%)Non-Interest Financing Income (including the influence of “ZE’EVI” lawsuit - 37 million NIS)

117156(39)(25%)

Commissions 1,0411,022192%Of which: Commissions from Activity in Capital Markets488470184%Other income (2014 year sale of FIBI LONDON for 31 millions NIS)1360(47)(78%)Total Income2,5902,849(259)(9%)Total Operating and Other Expenses 2,0102,169(159)(7%)Salaries and Related Expenses1,2051,328(123)(9%)Maintenance and Depreciation of Property and Equipment323334(11)(3%)Amortization and Impairment of Intangible Assets99104(5)(6%)Other Expenses383403(20)(5%)Profit Before Taxes580680(100)(15%)The bank’s share in VISA CAL profit2828--Net Profit329404(75)(19%)ROE6.4%8.2%

Bank of Israel Average Interest Rate 0.13%0.72% (0.59%)

Equity Capital (tier 1) to risk components ratio (end of period)9.73%(*)9.69%

* As of 31/12/14.

FIBI


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1-9/20151-9/2014Gross ChangeNet Changeהשפעות חיוביות

148

Decrease in Salaries and Related Expenses (excluding compensation provision for the merger of Pagi and U-Bank)

(1250,)(1,328)7849

Decrease in Salaries due to Bank Leumi Agreement

72-7245

Decrease in Amortizations, Maintenance and Depreciation of Property and Equipment

(422)(443)2117

Increase in the Reconciliations in Fair Value of Derivative Instruments

10(11)2113

Decrease in Operating and Other Expenses (excluding Salaries)

(383))403(2012

Increase in Capital Markets Commissions

4884701812

Main Positive Influences

Main Changes in Net Profit (1-9/2015 - 1-9/2014 (Millions NIS

FIBI


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1-9/20151-9/2014Gross ChangeNet Changeהשפעות שליליות

(223)

Decrease in Net Interest Income1,4691,573(104)(65)

Decrease in Profit Realized from Bonds and Equity Portfolios

129202(73)(45)

Growth in Expenses from Credit Losses (35)8(43)(31)

Outcome due to “ZE’EAVI” Lawsuit (37)-(37)(23)

Capital Gain from the Sale of FIBI London-31(31)(26)

Compensation Provision for the merger of Pagi and U-Bank ( in Q3/15 10 million NIS gross, and 6 million NIS net)

(27)-(27)(17)

Main Negative Influences

Total Decrease of 75 million NIS in Net Profit

Main Changes in Net Profit (1-9/2015 - 1-9/2014 (Millions NIS

FIBI


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Operating & Other Expenses(Millions NIS)

1-9/2015

1-9/2014

** Includes amortization of goodwill in 1-9/15 in respect of subsidiaries in the amount of NIS 33 million largely expected to be completed in 2016.* Includes amortization of goodwill in 1-9/15 in respect of subsidiaries in the amount of NIS 33 million largely expected to be completed in 2016.

159-

7.3%123-

9%-

11-20-

Excluding the effect of LEUMI Agreement – reduced by of 51 million NIS

5-

FIBI


Improvement in Operational Efficiency Ratio Total Operating Expenses to Total Income

Total Income

Total Operating Expenses

%% Total Operating Expenses / Total Income (Before Expenses for Credit Losses)

7

76.6%76.6%

77.3%77.3%

FIBI


30.9.1530.9.15 31.12.1431.12.14

Capital Notes 6.0

Capital Available for Investment 5.4

Public Deposits

100.7

Gov. & Bank Bonds1.3

Credit to the Public69.9

State of Israel Bonds 8.0

Bank of Israel Deposits 29.0

Corporate Bonds (foreign & Israel currency) 2.3

Structures, Hedge Funds &Stocks 0.3

Market Risk in VAR(0.02)

(*) For iIllustration only – not to scale8

FIBI Strategic Assets & Liabilities compositeFIBI Strategic Assets & Liabilities composite(*) (*) 3030..99.1.155 (NIS Billion(NIS Billions)s)

FIBI Strategic Assets & Liabilities Structure )NIS Billions(

Capital to Risk Assets Total Ratio

equity capital (tier 1) to risk components ratio

Deposits to Deposits to Credit RatioCredit Ratio

Liquid Assets Liquid Assets to Deposits to Deposits

RatioRatio

13.24% 14.24%

9.69% 9.73%

144.0% 138.0%

42.8% 40.2%

Capital Available for Investments to Investment Capital Ratio

34.5% 31.5%

Liquidity Ratio (LCR) 99%

Bonds of foreign countries 1.6

FIBI


13.42%

*

14.30%14.57%

13.42%

*

*

*

Equity Capital (tier 1) Ratio- Capital Adequacy

9

-0.70%

FIBI


3.5%

10

Credit to the public

Deposits from the public

Capital attributed to the shareholders of the Bank

Balance sheet

The Development in Balance Sheet, Equity, Credit and Deposits - consolidated, end of (period (Billions NIS

Leverage ratio at 30/9/15 is 5.46%

Dividend yield rate

Including dividend distribution of 70 million NIS which was declared on 19.11.15

4%6%

5%4%

*Before the effect of the implementation of new accounting standard regarding employee privileges.

*

FIBI


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Credit to the Public by Segment(Millions NIS)

30.9.15

Rates of Change in Average Balances

compared to Average 1-9/14

18,0446.6%

Mortgages 20,2169.2%

Credit to Private Clients 38,2607.9%

Corporate18,522(8.5%)

Commercial and Small Businesses

13,0963.7%

Total Credit to the Public 69,8782.0%

– ()30.9.14

FIBI


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30/9/1530/9/14Gross

Change

Balance-Sheet

Off-Balance-

Sheet TotalBalance-

Sheet

Off-Balance-

Sheet Total

Impaired Credit Risk8841531,037783107890147

Inferior Credit Risk12641167522166688(521)

Credit Under Special Supervision Risk8872711,1581,2061951,401(243)

Total Problematic Credit Risk1,8974652,3622,5114682,979(617)

Ratio of the provision for credit losses to impaired credit to the public not accruing interest income accruingNPL coverage ratio

%99.8112.5%

Average of 4 other leading banks (30/9/15)90.9%

A decline in the problematic debt segment

Breakdown of the Problematic Debt) Millions NIS (

FIBI


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Deposits from the Public Breakdown by Segment (Millions NIS)

30.9.15

Rates of Change in Average Balances

Compared to Average 1-9/14

31.12.14

Total Private Clients53,2568.8%

Corporate32,49117.0%

Commercial + Small Businesses

14,9057.2%

Total Business Clients47,39613.7%

Total 100,6528.9%

Of which: Positive Current Account Balance

42,819

) 30.9.14(

)15%(

)53%(

)32%(

FIBI


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Client Assets Portfolio (Deposits & Securities) present continued growth (average balances, Billions NIS)

An increase of 12% (41 Billion NIS) in client assets portfolio, further similar increase for year 2014.An increase of 12% (41 Billion NIS) in client assets portfolio, further similar increase for year 2014.

11.5%

348.4%

23

12.4%

41330

296273

371

FIBI


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Subsidiaries Net Profit

Specialization

Net profit 1-9/2015 Millions

NIS

ROE

Equity Capital (tier 1) to Risk Components Ratio

Growth Centers

Retail Clients

Commercial/ Corporate

Defense Forces Personnel

Factoring

48.25.7%9.6%

• Winning the tender for the Ministry of Defense for the provision of loans and banking services to entitled cutomers in the coming years

• Extension of the agreement with Hever• Renewal of activities with Small

Business Fund• Expansion of the factoring activity• Joining the Fund in cooperation with

the Manufacturers Association - together with FIBI May 2015.

Retail Clients

Teachers Sector

Israeli-Arab Sector

26.77.0%14.2%• Winning in the teachers loans tender

during 2014• Growth in the Israeli-Arab sector

Ultra-Orthodox Sector29.2

10.7%

12.5%• Increasing network coverage in the

ultra-orthodox sector

Will merge into FIBI On 31/12/15 while maintaining the brand name

FIBI


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Highlights for 1-9/2015

Merging U-Merging U-BANK and BANK and

PAGIPAGI

Cessation Cessation of a labor of a labor disputedispute

In 30/9/15 U-Bank merged into FIBI.Immediate and future effects of the merger : A one-time increase in expenses reflected in current expenditure - 31 million NIS (of

which :15 million NIS in Q3 2015) Saving in expenses as a result of voluntary retirement of 120 employees. Vacating of Real Estate areas in central Tel Aviv and additional savings. Accelerating growth especially in credit among U-Bank customers, a brand that will

continue to operate under FIBI, thanks to removal of regulatory barriers.

During the fourth quarter PAGI is expected to be merged into FIBI, while preserving the brand PAGI – a leading brand in the ultra-religious sector

A labor agreement has been signed in which the Clerks Representative Committee is committed to a three year period of “industrial peace”

Winning OSTAR HA-HAYAL the tender for

the Ministry of Defense

• Winning the tender for the provision of loans and banking services to entitled customers in the coming years

FIBI


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Main Main parametersparameters

Equity to risk components ratio

Net profit

During the reporting period there were two one-time effects:•ZE’EVI lawsuit affected third quarter results by 37 million NIS (23 million NIS net).•Compensation Provisions for MergersExcluding those effects, the ROE in 1-9/15 is 7.0% and 6.8% Q3/15.

• Equity to risk components ratio – 9.73%, stable compared to 9.69% in the end of 2014.

Efficiency ratio

• efficiency ratio (before provisions for credit losses) – 76.6% compared with 77.3% in 2014.

• Declaration of another dividend - 70 million NIS. The highest dividend yield in the banking sector.

Dividend yield

Continued Continued growth in growth in activitiesactivities

Growth in main focus of FIBI:Increase of 6.6% in credit balances to private sector (excluding mortgage loans).•Increase of 9.2% in mortgage balances .•Increase of 6% in credit balances to commercial sector..

Growth in operating income

An increase of approximately 2% (19 million NIS) in operating bank fees the result of an increase in fees from capital markets activity

Growth in credit to private clients

Growth continuation in the

investment field

An increase of 46 billion NIS (14%) in the clients investment portfolios Amounting to 371 billion NIS.

FIBI


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Expenses for credit losses 0.07% (0.05% in Q3/15) compared to income from credit losses 0.02% in 1-9/14 and 0.13% in all 2014.

Maintaining Maintaining the quality the quality of the loan of the loan portfolio portfolio

and and dispersiondispersion

NPL coverage ratio (excluding mortgages)

Decrease in the expenses for credit

losses

Ratio of provision for doubtful accounts versus non-performing credit 99.8%

Operating Operating expenses expenses restraintrestraint

Continuation of budgetary restraint

and efficiency measures

Ongoing moves to reduce expenses in branches and in headquarters

Reduction of 7% in expenses

Decrease of 7% in all expenses in the bank (160 million NIS):Decrease in salaries of 123 million NIS, based on implementation of LEUMI Agreement and a decrease in number of employees in the Group (excluding the mergers influence)Decrease in the other expenses due to efficiency measures implemented in the branches and headquarters.

FIBI


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 Bank’s 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 Bank’s financial situation and results of operation, please view the Bank’s 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 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.

Disclaimer

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FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.9.15.

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