FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 31.3.15.

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Overview 31.3.15

FIBI


2

Net Profit and ROE (NIS Millions)

* Goodwill amortization amounts to 11 NIS Million and subtracts 0.7% of the ROE.** The effect of the implementation of new accounting standard regarding employee privileges led to a decrease of approximately 193 NIS million in shareholders' equity.

Average capital

Equity capital (tier 1) to risk components ratio

6,834

9.52%

6,657 2.1%+

7.5%

6.8%

7.4%ROE

6,693

9.73%9.60%

FIBI


3

Exceptional Macro-economic and accounting effects on the Statement of income this quarter

)NIS Millions (

GrossNetNotes

Negative index rate (1.6%) effect on the CPI position and the influence of the barrier against CPI index-linked liabilities

(34)(21)With the increase of CPI index an income will be written

Fair value adjustments of derivatives(17)(11)

Lower interest rates and currency fluctuations resulted in an increased expense for the fair value of derivatives - an accounting difference

Influence of the Leumi Bank work agreement adoption and the acceptance of US principles regarding employee privileges.

6238On off actuarial provision was offset by a provision for accrued sick days

FIBI


4

Statements of income 1-3/2015 – 1-3/2014 ((NIS Millions

1-3/20151-3/2014Gross

changeChange

in %

Interest and non Interest Incomes519578(59)(10.2%)

Expenses from credit losses (rate of 0.07%)1210220.0%

Interest income after Expenses from credit losses 507568(61)(10.7%)

Non interest income4383974110.3%

Commissions 357347102.9%

Total operating and other expenses 649721(72)(9.9%)

Salaries and related expenses376446(70)(15.6%)

Maintenance and depreciation of premises and equipment108112(4)(3.6%)

Amortization and impairment of intangible assets3134(3)(8.8%)

Other expenses13412953.9%

Profit before taxes221203188.9%

The bank’s share in VISA CAL profit88

Net profit12511965.0%

ROE7.5%7.4%

Bank of Israel average interest rate 0.20%0.92%(0.72%)

Equity capital (tier 1) to risk components ratio (end of period)9.52% (*)9.73%

* According to 31/12/14.

FIBI


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1-3/20151-3/2014Gross changeNet changeהשפעות חיוביות

54

Decrease in Salaries and related expenses

) excluding Leumi Bank agreement((438)(446)85

The effect of change in discount rate on reserves

62- 6238

Increase in commissions357347105

Decrease in amortizations and impairment of intangible assets and maintenance and depreciation of premises and equipment

(138)(145)76

Main positive influences

Explaining of the main changes in net profit (1-3/2015 - 1-3/2014 (NIS Millions

FIBI


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השפעות שליליות1-3/20151-3/2014Gross changeNet change

(48)

Decrease in interest income470511(41)(25)

Of which: CPI index influences(34)(13)(21)(13)

Increase in the reconciliations in fair value of derivative instruments(17)(2)(15)(10)

Main Negative influences

Explaining of the main changes in net profit (1-3/2015 - 1-3/2014 (NIS Millions

Total increase of 6 Nis Millions in net profit

FIBI


7

Statements of financing income((NIS Millions 1-3/2015 – 1-3/2014

1-3/20151-3/2014Gross

changeNet

change

Total Interest income444537(93)(17.3%)

Total non-interest financing income75413482.9%

Interest income and non-interest financing 519578(59)(10.2%)

Fair value of derivatives(17)(2)(15) Total income from financing (interest and non-interest)536580(44)(7.6%)

Profits from the sale of bonds and trading portfolio6668(2) (2.9%)

Other financial income and financial intermediation free capital470512 *(42)(8.2%)

Bank of Israel average interest rate 0.20%0.92% (0.72%)

Period Known CPI Index(1.6%)(0.7%)(0.9%)

* Includes the negative effect of the CPI index decline (21 NIS million).

FIBI


8

Operating & Other Expenses(NIS Millions)

1-3/2015

1-3/2014

5

*

72-

9.9%70-

4-

3-**

*Includes The effect of the continued implementation of the of Bank Leumi and the effect of Lower interest rates in the increase in reserves for employee rights in the amount of 62 NIS million.

**Includes amortization of initial difference in respect of subsidiaries in the amount of 11 NIS million.

FIBI


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)

9

73.6%73.6%

77.2%77.2%

FIBI


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Credit to the public

Deposits from the public

Capital attributed to the shareholders of the Bank

Balance sheet

Growth compared to Q1/14

Growth compared to 12/14

Growth in credit

4.2%2.6%

Growth in Clients assets

5.8%1.7%

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

FIBI


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Statement Of Changes in Equity 2014((NIS Millions

Balance At 31/12/14 Total Shareholders Equity )non-controlling interests ( Not including

6,965

The effect of the acceptance principles regarding to the US employee rights

(144)

)After The effect of the implementation (Balance At 31/12/14

6,821

Net Earnings125

A movement in other comprehensive income for employee rights

(49)

Change in capital reserve For securities available for sale27

Net profit Attributed to non-controlling interests5

Balance At 31/3/15 Total Shareholders Equity)non-controlling interests ( Not including

6,929

Total change in period108

Total effect of accounting updates on capital 188 NIS million in Q1/2015. Recall that in late 2014, following the capitalization of software costs a Decrease in the capital amount of

approximately 106 NIS million .Equity capital to risk components ratio (Basel III) according to 31.3.15 is 9.52% and in 31.12.14

9.73% .

FIBI


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Credit to the Public by segments (NIS Millions)

1-3/20151-3/2014

Rates of change in a balances compared to

31.12.14

Rates of change in a balances compared to

31.3.14

Private + Retail (Households)

17,60116,3563.3%7.6%

Mortgage 18,91417,6792.0%7.0%

Total private clients36,51534,0352.6%7.3%

Corporate 21,32821,2233.9%0.5%

Commercial7,9417,5730.5%4.9%

Small Business 4,9885,0630.7%(1.5%)

Total Credit to the Public 70,77267,8942.6%4.2%

)24%(

)26%(

)31%(

)19%(

– ()31.3.14

FIBI


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31/3/1531/3/14Gross

changeBalance-sheet

Off-balance-

sheet TotalBalance-

sheetOff-

balance-sheet

Total

Impaired credit risk7951419369471351,082(146)

Inferior credit risk17169240602134736(496)

Credit under special supervision risk1,3272581,5858941411,035550

Total problem credit risk2,2934682,7612,4434102,853(92)

Ratio of the provision for credit losses to impaired credit to the public not accruing interest income - NPL

114.0%95.7%

Ratio of the provision for credit losses to impaired credit to the public not accruing interest income – NPL Without mortgages

100.3%79.5%

A decrease in problem credit risk, mainly in inferior and impaired credit risk that are more problematic.

Breakdown of the credit risk problem )NIS Millions (

FIBI


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Deposits from the Public breakdown by segments (NIS Millions)

31/3/1531/3/14

Gross Change

Compared to 31.3.14

Rates of change in balances compared

to 31/3/14

Total private clients49,95047,8402,1104.4%

Corporate26,47722,9463,53115.4%

Commercial + Small Business

20,85020,3175332.6%

Total 97,27791,1036,1746.8%

– ()31.3.14

)22%(

)53%(

)25%(

FIBI


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Client assets portfolio (deposits & securities) present Continued growth (average balances, NIS Billions)

Increase of 6% (19 NIS Billions) in client assets portfolio, Continuing an increase of 12% in 2014 (34 NIS Billion)Increase of 6% (19 NIS Billions) in client assets portfolio, Continuing an increase of 12% in 2014 (34 NIS Billion)

11.5%

348.4%

23

6%

19

330

296273

349

FIBI


13.42%

*

14.30%14.57%

13.42%

*

*

*

-1.3-0.63% -0.57% 0.63%-

Equity capital (tier 1) ratio

16

FIBI


.*In annual terms **Calculated only on the balance sheet credit.

9.52%

9.43%

9.37%

9.40%

9.17%

equity capital (tier 1) to risk components ratio

137.5%

114.5%

121.9%

125.5%

101.5%

Deposits from the public to credit to the

public

73.6%

61.5%

57.2%

77.1%

63.9%

Total operating expenses /

Revenue (before credit losses

expenses)

Other 4 leading Banks Average 9.37% 116.1% 63.0% 67.2%

100.3%

59.9%

76.2%

61.2%

95.0%

NPL-Provision for credit losses to total impaired credit (without mortgages)**

17

FIBI is demonstrating relative strength in main financial ratios 3/2015

(income) Expenses for

credit losses to credit to the

public*

0.07%

0.09%

0.13%

0.10%

0.09%

0.11%

FIBI


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Subsidiaries net profit

Specialization

Net profit 1-

3/2015 Nis

Millions

ROE

equity capital (tier 1) to risk components ratio

Growth centers

Retail clients

Commercial/ Corporate

Defense forces personnel

Factoring

20.77.5%9.7%

• 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 the FIBI early May this year

Capital Markets, Trust & Custody services

Private & affluent banking

9.07.9%15.2%

• Expansion activities with private and institutional clients

• Developing wealthy clients branches

Retail clients

Teachers sector

Israeli-Arab sector

10.68.7%14.5%• Winning in the teachers loans

tender during 2014• Growth at the Israeli-Arab sector

Ultra orthodox sector11.212.8%12.0%• Increasing network coverage in the

ultra orthodox sector

FIBI


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Main Indicators - FIBI Group

1-3/20152014

credit growth rate2.6%4.2%

Increase clients asset portfolio (deposits and securities) rate 6%9%

Decrease Number of employees100

An increase in commission income rate (*)2.9%3.7%

A decrease in profit in the current financing rate (*/**)(41)(82)

*Excluding the The effect of Fas 91 in 2014.** The effect of negative index is about 21 million in the first quarter of 2015.

FIBI


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Highlights for 1-3/2015

Continued Continued growth in growth in activitiesactivities

Leumi Bank agreement

and discount rate

A reduction in the provision for salaries, acceptable provisions for accumulated sick days and a decline in the discount rate the reserves in salary expenses 62 million (39 million net)

Resulted in a decrease in financial income of the group between reporting periods of approximately 21 million financing income affected in approximately 34 million

Growth in operating income

Lower interest rates in and currency changes Led to an expense in respect of the fair value of derivatives of 17 NIS million, an increase of 15 million compared to expenses Q1/2014.

Negative inflation

Main Main parametersparameters

Equity to risk components ratio

Net profit An increase of 5% in net profit to - 125 NIS, ROE - 7.5%.

• Equity to risk components ratio – 9.52% compared to 9.73% at the end of 2014. The decrease in the capital ratio was affected by growth in the credit portfolio and the implementation of the Directive for employee rights, Previous period there has been an implementation capitalization of software costs.

Efficiency ratio

• The efficiency ratio (before provisions for credit losses) - 73.6% compared with 77.2% in Q1/2014 (including partial impact of the implementation of the Bank Leumi).

Capital Capital RaisingRaising

Successful bond issues

• During Q1/2015 the Bank carried out two successful issues of bonds totaling approximately 1.4 NIS billions. offerings demand were high.

FIBI


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Highlights for 1-3/2015

Continued Growth in activities

• Expenses for credit losses 0.07% compare to 0.06% Q1/2014 and 0.13% in all 2014.Maintaining Maintaining the quality the quality of the loan of the loan portfolio portfolio

and and dispersiondispersion

NPL (Without mortgage)

Decrease in the Expenses for credit

losses

Rate of expenses for credit damaged non-interest is the highest in the banking system (excluding mortgages) 100.3%, including mortgages 114.0%.

Growth in credit to private and corporate

clients

Continued Growth in

An increase of about 7% private credit balances (including mortgages) in Q1/2015 compared to Q1/2014.

Growth in credit to corporate, particularly commercial clients - an increase of about 5% compared to Q1/2014.

Operating Operating expenses expenses restraintrestraint

Continuation of growth in the

investment field

Continued Growth in

An increase of - 29 NIS Billion (9%) in the amount of the Bank's clients portfolio amounting to approximately 350 NIS Billion.

Growth in operating income

Continued Growth in

An increase in operating commissions of 2.9% (10 NIS Million). Most of the increase is in capital market clients

Continuation of budgetary restraint

and efficiency measures

Continuous processes to reduce expenses in branches and in the headquarters of the group. (Including reduction of branches and staff areas), that expressed a decrease in expenses in all of the Bank fields of activity.

Further reduction in the number of Group employees.

FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 31.3.15.

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