Overview

31/12/2009

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GDP Rate of Growth (%)

*Forecast

3

*Bank of Israel Interest rate for the last month of the Year / Period

Bank of Israel Interest Rate

Bank of Israel Interest Rate *and the Rate of Inflation

Rate of Inflation

**Forecast

4

Country Ratings

MOODY’SFITCHS & P

Bank Deposits (Long Term)A1AA

Bank Deposits (Short Term)P1F1A1

OutlookStableStableStable

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Foreign Investments in Israel (US$ Millions)

In 2006: Acquisition by “Teva”

Israeli Investments Abroad (US$ Millions)

In 2006: Acquisition of “Iscar” by Berkshire - Hathaway

6,240

10,432

23,866

11,877

2006 2007 2008 2009

8,762

12,331

22,961

9,239

2006 2007 2008 2009

Financial Reports31/12/2009

Ownership Structure

Bino/Liberman Group

The Public FIBI Holding Company Ltd. FIBI Investment House Ltd.

Israel Discount Bank

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 - 79.06, V - 79.06E - 20.94, V - 20.94 E - 100, V - 100

E - 0, V - 0 (Stocks Dormant)

E - 54.33, V - 74.9

E - 19.22, V - 14.01

E - 26.45, V - 11.09

E - 68V - 66

E - 68.7V - 68.7

E - 51V - 51

E - 100V - 100

E - 100V - 100

E - 100V - 100

E - 100V - 100

E - 100V - 100

E - 28.2V - 21

E - 100V - 100

E - 75V - 75

E - % Share in EquityV - % Voting Right7

- Retail /Commercial- Branches: 47- Since 2006- Key Audience:

Security

- Retail- Branches: 17- Since 2008- Key Audience:

Teachers

First International Bank Group

First International Bank

- Corporate + middle market banking- Private + affluent banking- Capital & Finance Markets- 80 branches

Retail BankCluster

International- Capital, Trust & Custody Markets- Private + affluent banking- 6 branches- Since 2004

- Private Banking- Since 1984

- Business Banking- Private Banking- Since 1982

- Retail/Commercial- Branches: 19- Since 1977- Key Audience:

Ultra Orthodox

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Shareholders

TheLiberman 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.

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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 General Manager 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, as well as of the Bank's. The controlling interest in FIBI and in the Bank is held by the Bino Family (Mr. Zadik Bino and his three Children).

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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: 169 in Israel (including subsidiaries)

Employees: 4,987 (including subsidiaries)

Equity: NIS 6,165 Million (USD 1,633 Million*)

5th largest banking group in Israel

* $/NIS = 3.775 as of Dec. 31, 2009

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Bank Ratings

MOODY’S

Bank Deposits (Long Term)A 2

Bank Deposits (Short Term)P-1

Financial StrengthC-

OutlookNegative

Midrug – MOODY’S

MidrugBBB+

Ma’a lot - S&P

IssuerAA / Negative

Subordinated NotesAA - / Negative

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Core Capabilities

Strategy - Main Focus

Conservative capitalization levels: capital adequacy ratio of 14.18%; 1st tier adequacy ratio of 9.9%; deposit/credit ratio of 137.0%

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 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 activities, 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

Subsidiaries specializing in growth retail markets (PAGI-ultra orthodox, UBank-affluent, Otzar Hahayal-military personnel, Massad-teachers)

Risk Profile

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Clients

Strategy - Main Focus

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, state-of-the-art pension planning advise offering

Retail banking: broaden overall footprint organically and via newly acquired subsidiaries

Measures taken to increase group efficiency, including implementation of a shared-services model

Decision taken to withdraw from computer infrastructure outsourcing agreement

Other

Client-centric vs. product-oriented banking

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Group Consolidation

Objective: to realize synergies from three bank acquisitions

Implement shared-services model, including IT systems (UBank IT

systems converted in 2008, Massad converted in 2010 and Otsar-Hahayal

planned for 2010; HQ units unified: logistics, severance pay fund

operations, regulatory units and parts of training and human resources

operations, process to be accelerated in 2010)

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

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Net Operating Earnings and ROENIS Millions

Quarterly Accumulated

161

568

2008 2009

9.7%

2.9%

(5.6(%

10.3%11.5%

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Ratio of Provision for Doubtful Debts to Credit to the Public

0.27%

0.91%

1.75%

1.34%

0.99%

0.62%

0.42%0.33%

-0.06%

0.17%

0.52%

0.90%

0.63%

0.46%0.37% 0.32%

0.53%

0.85%

1.28%

1.10%

0.92%

0.72%

0.53%

0.28% 0.28%

0.51%

0.82%

1.50%

0.64%0.74%

0.89%0.82%

2000 2001 2002 2003 2004 2005 2006 2007 I/08 II/08 III/08 IV/08 I/09 II/09 III/09 IV/09

4 Other Leading Banks FIBI

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Total Credit Risk in Respect ofProblematic Debts (NIS millions)

Balance for dateChange31/12/09

Compared with

31/12/0831/12/0931/12/0831/12/0731/12/0631/12/05

Non income bearing debts6437136628151,188)70(

Restructured debts215324281236221)109(

Debts scheduled for restructuring263-34822723

Debts temporarily in arrears106153172224285)47(

Debts subject to special supervision

1,9282,4301,6962,3493,281)502(

Off-balance sheet credit risk346445269291345)99(

Total credit risk in respect of problematic debts

3,2644,0683,0804,2635,597)804(

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Secured by Governments

12%

Foreign Governments

bonds 7% State of Israel bonds 81%

Shares 2%

Commercial Banks bonds

46%

Other 12% MBS (PRIME+ALTA)

4%

Governments bonds&

Secured by Governments

bonds 37%

Composition of Total Proprietary Trading Book

Governments bonds &

Secured by Governments

bonds 61%

Shares 1%

Others 14%

Commercial Banks bonds

24%

AmountNIS MComposition

Government & Secured by Government bonds8,65461%

Commercial Banks bonds3,46424%

Shares2141%

Other1,977 14%

Total14,309100%

Foreign Currency Proprietary Trading Book Total Proprietary Trading Book

20

101 9741 42

202195

396349

801 846

ConversionDiff.

ConversionDiff.

Credit Card Credit Card SecuritiesActivity

SecuritiesActivity

AccountManagement

AccountManagement

TotalOperating

Commissions

TotalOperating

Commissions

Operating Commissions – (FIBI only) (NIS Millions)

2008 2009

21

Operating Commissions – (Group) (NIS Millions)

21

554

647

139 131

335364

96 90

317 339

87 78

533

612

137 129

AccountManagement

AccountManagement

Credit Card Credit Card SecuritiesActivity

SecuritiesActivity

ConversionDiff.

ConversionDiff.

20082009

Total Operating Commissions1,3201,419

Without Massad1,2561,328

20092008IncludingMassad

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478 557696 716

2,635 2,741

1,461 1,468

2,491 2,568

1,381 1386

655652527457

Total Operating& Other

Expenses

Total Operating& Other

Expenses

Total Salaries &Related

Expenses

Total Salaries &Related

Expenses

Maintenance,Depreciation,Premises &Equipment

Maintenance,Depreciation,Premises &Equipment

OtherExpenses

OtherExpenses

Operating & Other Expenses (Group)(NIS Millions)

20092008IncludingMassad

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2008 2009

Operating Expenses & Income Adjusted * Operating Expenses & Income

* Income excluding dividends, provisions for decline in value of proprietary trading book and severance pay fund gains; expenses excluding severance pay fund effects

2008 2009

64.3%51.5% 51.9%52.3%

Operating Income and Expenses

% %Operating Income Operating Expenses Cost / Income Ratio Adjusted Cost / Income Ratio

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30.9.08 30.9.09 31.12.09

14.30% 14.18%

13.42%

7.65% 8.19%

9.80%

8.40%

9.9%

11.40%

11.48%

Capital Adequacy Ratio

Second Tier 4 Bank Groups

Capital Adequacy

First Tier Capital Adequacy

13.65%

8.41%

Bazel II:Capital Adequacy - 14.03%First Tier Capital Adequacy - 9.31%

FIBIFirst Tier

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Changes in Assets, Deposits & Credit to the Public (NIS Billions)

Credit to the public

Deposits from the public

Shareholders equity

Assets

Deposits / Credit Ratio

137% *

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Financial Strength Ratios as of 31.12.2009The Five Leading Banking Groups by Rank

Capital Adequacy

Ratio*

First tier Capital Adequacy Ratio*

Deposit / Credit Ratio

Problematic debt / Credit

Ratio

Doubtful debts / Credit Ratio

FIBI214.18%

(14.03%)1

9.86%

)9.31%(1137.4%15.4%20.44%

POALIM313.68%

)13.67%(3

8.60%

)8.52%(4107.5%37.7%50.93%

LEUMI114.31%

)14.09%(4

8.52%

)8.33%(3122.4%59.8%30.74%

DISCOUNT413.12%

)12.06%(2

8.79%

)7.51%(2123.9%48.1%40.87%

MIZRAHI TEFAHOT512.57%

)14.25%(5

7.07%

)8.01%(599.8%25.6%10.39%

AVERAGE13.69%8.53%116.2%7.9%0.75%

*Bazel I (Bazel II)

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Deposits from the Public82.8 NIS Billion

Deposits / Credit Ratio

Liquid Assets

Capital Adequacy:Bazel I Bazel II

First Tier:Bazel I Bazel II

Deposits from the Public

Capital Investments

31.1%Is secured under liquid assets (Deposits / State Bonds)

Credit tothe Public60.3 NIS Billion

Gov. & Bank Deposits3.0 NIS Billion

14.18%

9.31%

137%

36.4%

53%Of capital available for Investments

Bonds-State of Israel: 7.0 NIS Billion

Cash/Deposits-Bank of Israel:19.7 NIS Billion

Bonds-Foreign states: 1.6 NIS BillionDeposits in Banks: 3.5 NIS Billion

Bonds-Banks: 3.5 NIS Billion

NIS+Forex Corporate Bonds:1.8 NIS Billion

Structure Products, Hedge Funds & Stocks:0.5 NIS Billion

Credit Risks in VAR Terms: (0.05) NIS Billion

Capital Notes4.9 NIS Billion

Capital available for Investments4.3 NIS Billion

14.03%

9.9%

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Changes in Net Profit - Subsidiaries (NIS Millions)

20092008Change

33.037.1(4.1)

65.665.30.3

60.152.27.9

29.421.1* 8.3

833(450)1,283

3,7182,1101,608CHF K

GBP K

*Excluding the sale grant

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PAGI, in which FIBI has a 68% equity holding is a commercial bank with 19 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.

Banking Subsidiaries in Israel

UBANK - FIBI acquired 100% of share capital of UBANK (formerly Investec Bank (Israel) Ltd.) in December 2004. 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.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.

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OTSAR HAHAYAL - FIBI acquired 68% of the share capital of Otsar Hahayal in August, 2006. Bank Otsar Hahayal specializes in retail and small to medium-sized businesses (SMEs) and has a high proportion of current and former 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 activity and earning base. FIBI is currently in the process of integrating Otsar Hahayal’s IT systems and coordinating across headquarters support functions.

Banking Subsidiaries in Israel

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 completed 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.

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