FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.6.15.

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Overview 30.6.15

FIBI


2

Net Profit and ROE (Millions NIS)

* Goodwill amortization amounts to 44 Million NIS and decreases ROE by 0.7% .** The effect of the implementation of new accounting standard regarding to employee privileges led to a decrease of approximately 123 NIS million in shareholders' equity.

Average capital

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

6,8576,884 3.4%+

ROE

6,946

9.86%9.71%

6,657 6,6171.3%+ 3.6%+

*

**

Including merger

provision

11 Million NIS (Net)

Including capital

gain from the sale of

FIBI London

26 Millions NIS (Net)

FIBI


3

Statements of income H1/2015 – H1/2014 ((Millions NIS

H1/2015H1/2014Gross

changeChange

in %

Interest and non Interest Incomes1,0601,173(113)(10%)

Expenses from credit losses (rate of 0.07%)26323

Interest income after Expenses from credit losses 9311,081(150)(14%)

Commissions 701682193%

Of which: commissions from activity in capital markets335316196%

Total operating and other expenses 1,3241,440(116)(8%)

Salaries and related expenses786884(98)(11%)

Maintenance and depreciation of premises and equipment213219(6)(3%)

Amortization and impairment of intangible assets6868-0%

Other expenses257269(12)(4%)

Profit before taxes420455(35)(8%)

The bank’s share in VISA CAL profit18162(13%)

Net profit243269(26)(10%)

ROE7.2%8.3%

Bank of Israel average interest rate 0.15%0.83%(0.68%)

Equity capital (tier 1) to risk components ratio (end of period)9.71% (*)9.72%

* According to 31/12/14.

FIBI


4

Statements of income Q2/2015 – Q2/2014 ((Millions NIS

Q2/2015Q2/2014Gross

changeChange

in %

Interest and non Interest Incomes513547(34)(6%)

Expenses from credit losses (rate of 0.08%)14(7)21

Interest income after Expenses from credit losses 499554(55)(10%)

Commissions 34433593%

Of which: commissions from activity in capital markets16415774%

Total operating and other expenses 675719(44)(6%)

Salaries and related expenses410438(28)(6%)

Maintenance and depreciation of premises and equipment105107(2)(2%)

Amortization and impairment of intangible assets373439%

Other expenses123140(17)(12%)

Profit before taxes199252(53)(21%)

The bank’s share in VISA CAL profit108225%

Net profit118150(32)(21%)

ROE7.0%9.4%

Bank of Israel average interest rate 0.10%0.75% (0.65%)

Equity capital (tier 1) to risk components ratio (end of period)9.71% (*)9.72%

* According to 31/12/14.

FIBI


5

Q2/2015Q2/2014Gross changeNet changeהשפעות חיוביות

59

Decrease in Salaries and related expenses (excluding provision for compensation for merger Pagi and U-Bank)

(393)(438)4528

Increase in the reconciliations in fair value of derivative instruments

17(7)2416

A decrease in operating and other expenses (excluding Salaries)

(265)(281)1610

Increase in commissions34433595

Main positive influences

Explaining of the main changes in net profit (Q2/2015 - Q2/2014 (Millions NIS

FIBI


6

Q2/2015Q2/2014Gross changeNet changeהשפעות שליליות

(99)

Capital gain from the sale of FIBI London -31(31)(26)

A decrease in profit realization of bonds and shares

2367(44)(25)

A decrease in net interest income501539(38)(24)

Growth in Expenses from credit losses (rate of 0.08%)

(14)7(21)(13)

Provision for compensation for merger of Pagi and U-Bank

(17)-(17)(11)

Bank of Israel average interest rate 0.1%0.75%)0.65%(

Main Negative influences

Total decrease of 32 Nis Millions in net profit

Explaining of the main changes in net profit (Q2/2015 - Q2/2014 (Millions NIS

FIBI


7

Operating & Other Expenses(Millions NIS)

H1/2015

H1/2014

*** Of which: impact of the continued implementation of the Bank Leumi agreement of 72 million NIS** Includes amortization of goodwill in 1-6.15 in respect of subsidiaries in the amount of NIS 22 million* Of which: impact of the continued implementation of the Bank Leumi agreement of 72 million NIS** Includes amortization of goodwill in 1-6.15 in respect of subsidiaries in the amount of NIS 22 million

116-

8%98-11%-

6-12-

*

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)

8

74.8%74.8%

75.9%75.9%

FIBI


30.6.1530.6.15 31.12.1431.12.14

Capital Notes 6.1

Capital Available for Investment 5.3

Public Deposits

98.6

Gov. & Bank Bonds1.8

Credit to the Public70.6

State of Israel Bonds 10.1

Bank of Israel Deposits 25.0

Corporate Bonds (foreign & Israel currency) 1.2

Structures, Hedge funds &Stocks 0.5

Market risk in VAR(0.02)

(*) illustration – not to scale9

FIBI Strategic Assets & Liabilities compositeFIBI Strategic Assets & Liabilities composite(*) (*) 3030..66.1.155 (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

13.59% 14.26%

9.71% 9.72%

139.7% 138.0%

41.0% 40.2%

capital available for Investments to investment capital Ratio

35.1% 31.4%

Liquidity Ratio (LCR) 93.0%

Bonds of foreign countries 1.5

FIBI


2.1%

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 30/6/15 is 5.47%

5.1%

Dividend yield rate

60 Million NIS weredistributed at 30.6.15 as a dividend

3.7%

3%6%

5%4%

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

*

FIBI


11

30.06.1531.03.15The change compared to

31/03/15

Millions NIS)%)Millions NIS(%)Millions NIS

Gov. & Bank Bonds

11,57375%9,51270%2,061

Of which: State of Israel Bonds

9,59862%8,29361%1,305

Financial institutions

2,38215%2,67620%(294)

Other Bonds1,2098%1,1589%51

Stocks2702%2682%2

Total securities

15,434100%13,614100%1,820

Nostro portfolio composition

FIBI


12

Credit to the Public by segments (Millions NIS)

30.6.15

Rates of change in a balances compared to

31.12.1430.6.14

Credit to private clients18,4628.4%12.7%

Mortgage 19,7696.6%11.0%

Corporate 19,416(5.4%)(7.8%)

Commercial And Small Business

12,9680.9%2.9%

Total Credit to the Public 70,6152.4%4.1%

FIBI


13

30/6/1530/6/14

Gross change

Balance-sheet

Off-balance-

sheet TotalBalance-

sheet

Off-balance-

sheet Total

Impaired credit risk8241429668391189579

Inferior credit risk20264266576125701(435)

Credit under special supervision risk8922981,1901,0301761,206(16)

Total problem credit risk1,9185042,4222,4454192,864(442)

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

92.1%90.6%

A decrease in problem credit risk in FIBI

Breakdown of the credit risk problem )Millions NIS (

FIBI


14

Deposits from the Public breakdown by segments (Millions NIS)

30.6.15

Rates of change in balances compared to

31.12.1430.6.14

Total private clients51,3904.9%10.5%

Corporate32,6535.9%10.5%

Commercial + Small Business

14,591(4.8%)(0.4%)

Total business clients47,2442.3%6.9%

Total 98,6343.7%8.8%

Of which: Positive current account balance

39,72117.0%51.0%

– ()30.6.14

)16%(

)51%(

)33%(

FIBI


15

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

An increase of 9% (30 NIS Billions) in client assets portfolio, Continuing an increase of 12% in 2014 (34 NIS Billion)An increase of 9% (30 NIS Billions) in client assets portfolio, Continuing an increase of 12% in 2014 (34 NIS Billion)

11.5%

348.4%

23

9%

30

330

296273

360

FIBI


13.42%

*

14.30%14.57%

13.42%

*

*

*

Equity capital (tier 1) ratio- capital Adequacy

16

10% - Minimal Regulatory Requirement For HAPOALIM & LEUMI

9% - Minimal Regulatory requirement

FIBI


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

9.71%

9.42%

9.52%

9.53%

9.30%


139.7%

112.4%

119.4%

126.2%

100.9%

Deposits from the public to credit to the

public

74.8%

58.3%

63.5%

76.0%

60.7%

Total operating expenses /

Revenue (before credit losses

expenses)

Other 4 leading Banks Average 9.45% 114.5% 63.6% 73.2%

92.1%

67.7%

82.2%

65.5%

93.5%

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

17

FIBI is demonstrating relative strength in the main financial ratios H1/2015

(income) Expenses for

credit losses to credit to the

public*

0.07%

0.20%

0.07%

0.01%

0.10%

0.11%

FIBI


18

Subsidiaries net profit

Specialization

Net profit 1-6/2015 Millions

NIS

ROE


Growth centers

Retail clients

Commercial/ Corporate

Defense forces personnel

Factoring

34.66.2%9.6%

• 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

9.3 )*(4.0%15.0%

(*) Including special provision to the _merger in the amount of 16 Millions NIS •Expansion activities with private and institutional clients•Developing high net worth clients branches

Retail clients

Teachers sector

Israeli-Arab sector

18.67.5%14.1%• Winning in the teachers loans tender

during 2014• Growth at the Israeli-Arab sector

Ultra orthodox sector18.310.3%12.1%

• Increasing network coverage in the ultra orthodox sector

Will merge into FIBI On 30/9/15

while maintaining the brand name

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

FIBI


19

Highlights for H1/2015

Continued Continued growth in growth in activitiesactivities

Increase of 8.4% in credit balances to private sector (excluding mortgage loans) since the end of 2014 . Increase of 12.7% compared to 30/6/14. The growth in credit balances is the result of strategic moves to expand credit to private and household sectors as well as investment in infrastructure to service both private and retail clients.

Growth in operating income

An increase of approximately 3% (19 Millions NIS) in operating bank fees the result of an increase in fees from capital markets activity offset by a decrease in fees resulting from regulatory changes.

Growth in credit to private clients

Main Main parametersparameters

Equity to risk components ratio

Net profit

Net profit in H1/2015 - 243 Millions NIS, and in Q2/2015 118 Millions NIS. ROE in H1/2015 – 7.2% and in Q2/2015 7%. Net income in Q2/2015 includes a non-recurring provision for the retirement of

employees of U-Bank and Poalei Agudah Bank (Pagi) in the amount of 11 Millions NIS net. Net income last year included income from the sale of FIBI London in the amount of 26 Millions NIS. Neutralizing these two items increased earnings by 4.4%.

• Equity to risk components ratio – 9.71%.

Efficiency ratio

• Improvement in the efficiency ratio (before provisions for credit losses) – 74.8% compared with 75.9% in H1/2014.

Growth continuation

in the investment

field

Continued Growth in

An increase of - 30 Billion NIS (9%) in the clients investment portfolios in H1/2015 compared to 12.7% in 30/6/14. This growth is the result of strategic moves to expand its investment activity of private and retail clients , and of investment in infrastructure to service these clients.

FIBI


20

Highlights for H1/2015

• Expenses for credit losses 0.07% compare to 0.01% H1/2014 and 0.13% in all 2014.

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

and and dispersiondispersion

NPL (excluding mortgage)

Decrease in the Expenses for credit

losses

Ratio of provision for doubtful accounts versus non performing credit (excluding mortgages) 92.1%, including mortgages 105.4%.

Operating Operating expenses expenses restraintrestraint

Continuation of budgetary restraint

and efficiency measures

The decision to merge U-Bank will be effective as of 30/09/15 (employment agreement has been signed with the employees to enable continued operations of U-bank branches in the existing format) Pagi will be merged as of 31/12/15 (no change in the employment agreement).

The decrease in salary expense in Q2/2015 (excluding the effect of the merger yet) of 45 NIS Millions (gross) is the result of an increase in the discounted value of interest on employee liabilities and rights as well as a decrease in the work force.

A provision for a one-time compensation of 17 NIS Millions was made in light of the planned merger of U-Bank and Pagi into FIBI.

Continued reduction in the number of positions in the Group. The merger of UBank and Pagi is expected to reduce the workforce by 150 employees mainly employed in headquarters of the two merged banks.

Ongoing process to reduce expenses both in the branches and in the headquarters of the group. In the past year 6 branches were closed and their activity was transferred to other braches in close proximity.

The trend to greater efficiency continues - a 3% decrease in non-wage expenses.

FIBI


21

Main Indicators - FIBI Group

*Excluding the effect of Fas 91 in 2014.

The rate of change on

H1/2015

) compared to 30.6.14 (The rate of change last year

Credit growth rate2.4%4.1%Credit to private clients8.4%12.7%Client assets portfolio (deposits & securities) 5.2%10.7%

The rate of change on

H1/2015 compared to

H1/2014

The rate of change on 2014

compared to 2013

Income from commissions2.8%3.7% Financing profit from current activity 77-82- *

Salaries and related expenses11%-0.6% Operating and other expenses (excluding Salaries)3.2%-1.6%

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

22

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FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview 30.6.15.

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