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First International Bank of First International Bank of Israel Ltd. - FIBIIsrael Ltd. - FIBI
31.03.200931.03.2009First International Bank of Israel Ltd. 31.12.2008
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 operations 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.
GDP Rate of GrowthGDP Rate of Growth )%()%(
*Forecast – based on Bank of Israel Research Division 2
*
5.2
1.0
-3.6
4.0
5.35.1
201020092008200720062005
Bank of Israel Interest Rate Bank of Israel Interest Rate )%( )%(
and the Rate of Inflation and the Rate of Inflation )%()%(
Annual AverageAnnual Average
Bank of Israel Interest Rate Rate of Inflation
3* I/09 Quarterly Average **In annual terms
2.4%
-0.1%
3.4%
3.8%
2.40%
3.9%
5.2%
3.7%
0.9%1.17%
I/09 20092008200720062005
*
* *
Country RatingsCountry Ratings
Moody's Fitch S&PBank Deposits )LT( A1 A A
Bank Deposits )ST( P -1 F 1 A -1
Outlook Stable Stable Stable
4
Foreign Investments in Israel *Foreign Investments in Israel *
)US$ Millions()US$ Millions(24,802
9,667
14,861
8,425
2008200720062005
Israeli Investments Abroad * Israeli Investments Abroad * )US$ Millions()US$ Millions(
3,809
14,619
20,604
9,308
2008200720062005
*In 2006: Acquisition by “Teva”
5
*In 2006: Acquisition of “Iscar” by Berkshire - Hathaway
Ownership StructureOwnership StructureBino-Liberman Group
FIBI Holding Company Ltd.
The Public
Israel Discount Bank
The First International Bank of Israel Ltd.
The Public
E. 58.545%
V. 88.768%
E. Percentage of equity share capital ownership
V. Percentage of voting power exercised at any general meeting
E. 15.505%
V. 11.232%
E. 19.19%
V. 16.31%
E. 54.33%
V. 72.59%
FIBI Investment House Ltd.
E. 26.48%
V. 11.1%
E. 25.95%
V. 0%
E. 100%
V.100%
As of 31.12.2008
PAGIPoalei Agudat Israel
Bank Ltd.
Modus-Selective
Investments
Portfolio Ltd.
FIBI Bank
)UK( Plc
FIBI Bank
)Suisse(
Ltd.
Kidma –
Provident Funds
Management Ltd.
E. 68.68%
V.68.68%
E.50%
V. 60%
E. 100%
V.100%
E. 100%
V.100%
E. 100%
V.100%
UBank Ltd.
E. 100%
V.100%
Otsar
Hahayal
E. 68%
V.66%
Bank
Massad
The First Int’l
& Co.
Underwriting and
Investments Ltd.
E. 75%
V. 25%
E. 51%
V.51%
6
Since: 2008 20061977
20 47
retail/commercial
FIBI
Retail bank
cluster
FIBI Bank )UK( FIBI Bank
)Switzerland(
U - Bank
Otsar
HahayalMassad
Corporate + middle market banking Private + affluent banking 82 branches
PAGI
International
Branches:
Capital markets Trust and custody Private and
affluent banking 6 branches )unique
affluent banking
branches(
Business
banking Private
banking
Focus:
17
retail/commercialretail
Key audience: defense + militaryteachers ultra-orthodox
First International Bank GroupFirst International Bank Group
Private
banking
7
9
First International Bank of Israel Ltd. 31.03.2009 9
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.
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.
ShareholdersShareholders
10
First International Bank of Israel Ltd. 31.03.2009 10
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 42.64% 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 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. In 2008 Mr. Zadik Bino transferred 47.5% of his indirect holdings in FIBI and in the Bank to his three children; Mr. Gil Bino, Mrs. Hadar Bino Shmueli and Mrs. Daphna Bino Or, in equal shares.
Shareholders Shareholders )continued()continued(
11
First International Bank of Israel Ltd. 31.03.2009 11
•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: 172 in Israel (including subsidiaries)
•Employees: 4,829
•Equity: NIS 5,646 Million (US$ 1.348 Million *)
•5th largest banking group in Israel
First International Bank of Israel - FIBIFirst International Bank of Israel - FIBI
/$ *NIS = 4.188 as of March 31, 2009
12
First International Bank of Israel Ltd. 31.03.2009 12
Bank RatingsBank Ratings
Moody's FitchBank Deposits )LT( A2 BBB +
Bank Deposits )ST( P - 1 F 2
Outlook Negative Stable
13
First International Bank of Israel Ltd. 31.03.2009 13
Core Capabilities• Top class reputation in private banking services, especially dealing room,
specialized investment advice center and TASE futures and operations index, 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
Clients
Client-centric vs. product - oriented banking
• Corporate finance: increase penetration of middle market
• Private banking: extend presence in affluent segment
• Retail banking: broaden overall footprint (e.g., acquired Bank OtsarHahayal and Massad)
Strategy - Main FocusStrategy - Main Focus
14
First International Bank of Israel Ltd. 31.03.2009 14
Group Consolidation
Realize synergies from three bank acquisitions:
• Implement shared-services model, including IT systems
(UBnak completed, others in progress)
• Cross-sell products (mortgages, structured products, advisory services)
• Create streamlined and effective branch network
New Products
State-of-the-art pension-planning advice offering
Other
• Upgraded scoring model and processes in anticipation of Basel II, including development of advanced credit-scoring models for risk-based pricing
• Outsourcing: first Israeli bank to outsource its computer infrastructure
• Large but conservatively-managed foreign proprietary trading book
Strategy - Main FocusStrategy - Main Focus
15
First International Bank of Israel Ltd. 31.03.2009 15
Net Operating Earnings and ROE – QuarterlyNet Operating Earnings and ROE – QuarterlyNIS MillionsNIS Millions
89
-80
109
I/09IV/08I/08
8.0%6.6%
16
First International Bank of Israel Ltd. 31.03.2009 16
Ratio of Provision for Doubtful Debts to Ratio of Provision for Doubtful Debts to Credit to the PublicCredit to the Public
4 Other Leading
Banks
4 Other Leading Banks
FIBIFIBI
0.64%
1.50%
0.82%
0.51%
0.28%0.28%
0.53%
0.72%
0.92%
1.10%
1.28%
0.85%
0.53% 0.63%
0.90%
0.52%
0.17%
-0.06%
0.33%0.42%
0.62%
0.99%
1.34%
1.75%
0.91%
0.27%
17
First International Bank of Israel Ltd. 31.03.2009 17
Total Credit Risk in Respect ofTotal Credit Risk in Respect ofProblematic Debts )NIS millions(Problematic Debts )NIS millions(
31.12.2005 31.12.2006 31.12.2007 31.12.2008 31.03.2009
Non income bearing debts 1,188 815 662 713 718 5
Restructured debts 221 236 281 324 76 (248)
Debts scheduled for restructuring 277 348 0 3 (3)
Debts temporarily in arrears 285 224 172 153 167 (19)
Debts subject to special supervision 3,281 2,349 1,696 2,430 2,859 429
Off-balance sheet credit risk 345 291 269 436 388 (48)
Total credit risk in respect of problematic debts
5,597 4,263 3,080 4,059 4,208 149
Change 31.03.09
compared with 31.12.08
18
First International Bank of Israel Ltd. 31.03.2009 18
Composition of Total Proprietary Trading Composition of Total Proprietary Trading Book )NIS Millions( for 31.03.2009Book )NIS Millions( for 31.03.2009
*Including 485 Million NIS investment in BEZEQ Shares and 100 M NIS in HOT shares, the rest is in Hedge Funds and Private Equity
Composition AmountBonds-Israel Government 8,712 Bonds-Commercial Banks 3,425 Bonds-Foreign Governments 193 Bonds secured by Foreign Governments 901 Shares * 753 Other 2,280 Total 16,264
Bonds-Israel Government
53%Bonds-Commercial
Banks21%
Bonds-Foreign Governments
1%
Bonds secured by Foreign
Governments6%
Shares *5% Other
14%
19
First International Bank of Israel Ltd. 31.03.2009 19
Composition of Foreign Currency Composition of Foreign Currency Proprietary Trading Book )NIS Millions( for Proprietary Trading Book )NIS Millions( for
31.03.200931.03.2009
*Including 475 Million NIS MBS Bonds secured by the US Government, the rest is banks & corporate bonds secured by foreign governments .
**Single issuer exposure up to 3% of portfolio. Average Duration: 2.09 years
Structed Products, credit risk based
2%
Hedge Funds * *1%
Mortgage Backed Securities (MBS)
5%
Eurobonds *59%
Structed Products, Interest, Shares &
Currency risk based1%
Israeli Companies Traded abroad
2%
Bonds of Israel Government *
14%
Bonds of Foreign Governments *
3%
Bonds secured by Foreign Governments
13%
20
First International Bank of Israel Ltd. 31.03.2009 20
I / 09I / 08 Massad
457
153
Operating & Other Expenses )NIS Millions(Operating & Other Expenses )NIS Millions(
376 353
129
167
107
155
Other ExpensesMaintenance, Depreciation,Premises & Equipment
Salaries & Related Expenses
332
121
ChangeI / 08I / 09
51598649Total Operating Costs (Excluding severance fund effects & standard 14)
7598605Excluding Massad
54
38
20
2
52
410
22
6
OtherExpenses
Personnel &Welfare
Marketing &Advertising
CommissionsPaid
Consultancy
21
First International Bank of Israel Ltd. 31.03.2009 21
Operating Income and ExpensesOperating Income and Expenses
Adjusted* Operating Adjusted* Operating Income & ExpensesIncome & Expenses
Operating Income Operating Income & Expenses& Expenses
357
OperatingIncome
Cost/Income Ratio
Adjusted Cost/ Income Ratio
OperatingExpenses
(*)Income excluding dividends, provisions for decline in value of proprietary trading book and severance pay fund gains; expenses excluding severance pay fund effects and standard 14
371312
649638
312 348
59864948.9%48.9% 57.2%57.2%
52.2%52.2% 53.6%53.6%
22
First International Bank of Israel Ltd. 31.03.2009 22
8,3958,034
7,163
7.4%7.8%
8.9%8.8%8.9%
2,000
3,000
4,000
5,000
6,000
7,000
8,000
I/09IV/08I/08
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
First Tier Capital Adequacy
First Tier
Second Tier
11.6%
12.8%12.4%
11.1%11.6%
*
*As of 30.06.2008
*
FIBI
4 Bank Groups
Capital Adequacy RatioCapital Adequacy Ratio
Capital Adequacy
23
First International Bank of Israel Ltd. 31.03.2009 23
Changes in Assets, Deposits and Changes in Assets, Deposits and Credit to the Public Credit to the Public )NIS Billions()NIS Billions(
Deposits from the Public
Credit to the Public
Total assets
*The average deposits/credit ratio in the five leading banking groups (as of Dec. 2008) : 110%
101.298.992.5
86.5
72.7
I/09 2008200720062005רבעון
61.861.355.6
52.244.3
81.779.975.872.2
61.6
Ratio of Deposits to Credit 131% *
5,6465,4915,4864,740
4,181
Shareholders Equity
I / 09I / 08 %change
8.58.00.5
17.317.8)0.5(
32.619.712.9
10.97.33.6
FIBI Bank )UK( )GBP K(886764122
FIBI Bank )Switzerland( )CHF K(
924521403
Changes in Net Profit - SubsidiariesChanges in Net Profit - Subsidiaries
23
25
First International Bank of Israel Ltd. 31.03.2009 25
Gov. & Bank Deposits NIS 2.0 M
Capital Notes NIS 4.7 B
Capital available for Investments **
NIS 3.9 M
Credit to the Public
NIS 61.8 BillionDeposits from the
Public
NIS 81.7 Billion
Liquid Assets)32.7% Deposits from
the Public(
Deposits / Credit Ratio 131%
Capital Investments81.0% of capital available for Investments
Bonds – State of Israel NIS 8.7 Billion
Bonds-foreign states NIS 1,0 Billion
Cash/Deposits-Bank of Israel NIS 11.2Billion
Deposits in Banks NIS 5.7 B
Bonds – Banks NIS 3.4 B
13% is secured under liquid Assets
)Deposits / State Bonds(
NIS Corporate Bonds, NIS 966 M
MBS Prime+AltA NIS 315 M
Hedge Funds & Stocks NIS 168 M
Credit Risks in VAR Terms NIS 73 M
Structure Products NIS 245 M
FOREX Corporate Bonds NIS 655 M
BEZEQ+HOT NIS 585 M
*Out of this MBS GNMA & Agencies NIS 475 M ** Equity less Liquid Assets 24
Capital Adequacy 12.9%First Tier 8.9%
26
First International Bank of Israel Ltd. 31.03.2009 26
Banking Subsidiaries in IsraelBanking Subsidiaries in IsraelPAGIPAGI, 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.
UBANKUBANK - 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.
27
First International Bank of Israel Ltd. 31.03.2009 27
OTSAR HAHAYALOTSAR 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 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.
MASSADMASSAD - 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. .