FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Overview 31.12.13

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

2

Net Profit and ROE NIS Millions

* Assuming core capital ratio of (9.33%), (the Israeli banking industry average core capital ratio as of 31.12.13), the ROE is 9.18% in FY2013 and 9.42% in Q4 2013.** The Net profits include amortization of 51 NIS Millions, inflicting a 0.8% reduction in the year’s ROE.

Average capital

Core capital adequacy

ratio

6,056

9.65%

6,649

10.04%

6,418 6.0%+ 9.8%+

ROE

141 NIS Millions

6,806

10.04%9.65%

**

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

3

Statements of income 2013-2012NIS Millions

 20132012Gross change

Change in %

Interest income, net2,1872,250(63)(2.8%)Expenses from credit losses (0.14% provision rate) (*)97134(37)(27.6%)

Net interest income after expenses from credit losses2,0902,116(26)(1.2%)

Total non-interest income1,6821,5471358.7%

Of which: non-interest financing 2001505033.3%

Commissions1,4181,362564.1%

Other Income 64352982.9%

Total income (after expenses from credit losses)3,7723,6631093.0%

Total operating and other expenses2,8252,791341.2%

Profit before taxes947872758.6%Provision for taxes on profit3863246219.1%The bank’s share in profit of equity-basis investees, after taxes

3051(21)(41.2%)

Net profit570577(7)(1.2%)ROE8.6%9.5% Core capital ratio (end of period)10.04%9.65% 

Bank of Israel average interest rate 1.39%2.35%(0.96%)

* Excluding a one time regulatory provision for mortgages - the provision rate is 0.11%

(13)

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

4

Excluding fees from capital markets activity we maintain a 11 NIS Millions growth

An increase in customers activity resulted in a 4.1% increase in Operating commissions income (NIS Millions)

201356

4.1%

An increase of 8.6% in capital markets fees (linked to an increase in customers activity)

45

13-

24

2012

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

5

Total Income to Total Weighted Risk Assets Ratio

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

6

An increase of 1.2% in Operating & Other Expenses(NIS Millions)

1-12/20131-12/2012

1.2%

54

26-

*

*Including amortization of 51 NIS Millions

6

The operating expenses increase resulted mainly by the VAT increase on salaries and other expenses The operating expenses increase resulted mainly by the VAT increase on salaries and other expenses

3.3%

1.0% )4.7%(

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Improved Operational Efficiency Ratio (Consolidated) Total Operating Expenses to Total Income

7

76.2%76.2%

Total Income

Total Operating Expenses

%%Total Operating Expenses / Total Income (Before Expenses from credit losses)

Total Operating Expenses / Total Income (After Expenses from credit losses)

%%

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

Capital Capital AdequacyAdequacy

Basel IIBasel II

Core Capital Core Capital AdequacyAdequacy

Basel IIBasel II

Estimate Core Estimate Core Capital Capital

AdequacyAdequacy Basel IIIBasel III

Deposits to Deposits to Credit RatioCredit Ratio

Liquid Assets Liquid Assets to Deposits to Deposits

RatioRatio

14.94% 14.96%

9.65% 10.04%

10.11%

124.3% 129.7%

35.4% 38.4%

31.12.1231.12.12 31.12.1331.12.13

Capital Notes 5.7

Capital Available for Investment 5.0

Public Deposits

89.1

Gov. & Bank Bonds2.0

Credit to the Public68.7

Sovereigns Bonds 1.2

State of Israel Bonds 6.9

Bank of Israel Deposits 23.1

Deposits in Banks 3.0

Banks Bonds 1.5

NIS, Corporate Bonds 0.8

Structures, Hedge funds &Stocks 0.6

Market risk in VAR(0.04)

* illustration – not to scale8

FIBI Strategic Assets & Liabilities compositeFIBI Strategic Assets & Liabilities composite** 31.12.13 31.12.13 (NIS Billion(NIS Billions)s)

FIBI Strategic Assets & Liabilities Structure NIS Billions

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

9

5.1%

4.1%

An increase of 5% in balance sheet NIS Billions

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

10

5%

13%

Shareholders` equity to total balance ratio

6.2% 6.2%

5.7%

The presented growth in equity is after dividend distribution of 200 Nis Millions in june 2013. Additional dividend of 100 Nis Millions was distributed in Q1/13.

Continued Growth in EquityShareholders` equity to total balance ratio is stable despite of the substantial growth in the total balance

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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Statement Of Changes in EquityNIS Millions

Balance At 31/12/12 Total Shareholders Equity6,563

2013 Net Earnings for the year 570

Dividend Paid 2013(200)

Other Comprehensive loss and others(41)

Balance At 31/12/13 Total Shareholders Equity6,892

Increase in Equity5%

Increase in Equity Excluding Dividend Paid

8%

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

12

Credit to the Public by segments

31.12.2013 NIS Millions

 31.12.1331.12.12

Gross Change

Compared to 2012

Gross Change in Average Balance

Compared to

2012

Change in % Average Balance

Compared to

2012

Private + Retail (Households)

16,39015,3351,0559126.1%

Mortgage 17,42716,2601,1672,06113.4%

Total private clients33,81731,5952,2222,9739.8%

Commercial * + Small Business

12,94313,274(331))290((2.2%)

Corporate 21,94623,010(1,064)(1,344)(5.9%)

Total Credit to the Public

67,70667,8798271,3392.0%

* The decrease is due to the closure proceedings of FIBI London.

– ()31.12.12

)23%()19%(

)34%( )24%(

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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Provisions for Credit losses 2007-2013

*In Q1 the Bank has implemented a one time regulatory provision on mortgage portfolio in order to set the expenses for credit losses ratio to 0.35% of the mortgage credit balance (24 NIS million). Excluding this one time provision, the bank’s ratio is about 0.08% and the group’s ratio is 0.11% in 2013.** In Q4 Expenses for Credit Losses to Credit to the Public Ratio is 0.19%

Expenses for Credit Losses to Credit to the Public Ratio

**

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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An increase of Total Client Assets NIS Millions

31.12.1331.12.12

Gross Change

Compared to 31.12.12

Change in % Compared to

31.12.12

Total Deposits89,12284,3654,7575.6%

Securities clients portfolio

225,098192,67832,42016.8%

Total Client Assets314,220277,04337,17713.4%

– ()31.12.12

)13%(

)23%()32%(

)30%(

Breakdown of deposits portfolio

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

13.42%

*

14.30%14.57%

13.42%

*

*

*

**

* **-1.3* **-1.3-0.67 -0.63 0.57-

Minimal Regulatory Requirement For

HAPOALIM&LEUMI

Minimal

Regulatory

requirement

Ga

p

The highest Core Capital Ratio compare to other 4 leading banks

15

10.11%8.73%8.80%9.20%9.15%

Ba

se

l II**B

as

el III

Basel II

Basel lII

%%%

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

16*In annual terms . Financial ratios are as of 12.2013.** In Q1/14 additional dividend of 100 Nis Millions was distributed, hence dividend yield as of 30/6/13 is 5.3%. 16

Core capital ratio and principal financial ratios 31.12.2013

FIBI is demonstrating relative strength in main financial ratios

Shareholders` equity to total balance ratio

Ratio of core capital to risk

assets

Deposits from the public to credit to the

public

Provision for credit

losses, to impaired

credit (excluding mortgage)

Expenses for credit losses to credit to the public*

Dividend yield

2013

6.20%10.04%129.7%73.9%0.14%3.53%**

7.64%9.37%109.9%48.7%0.34%1.17%

7.06%9.43%118.7%59.3%0.11%-

6.10%9.30%128.5%56.8%0.50%-

5.49%9.01%101.9%59.7%0.21%0.87%

Other 4 leading Banks Average6.84%9.33%114.2%57.0%0.27%

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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Subsidiaries net profit

Specialization

Net profit 2013

Nis Millions

ROECore

Capital Ratio

Retail customers

Defense forces personnel

Commercial/ Corporate Factoring

103.19.65%9.6%

Capital Markets, Trust & Custody services

Private& affluent banking42.09.5%15.5%

Retail customers

Teachers sector

Israeli-Arab segment

42.19.6%15.1%

Ultra orthodox segment38.511.1%12.4%

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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2013 Highlights

Net profit of 570 NIS Million in 2013 similarly to 2012, despite of substantially decrease in interest rate and regulatory reforms inflicting reductions in commissions

The Profit before taxes increased by 8.6%.

Stable net Stable net profitprofit

The Highest The Highest dividend yield dividend yield in the Israeli in the Israeli

banking banking system system

The highest The highest Core capital Core capital

ratioratio

In 2013 the bank distributed a dividend of 200 NIS Million, additional dividend of 100 Nis Millions was distributed in Q1/2013.

The highest Core capital ratio in the Israeli banking system (also according to Basel III regulation ) – 10.04%.

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL

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2013 Highlights

Total income increased by 3% while Operating & Other Expenses increased by only 1.2% (despite of an increase of salaries).

Most of the increase in the operating expenses is related to the VAT increase

Improve in Improve in Operational Operational Efficiency Efficiency

Ratio Ratio

Maintaining Maintaining quality and quality and

spreading of spreading of credit portfoliocredit portfolio

Continued Continued growth in growth in retail core retail core

activityactivity

Decrease in credit losses Provisions - 0.14% compared to 0.2% in 2012.

A yearly increase of 5% in total balance over the last two years 2.0% increase in the average credit balance, and 9.8% in private clients

credit balance Total client assets (deposits & securities) increased by about 23 Nis Billion

(13.4%), including an increase of 8.6% in capital markets fees An increase of 4.1% in commissions due to growth in customers activity

particularly in capital markets

FIBI

FIRST INTERNATIONAL BANK OF ISRAEL FIBI’s Main Strategic Objectives for the next years

Continued development of online and mobile banking

Maintain market position in private banking & investment consultancy

Customer base growth via subsidiaries and organic growth

Retail CustomersRetail Customers

Continued efforts to Improve income per employee and per account

Maximizing group’s synergies and economies of scale

Continued on going process to utilize the groups real estate including reduction of HQ areas & effective planning of branches format

Operational improvementOperational improvement

Maintaining quality and diversified credit portfolio

Increasing the Bank`s market share in the commercial sector

Commercial & Corporate Commercial & Corporate BankingBanking

Maintain market leader position and professional reputation in capital and money markets

Capital and money market Capital and money market ServicesServices

2014-2014-20162016

StrategyStrategy

20