first international bank of israel ltd. - fibi 30.06.2009 1 first international bank of israel ltd....

First International Bank of First International Bank of Israel Ltd. - FIBIIsrael Ltd. - FIBI

30.06.200930.06.2009

1

First International Bank of Israel Ltd. 30.06.2009 1

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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. 2

GDP Rate of GrowthGDP Rate of Growth )%()%(

*Yearly Terms **Forecast

5.2

-0.2-1.7

4.0

5.35.1

200901-06/092008200720062005

***


3


Bank of Israel Interest Rate Bank of Israel Interest Rate )%( *)%( *

and the Rate of Inflationand the Rate of Inflation )%()%(

Bank of Israel Interest Rate Rate of Inflation

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

2.4%

-0.1%

3.4%

3.8%4.20%

4.0%

5.0%

4.5%

2.5%

0.5%

June 09 20092008200720062005

**

4


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

5 5


Foreign Investments in Israel -Foreign Investments in Israel - Private )Non Banking( Sector Only Private )Non Banking( Sector Only )US$ Millions()US$ Millions(

Israeli Investments Abroad - Israeli Investments Abroad - Private )Non Banking( Sector Only Private )Non Banking( Sector Only )US$ Millions()US$ Millions(

In 2006: Acquisition by “Teva”

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

10,495

23,866

9,483

2,437

Q1/ 09200820072006

2,023

9,96010,918

22,961

Q1/ 09200820072006

6


Bino – Liberman Group

FIBI Holding Company Ltd.

The First International Bank of Israel Ltd.

The Public

The Public

FIBI Investment House Ltd.

Israel Discount Bank

Otsar

Hahayal

PAGI-Poaley

Agudat Israel

Bank Ltd.

Bank

Massad

UBank

Ltd.

FIBI Bank

)UK( Plc.

FIBI Bank

)Suisse(

Ltd.

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 – % Share in EquityV – % Voting Right

E – 79.07V – 79.07

E – 54.33V – 74.9

E – 20.93V – 20.93

E – 19.22V – 14.01

E – 26.45V – 11.09

E – 100V – 100

E – 0V – 0 (Stocks Dormant)

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 – 25

Ownership StructureOwnership Structure

7

Retail Bank

Cluster

FIBI Bank )UK(

FIBI Bank

)Suisse(

First International Bank GroupFirst International Bank Group

International

First International Bank

• Corporate + middle market banking• Private + affluent banking• Capital & Finance Markets• 81 branches

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

• Private Banking• Since 1984

• Business Banking• Private Banking• Since 1982

Focus: Retail Retail/Commercial Retail/CommercialBranches: 17 46 20Since: 2008 2006 1977Key Audience: Teachers Military Ultra Orthodox 8

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


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 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).

Shareholders Shareholders )continued()continued(

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: 170 in Israel (including subsidiaries)

•Equity: NIS 5,895 Million (US$ 1,504 Million *)

•5th largest banking group in Israel

First International Bank of Israel - FIBIFirst International Bank of Israel - FIBI

/$ *NIS = 3.919 as of June 30, 2009

12


Bank RatingsBank Ratings

Bank Deposits Long Term A 2 Long term BBB+

Bank Deposits Short Term P -1 Short Term F 2

Financial Strength C - Individual C/D

Outlook Negative Support Rating 2

Outlook Stable

Issuer AA / Stable

Subordinated Notes AA - / Stable

Ma'a lot - S&P

Moody's Fitch

13


Risk Profile

• Conservative capitalization levels: capital adequacy ratio of 13.95% (industry average: 12.62%); 1st tier adequacy ratio of 9.53% (industry average: 7.97%); deposit/credit ratio of 136.0% (industry average: 115.5%)

• 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 in anticipation of Basel II, including development of advanced credit-scoring models for risk-based pricing

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

Strategy - Main FocusStrategy - Main Focus

14


ClientsClient-centric vs. product-oriented banking

• Corporate finance: decrease concentration of credit portfolio, increase penetration of middle market

• Private banking: increase wallet share through advisory services; extend presence in affluent segment

• Retail banking: broaden overall footprint (e.g., acquired Bank OtsarHahayal and Massad)

New ProductsState-of-the-art pension-planning advice offering

Other• Measures taken to increase group efficiency, including implementation of a

shared-services model

• Decision taken to withdraw from computer infrastructure outsourcing agreement

Strategy - Main FocusStrategy - Main Focus

15


Objective: to realize synergies from three bank acquisitions

• Implement shared-services model, including IT systems (UBank IT systems converted in 2008, Massad and Otsar Hahayal planned for 2009-2010; HQ units unified: logistics, severance pay fund operations, regulatory units and parts of training and human resources operations, process to be accelerated in 2009-2010)

• 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 chair the new subsidiaries and serve on their boards

Group ConsolidationGroup Consolidation

16


Net Operating Earnings and ROE – QuarterlyNet Operating Earnings and ROE – QuarterlyNIS MillionsNIS Millions

97

109

140

II/09I/09II/08

89

7.0%

9.9%

8.0%

8.8%

6.8%

186

249

01-06/0901-06/08

17


Ratio of Provision for Doubtful Debts to Ratio of Provision for Doubtful Debts to Credit to the PublicCredit to the Public

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

0.74%0.64%

1.50%

0.82%

0.51%

0.28%0.28%

0.53%

0.72%0.92%

1.10%

1.28%

0.85%

0.46%0.63%

0.90%

0.52%

0.17%-0.06%

0.33%

0.42%

0.62%

0.99%

1.34%

1.75%

0.91%

18


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 30.06.2009

Non income bearing debts 1,188 815 662 713 734 21

Restructured debts 221 236 281 324 91 (233)

Debts scheduled for restructuring 277 348 0 3 1 (2)

Debts temporarily in arrears 285 224 172 153 108 (45)

Debts subject to special supervision 3,281 2,349 1,696 2,430 2,629 199

Off-balance sheet credit risk 345 291 269 436 405 (31)

Total credit risk in respect of problematic debts

5,597 4,263 3,080 4,059 3,968 )91(

Change 30.06.09

compared with 31.12.08

Balance for date

19


Composition of Total Proprietary Trading Composition of Total Proprietary Trading Book )NIS Millions( for 30.06.2009Book )NIS Millions( for 30.06.2009

CompositionAmount%

Governments bonds & Secured by Governments bonds10,410 62%

Bonds of Commercial Banks3,411 20%

Shares827 5%

Other2,122 13%

Total 16,770 100%

State of Israel Bonds

Foreign Governments

Bonds 3%

Secured by Governments

Bonds 6%

Other 13%

Governments bonds &


Bonds

Shares5%Bonds of

Commercial Banks20%

53%

62%

20


Composition of Foreign Currency Proprietary Composition of Foreign Currency Proprietary Trading Book )NIS Millions( for 30.06.2009Trading Book )NIS Millions( for 30.06.2009

CompositionAmount%

Governments bonds & Secured by Governments2,49436.8%

Due: State of Israel bonds95814.1%

Due: Foreign Governments bonds5588.2%

Due: Secured by Governments bonds5468.1%

Due: MBS (GNMA+Agencies)4326.4%

Commercial Banks bonds3,12846%

MBS (PRIME+ALTA)2984%

Shares841%

Other77112%

Total6,773100%

State of Israel bonds

MBS (GNMA+

AGENCIES) 6.4%

Secured by Governments bonds 8.2%

Foreign Governmentbonds 8.1%

CommercialBanks bonds

Other12%

Shares1%

MBS (PRIME+ALTA)

4%

Governments bonds &


bonds

37%

46%

14%

Single issuer exposure up to 3% of portfolio. Average Duration: 3 years

21


Operating Commissions – GroupOperating Commissions – Group ((NIS MillionsNIS Millions))

253

45

262

216

43

218

Account MangementCredit Card ChargesSecurities Activity Charges

1-6/091-6/08

Total Operating Commissions691620

Without Massad647599

1-6/09

Massad

1-6/08

216

254

40 39

209

236

22


Operating & Other Expenses )NIS Millions(Operating & Other Expenses )NIS Millions(

694

265369

1,264

706

225333

1,328

Total Operating & OtherExpenses

Total Salaries & RelatedExpenses

Maintenance,Depreciation, Premises

& Equipment

Other Expenses

1-6/091-6/08

Total Operating & Other Expenses

1,3281,264

Without Massad1,2411,206Massad

1-6/08 1-6/09

319 339

218250

669 652

1,2061,241

23


Operating Income and ExpensesOperating Income and Expenses

Adjusted* Operating Adjusted* Operating Income & ExpensesIncome & Expenses

Operating Income Operating Income & Expenses& Expenses

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

50.3%50.3% 58.4%58.4%50.8%50.8% 52.6%52.6%

628 698

12371328

776636

13281264

1-6/091-6/081-6/091-6/08

24


First Tier Capital Adequacy

First Tier

Second Tier

*

FIBI

4 Bank Groups

Capital Adequacy RatioCapital Adequacy Ratio

Capital Adequacy

*

8,7798,414

7,163

7.5%7.8%

9.5%8.9%8.9%

II/09I/09I/08

12.8%13.95%

11.6%

11.6% 11.4%

25


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 June 30 2009) : 115.5%

Ratio of Deposits to Credit 136% *

Shareholders Equity

100.698.992.5

86.5

72.7

30.6.092008200720062005

100.6

58.961.355.6

52.244.3

80.079.975.872.2

61.6

5,8955,4915,486

4,7404,181

1-6 / 091-6 / 08 %change

15.718.1)2.4(

38.132.25.9

35.832.53.3

20.212.6* 7.6

FIBI Bank )UK( )GBP K(1,038605433

FIBI Bank )Switzerland( )CHF K(

1,9461,749197

Changes in Net Profit - SubsidiariesChanges in Net Profit - Subsidiaries

*Excluding the Sale Grant

26


27


Gov. & Bank Deposits NIS 2.7 M

Capital Notes NIS 5.0 B

Capital available for Investments **

NIS 4.1 B

Credit to the Public

NIS 58.9 BillionDeposits from the

Public

NIS 80 Billion

Liquid Assets)37.6% Deposits from

the Public(

Deposits / Credit Ratio 136%

Capital Investments80% of capital available for Investments

Bonds – State of Israel NIS 9.4 Billion

Bonds-foreign states* NIS 1.52 B

Cash/Deposits-Bank of Israel NIS 13.4Billion

Deposits in Banks NIS 5.7 B

Bonds – Banks NIS 3.4 B

12.6% is secured under liquid Assets

)Deposits / State Bonds(

NIS Corporate Bonds, NIS 1 B

MBS Prime+AltA NIS 299 M

Hedge Funds & Stocks NIS 157 M

Credit Risks in VAR Terms NIS 130 M

Structure Products NIS 204 M

FOREX Corporate Bonds NIS 770 M

BEZEQ+HOT NIS 670 M

*Out of this MBS GNMA & Agencies NIS 431 M and bonds secured by foreign governments NIS 546 M

**Equity less Liquid Assets

27

Capital Adequacy 13.95%First Tier 9.53%

28


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.

29


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.

first international bank of israel ltd. - fibi 30.06.2009 1 first international bank of israel ltd....

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