first international bank of israel ltd. - fibi 31.03.2009 first international bank of israel ltd....

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

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5. It is hereby emphasized that portions of the information exhibited herein are

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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


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


•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


Bank RatingsBank Ratings

Moody's FitchBank Deposits )LT( A2 BBB +

Bank Deposits )ST( P - 1 F 2

Outlook Negative Stable

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


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


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


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


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


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


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


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


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


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


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


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


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


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 31.03.2009 first international bank of israel ltd....

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