First International Bank of Israel Presents 2019 Results

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Mar 15, 2020, 10:12 ET

TEL AVIV, Israel, March 15, 2020 /PRNewswire/ -- First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the fourth quarter and full year of 2019.

Highlights

18% growth year-over-year in net earnings for 2019 to NIS 865 million;
Return on equity for 2019: 10.5%;
34.5% growth year-over-year in net earnings for the fourth quarter to NIS 222 million;
Return on equity for the fourth quarter: 10.8%;
Net interest income in 2019 increased by 4.7% in comparison to 2018, amounting to 2,602 million;
The Bank continued to improve efficiency – operating and other expenses decreased by 5.9%, and the efficiency ratio increased to 64.4%;
Credit to the public increased by 4.3% to NIS 87,899 million;
Deposits from the public increased by 7.5% to NIS 120,052 million;
Ratio of Tier I equity capital to risk assets: 10.81%.

Profitability

A year of record profit for the First International Bank: First International Bank Group increased net earnings in 2019 by 18% to NIS 865 million. Return on equity for 2019 reached 10.5%.

In the fourth quarter of the 2019, net earnings increased by 34.5% year-over-year, amounting to NIS 222 million. Return on equity in the fourth quarter reached 10.8%.

Growth

Net interest income for 2019 increased by 4.7% in comparison to 2018, amounting to NIS 2,602 million, the increase due primarily to growth in the volume of operations.

The broadening of the Group is also clear within the balance sheet data, both on the credit side and on the deposit side. Deposits from the public grew by 7.5% to NIS 120,052 million. The net credit to the public portfolio in 2019 grew by 4.3% year-over-year, amounting to NIS 87,899 million as of December 31, 2019. The growth in credit is marked by the continued distribution of credit and is noted in the private customer segment, which grew by 4.6%, in the corporate and middle market business segment, which grew by 3.2%, and in the small business segment, which grew by 3.3%.

The growth in the credit portfolio was achieved while maintaining a commensurate risk level: the ratio of credit loss expenses to total credit to the public in 2019 amounted to 0.16% in contrast to 0.20% in 2018.

Efficiency

The First International Bank continues to improve efficiency in accordance with its strategic goals and its efficiency ratio improved to 64.4% in 2019, in comparison to 68.4% in 2018. Operating and other expenses amounted to NIS 2,654 million in 2019, a decrease of 5.9% in relation to 2018.

The decrease in expenses stemmed from the various efficiency measures taken by the Bank and was noted across all expense items, including Payroll and related expenses and which, when compared with last year, were reduced by 5.6%, and maintenance and depreciation of buildings and equipment expenses which were reduced by 6.1%.

The efficiency trend is also reflected by the decrease in the number of positions, which declined by 5% in 2019, as well as by the decrease of 4% in office space in 2019.

Financial stability

The upward trend relating to the capital attributed to the shareholders of the Bank continued, and grew by 5.9% (NIS 475 million) to NIS 8,568 million. The Tier I equity capital ratio increased to 10.81% compared with 10.51% as of December 31, 2018, and the comprehensive capital ratio increased to 13.70%.

In 2019, the Bank distributed dividends in the amount of NIS 410 million. The return on dividend amounted to 4.5%.

The Board of Directors of the Bank resolved on an additional dividend distribution of NIS 125 million.

Ms. Smadar Barber-Tsadik, CEO of the First International Bank Group stated:

"The financial results of the First International Bank Group for 2019 combine the three trends which has characterized the Bank over recent years: the growth in volume of operations, significant efficiency and maintenance of a commensurate level of risk and financial stability.

"Based on the performance of the Bank and its stability, in 2019 all the rating agencies (the local ones: Midrug and Ma'alot, as well as the international one: Moody's) raised the rating of our Bank to the rating which has been applied to the elite of the banking sector in Israel.

"At the end of 2019, the Bank approved a new strategic plan for the coming years, which comprises a direct continuation of our previous corporate strategy, the implementation of which had already been successfully completed some time ago. Furthermore, this year, our Bank initiated an IT infrastructure strategy in addition to its digital strategy, which was already implemented in 2018. These strategic plans are aimed at driving progress forward at the Bank given the changing competitive conditions within the local financial and banking sector. All the while, we are keeping a future vision of the banking world in a way that enables us to continue our growth and maintain our areas of leadership. The leitmotif principles underlying strategic plans are: a focus on customer needs, our pursuit of innovation and continuing our efficiency processes.

"The First International Bank Group continues its consistent efficiency processes in accordance with its strategic outline, with the aim of continuing the trend of improvements in the expense structure and improvements in the efficiency ratio of the Group.

"The success of our Bank in focusing on customer needs, while combining a high level of service, professionalism and digital services, is reflected in our leadership in the results of customer surveys. Furthermore, a Bank of Israel survey recently published, which covered the entire local banking system, awarded First International Bank, first place in customer satisfaction with regard to the Bank's Internet website and mobile application. Likewise, the Bank was also considered outstanding, with regard to customer satisfaction of service at branches."

CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES

Principal financial ratios	2019	2018	2017	2016	2015
					percent
Execution indices
Return on equity attributed to shareholders of the Bank	10.5%	9.3%	9.1%	7.2%	6.5%
Return on average assets	0.63%	0.54%	0.52%	0.41%	0.37%
Ratio of equity capital tier 1	10.81%	10.51%	10.38%	10.09%	9.81%
Leverage ratio	5.81%	5.76%	5.50%	5.52%	5.43%
Liquidity coverage ratio	128%	122%	123%	123%	104%
Ratio of total income to average assets	3.0%	3.1%	2.9%	2.9%	2.9%
Ratio of interest income, net to average assets	1.9%	1.8%	1.8%	1.7%	1.6%
Ratio of fees to average assets	0.9%	1.0%	1.0%	1.0%	1.1%
Efficiency ratio	64.4%	68.4%	69.5%	73.5%	77.6%

Credit quality indices
Ratio of provision for credit losses to credit to the public	1.05%	1.02%	1.03%	1.08%	1.12%
Ratio of impaired debts or in arrears of 90 days or more to credit to the public	1.08%	0.83%	0.92%	1.02%	1.36%
Ratio of provision for credit losses to total impaired credit to the public	131%	186%	155%	147%	108%
Ratio of net write-offs to average total credit to the public	0.10%	0.16%	0.18%	0.09%	0.15%
Ratio of expenses for credit losses to average total credit to the public	0.16%	0.20%	0.15%	0.10%	0.03%


Principal data from the statement of income	2019	2018	2017	2016	2015
					NIS million
Net profit attributed to shareholders of the Bank	865	733	678	521	446
Interest Income, net	2,602	2,486	2,302	2,169	1,953
Expenses from credit losses	138	166	121	80	18
Total non-interest income	1,520	1,637	1,450	1,480	1,541
Of which: Fees	1,286	1,325	1,305	1,300	1,378
Total operating and other expenses	2,654	2,819	2,607	2,683	2,710
Of which: Salaries and related expenses	1,601	1,696	1,579	1,581	1,589
Dismissal expenses	48	35	16	57	27
Primary net profit per share of NIS 0.05 par value (NIS)	8.62	7.31	6.76	5.19	4.45


Principal data from the balance sheet	2019	2018	2017	2016	2015
					NIS million
Total assets	141,110	134,120	135,717	127,907	125,476
of which: Cash and deposits with banks	37,530	31,303	39,186	29,150	30,727
Securities	10,995	12,595	10,238	15,776	16,439
Credit to the public, net	87,899	84,292	80,378	77,328	72,555
Total liabilities	132,186	125,707	127,333	119,973	117,813
of which: Deposits from the public	120,052	111,697	113,511	105,817	103,262
Deposits from banks	1,137	1,150	1,133	755	1,565
Bonds and subordinated capital notes	3,674	4,989	5,249	5,801	5,862
Capital attributed to the shareholders of the Bank	8,568	8,093	7,756	7,321	7,073


Additional data	2019	2018	2017	2016	2015
Share price (0.01 NIS)	9,989	7,860	7,202	5,650	4,594
Dividend per share (0.01 NIS)	410	355	310	199	130
Average number of positions ⁽¹⁾	4,150	4,361	4,512	4,738	5,035

(1) The number of positions includes conversion of overtime in terms of positions.

STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31 (NIS million)

	Consolidated			The Bank
	2019	2018	2017	2019	2018	2017
Interest Income	3,085	3,001	2,704	2,847	2,312	2,060
Interest Expenses	483	515	402	491	511	397
Interest Income, net	2,602	2,486	2,302	2,356	1,801	1,663
Expenses from credit losses	138	166	121	127	117	47
Net Interest Income after expenses from credit losses	2,464	2,320	2,181	2,229	1,684	1,616
Non-Interest Income
Non-Interest Financing income	225	231	83	233	203	94
Fees	1,286	1,325	1,305	1,144	995	973
Other income	9	81	62	54	151	176
Total non-Interest income	1,520	1,637	1,450	1,431	1,349	1,243
Operating and other expenses
Salaries and related expenses	1,601	1,696	1,579	1,487	1,303	1,179
Maintenance and depreciation of premises and equipment	353	376	380	326	282	278
Amortizations and impairment of intangible assets	92	91	94	89	86	83
Other expenses	608	656	554	583	508	486
Total operating and other expenses	2,654	2,819	2,607	2,485	2,179	2,026
Profit before taxes	1,330	1,138	1,024	1,175	854	833
Provision for taxes on profit	478	408	358	418	319	284
Profit after taxes	852	730	666	757	535	549
The bank's share in profit of equity-basis investee, after taxes	51	37	54	108	198	129
Net profit:
Before attribution to non-controlling interests	903	767	720	865	733	678
Attributed to non-controlling interests	(38)	(34)	(42)	-	-	-
Attributed to shareholders of the Bank	865	733	678	865	733	678


Consolidated and The Bank	Note	2019	2018	2017
Primary profit per share attributed to the shareholders of the Bank	9	NIS
Net profit per share of NIS 0.05 par value		8.62	7.31	6.76

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31 (NIS million)

	Consolidated
	2019	2018	2017
Net profit before attribution to non-controlling interests	903	767	720
Net profit attributed to non-controlling interests	(38)	(34)	(42)
Net profit attributed to the shareholders of the Bank	865	733	678
Other comprehensive income (loss) before taxes:
Adjustments of available for sale securities to fair value, net	101	(102)	90
Adjustments from translation of financial statements⁽¹⁾ net after the effect of hedges⁽²⁾	-	-	4
Adjustments of liabilities in respect of employee benefits⁽³⁾	(74)	37	1
Other comprehensive income (loss) before taxes	27	(65)	95
Related tax effect	(9)	22	(35)
Other comprehensive income (loss) before attribution to non-controlling interests, after taxes	18	(43)	60
Less other comprehensive income (loss) attributed to non-controlling interests	(2)	(4)	3
Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes	20	(39)	57
Comprehensive income before attribution to non-controlling interests	921	724	780
Comprehensive income attributed to non-controlling interests	(36)	(30)	(45)
Comprehensive income attributed to the shareholders of the Bank	885	694	735

(1) Adjustments from translation of financial statements of foreign operations which their currency of operations is different from the currency of operation of the Bank.

(2) Hedges-gains (losses) regarding the hedging of investment in foreign currency.

(3) Mostly reflects adjustments in respect of actuarial assessments as of the end of the period regarding defined benefits pension plans, of amounts recorded in the past in other comprehensive profit.

BALANCE SHEET AS AT DECEMBER 31 (NIS million)

	Consolidated		The Bank
	2019	2018	2019	2018
Assets
Cash and deposits with banks	37,530	31,303	36,528	30,905
Securities	10,995	12,595	10,736	10,620
Securities which were borrowed	9	863	9	863
Credit to the public	88,829	85,160	83,713	66,846
Provision for Credit losses	(930)	(868)	(871)	(654)
Credit to the public, net	87,899	84,292	82,842	66,192
Credit to the government	1,039	700	415	7
Investment in equity-basis investees	605	606	1,278	2,878
Premises and equipment	996	1,023	964	960
Intangible assets	248	239	238	226
Assets in respect of derivative instruments	1,091	1,399	1,096	1,416
Other assets⁽²⁾	698	1,100	667	929
Total assets	141,110	134,120	134,773	114,996
Liabilities and Shareholders' Equity
Deposits from the public	120,052	111,697	114,836	87,038
Deposits from banks	1,137	1,150	2,640	10,852
Deposits from the Government	353	982	353	777
Bonds and subordinated capital notes	3,674	4,989	2,055	3,455
Liabilities in respect of derivative instruments	1,247	1,294	1,247	1,298
Other liabilities(1)(3)	5,723	5,595	5,074	3,483
Total liabilities	132,186	125,707	126,205	106,903
Capital attributed to the shareholders of the Bank	8,568	8,093	8,568	8,093
Non-controlling interests	356	320	-	-
Total equity	8,924	8,413	8,568	8,093
Total liabilities and shareholders' equity	141,110	134,120	134,773	114,996

(1) Of which: provisions for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 57 million and NIS 64 million (consolidated) and NIS 55 million and NIS 57 million (the Bank) as of December 31, 2019 and 2018, respectively.

(2) Of which: other assets measured at fair value in the amount of NIS 42 million consolidated and the Bank (31.12.18 - NIS 426 million consolidated and the Bank).

(3) Of which: other liabilities measured at fair value in the amount of NIS 47 million consolidated and the Bank (31.12.18 - NIS 586 million consolidated and the Bank).

STATEMENT OF CHANGES IN EQUITY (NIS million)

	Share capital and premium ⁽¹⁾	Accumulated other comprehensive income (loss)	Retained earnings ⁽²⁾	Total share-holders' equity	Non- controlling interests	Total equity
Balance as at January 1, 2017	927	(177)	6,571	7,321	283	7,604
Changes during 2017
Net profit for the year	-	-	678	678	26	704
Dividend	-	-	(310)	(310)	(20)	(330)
Other comprehensive income, after tax effect	-	57	-	57	1	58
Temporary equity - non-controlling interest	-	-	10	10	-	10
Balance as at December 31, 2017	927	(120)	6,949	7,756	290	8,046
Changes during 2018
Net profit for the year	-	-	733	733	34	767
Dividend	-	-	(355)	(355)	-	(355)
Other comprehensive loss, after tax effect	-	(39)	-	(39)	(4)	(43)
Temporary equity - non-controlling interest	-	-	(2)	(2)	-	(2)
Balance as at December 31, 2018	927	(159)	7,325	8,093	320	8,413
Cumulative effect of the initial implementation of US accepted accounting principals⁽³⁾	-	8	(8)	-	-	-
Adjusted balance as at January 1, 2019 after the initial implementation	927	(151)	7,317	8,093	320	8,413
Changes during 2019
Net profit for the year	-	-	865	865	38	903
Dividend	-	-	(410)	(410)	-	(410)
Other comprehensive income (loss), after tax effect	-	20	-	20	(2)	18
Balance as at December 31, 2019	927	(131)	7,772	8,568	356	8,924

(1) Including share premium of NIS 313 million (as from 1992 onwards).

(2) Including an amount of NIS 2,391 million which cannot be distributed as dividend.

(3) Cumulative effect of the initial implementation regarding financial instruments of US accepted accounting standards at banks in respect of financial instruments (ASU 2016-01).

Contact:
Dafna Zucker
First International Bank of Israel
e-mail: [email protected]
Tel: +972-3-519-6224

Ehud Helft
GK Investor & Public Relations
e-mail: [email protected]
Tel: +1-646-201-9246

SOURCE First International Bank of Israel