First International Bank of Israel : Presents First Quarter 2019 Results

TEL AVIV, Israel, May 28, 2019 /PRNewswire/ -- First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the first quarter of 2019.

First Quarter 2019 Highlights

• 33.6% growth year-over-year in net earnings, amounting to NIS 183 million
• Return on equity: 9.3%
• Earnings from financing operations increased by 9.1% year-over-year
• Credit extended to the public increased by 2.4% in the quarter and by 5.4% over the previous year
• Ratio of Tier I equity to risk weighted assets: 10.53%

Profitability

Net profit at the First International Bank Group increased by 33.6%, compared with the first quarter of last year, and amounted to NIS 183 million. Return on equity was 9.3%. After elimination of non-recurring impacts (the expense provision related to the merger with Otsar Hachayal which amounted to NIS 4 million), the Bank return on equity was 9.5%.

Growth

Profit from financing operations increased by 9.1% in comparison with the corresponding period last year, and amounted to NIS 681 million. The growth of the Group is also demonstrated through the balance sheet data, both on the credit side and on the deposits side.

Deposits of the public increased by 3.3% compared with that of the end of 2018, amounting to NIS 115,349 million. Credit to the public, net, increased by 2.4% compared with that of the end of 2018, amounting to NIS 86,353 million. The growth in the credit portfolio was achieved while maintaining an appropriate risk level.  

Efficiency

The Bank continues to improve its efficiency in accordance with its strategic outline: the efficiency ratio improved to 67.2% as compared with a ratio of 68.4% as at the end of 2018 and 74.8% in the corresponding quarter last year.

Operating and other expenses were reduced by 8.7% as compared with the corresponding quarter last year and amounted to NIS 673 million.

The first quarter of 2019, represents the first full quarter following the merger of Otzar Hachayal Bank with and into the Bank. Within this framework, a program of early retirement of employees was implemented and is expected to continue into the coming quarters. Expenses incurred in the first quarter include settlement expenses in respect of the retirement of employees, which amounted to NIS 18 million before tax.

Financial stability and dividend distribution

The Tier I equity capital ratio was 10.53%, and the comprehensive capital ratio increased to 13.77%. The Bank has a dividend distribution policy of up to 50% of net earnings, and in line with this policy, the previously announced dividend distribution payment of NIS 105 million was made in the first quarter. The dividend yield amounted to 4.5%. The Board of Directors of the Bank resolved to distribute a new dividend in respect of the first quarter results, amounting to NIS 85 million.

Ms. Smadar Berber-Tsadik CEO of the First International Bank stated that: "The first quarter was characterized by the completion of the merger with Otzar Hachayal Bank, which took effect at the start of the year and this led to a significant structural change. The results of this process, combined with additional actions that included material early retirement plans, we expect will be reflected in efficiency improvements at the Group in the coming quarters.

"In the current quarter, the Bank continued to develop and introduce innovative digital and technological products and services. Furthermore, for the first time in the Israeli banking system, the Bank performed a foreign trade transaction using  'blockchain' technology, making an API (application programming interface) accessible to our business customers as part of the early adoption of 'open banking' principles. At the same time, we continue our development and integration of the innovative 'advise.me' system, which provides investment consulting in a modern way, and attracts satisfied customers at a quicker pace."

 

CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES
Principal financial ratios		For the three months ended				For the year ended
		2019		2018		2018
						in %
Execution indices
Return on equity attributed to shareholders of the Bank(1)		9.3%		7.2%		9.3%
Return on average assets(1)		0.5%		0.4%		0.5%
Ratio of equity capital tier 1		10.53%		10.05%		10.51%
Leverage ratio		5.71%		5.56%		5.76%
Liquidity coverage ratio		132%		120%		122%
Ratio of total income to average assets(1)		3.0%		3.0%		3.1%
Efficiency ratio		67.2%		74.8%		68.4%
Credit quality indices
Ratio of provision for credit losses to credit to the public		1.02%		1.02%		1.02%
Ratio of impaired debts or in arrears of 90 days or more to credit to the public		0.92%		0.91%		0.83%
Ratio of provision for credit losses to total impaired credit to the public		156%		162%		186%
Ratio of net write-offs to average total credit to the public (1)		0.06%		0.08%		0.16%
Ratio of expenses for credit losses to average total credit to the public (1)		0.17%		0.13%		0.20%

Principal data from the statement of income		For the three months ended
		2019		2018
				NIS million
Net profit attributed to shareholders of the Bank		183		137
Interest Income, net		635		584
Expenses from credit losses		36		27
Total non-Interest income		367		401
Of which:      Fees		320		338
Total operating and other expenses		673		737
Of which:      Salaries and related expenses		402		446
Dismissals expenses		18		3
Primary net profit per share of NIS 0.05 par value (NIS)		1.82		1.37

Principal data from the balance sheet						As of
		31.3.19		31.3.18		31.12.18
						NIS million
Total assets		136,983		132,636		134,120
of which:  Cash and deposits with banks		34,108		34,481		31,303
Securities		11,338		10,471		12,595
Credit to the public, net		86,353		81,904		84,292
Total liabilities		128,445		124,566		125,707
of which:  Deposits from the public		115,349		111,913		111,697
Deposits from banks		1,064		359		1,150
Bonds and subordinated capital notes		4,270		4,980		4,989
Capital attributed to the shareholders of the Bank		8,208		7,772		8,093

Additional data						As of
		31.3.19		31.3.18		31.12.18
Share price (0.01 NIS)		8,642		7,390		7,860
Dividend per share (0.01 NIS)		105		95		355
Ratio of interest income, net to average assets (in %)(1)		1.9%		1.8%		1.9%
Ratio of fees to average assets (in %)(1)		0.9%		1.0%		1.0%
(1)    Annualized.

 

 

CONSOLIDATED STATEMENT OF INCOME
(NIS million)
		For the three months ended March 31				For the year ended December 31
		2019		2018		2018
		(unaudited)		(unaudited)		(audited)
Interest Income		727		654		3,001
Interest Expenses		92		70		515
Interest Income, net		635		584		2,486
Expenses from credit losses		36		27		166
Net Interest Income after expenses from credit losses		599		557		2,320
Non- Interest Income
Non Interest Financing income		46		40		231
Fees		320		338		1,325
Other income		1		23		81
Total non- Interest income		367		401		1,637
Operating and other expenses
Salaries and related expenses		402		446		1,696
Maintenance and depreciation of premises and equipment		92		96		376
Amortizations and impairment of intangible assets		23		23		91
Other expenses		156		172		656
Total operating and other expenses		673		737		2,819
Profit before taxes		293		221		1,138
Provision for taxes on profit		111		82		408
Profit after taxes		182		139		730
The bank's share in profit of equity-basis investee, after taxes		10		6		37
Net profit:
Before attribution to non‑controlling interests		192		145		767
Attributed to non‑controlling interests		(9)		(8)		(34)
Attributed to shareholders of the Bank		183		137		733
		NIS
Primary profit per share attributed to the shareholders of the Bank
Net profit per share of NIS 0.05 par value		1.82		1.37		7.31
The notes to the financial statements are an integral part thereof.

 

 

STATEMENT OF COMPREHENSIVE INCOME
(NIS million)
		For the three months ended March 31				For the year ended December 31
		2019		2018		2018
		(unaudited)		(unaudited)		(audited)
Net profit before attribution to non‑controlling interests		192		145		767
Net profit attributed to non‑controlling interests		(9)		(8)		(34)
Net profit attributed to the shareholders of the Bank		183		137		733
Other comprehensive income (loss) before taxes:
Adjustments of available for sale bonds (2018 - securities) to fair value, net		66		(42)		(102)
Adjustments of liabilities in respect of employee benefits(1)		(8)		7		37
Other comprehensive income (loss) before taxes		58		(35)		(65)
Related tax effect		(20)		11		22
Other comprehensive income (loss) before attribution to non‑controlling interests, after taxes		38		(24)		(43)
Less other comprehensive income (loss) attributed to non‑controlling interests		1		-		(4)
Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes		37		(24)		(39)
Comprehensive income before attribution to non‑controlling interests		230		121		724
Comprehensive income attributed to non‑controlling interests		(10)		(8)		(30)
Comprehensive income attributed to the shareholders of the Bank		220		113		694
(1)  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.
The notes to the financial statements are an integral part thereof.

 

 

CONSOLIDATED BALANCE SHEET
(NIS million)
		31.3.19		31.3.18		31.12.18
		(unaudited)		(unaudited)		(audited)
Assets
Cash and deposits with banks		34,108		34,481		31,303
Securities		11,338		10,471		12,595
Securities which were borrowed		664		637		863
Credit to the public		87,246		82,745		85,160
Provision for Credit losses		(893)		(841)		(868)
Credit to the public, net		86,353		81,904		84,292
Credit to the government		676		677		700
Investments in investee company		617		571		606
Premises and equipment		1,011		1,046		1,023
Intangible assets		231		228		239
Assets in respect of derivative instruments		941		1,189		1,399
Other assets(2)		1,044		1,397		1,100
Assets held for sale		-		35		-
Total assets		136,983		132,636		134,120
Liabilities and Shareholders' Equity
Deposits from the public		115,349		111,913		111,697
Deposits from banks		1,064		359		1,150
Deposits from the Government		779		749		982
Bonds and subordinated capital notes		4,270		4,980		4,989
Liabilities in respect of derivative instruments		1,021		967		1,294
Other liabilities(1)(3)		5,962		5,598		5,595
Total liabilities		128,445		124,566		125,707
Capital attributed to the shareholders of the Bank		8,208		7,772		8,093
Non‑controlling interests		330		298		320
Total equity		8,538		8,070		8,413
Total liabilities and shareholders' equity		136,983		132,636		134,120
(1)    Of which: provision for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 62 million           and NIS 69 million and NIS 64 million at 31.3.19, 31.3.18 and 31.12.18, respectively.
(2)    Of which: other assets measured at fair value in the amount of NIS 312 million and NIS 298 million and NIS 426 million at 31.3.19,           31.3.18 and 31.12.18, respectively.
(3)    Of which: other liabilities measured at fair value in the amount of NIS 536 million and NIS 603 million and NIS 586 million at 31.3.19,           31.3.18 and 31.12.18, respectively.
The notes to the financial statements are an integral part thereof.

 

 

STATEMENT OF CHANGES IN EQUITY
(NIS million)
		For the three months ended March 31, 2019 (unaudited)
		Share capital and premium(1)		Accumulated other comprehensive income (loss)		Retained earnings(2)		Total		Non- controlling interests		Total equity
Balance as at December 31, 2018 (audited)		927		(159)		7,325		8,093		320		8,413
Cumulative effect of the initial implementation of US accepted accounting    principles(3)		-		8		(8)		-		-		-
Adjusted balance as at January 1, 2019 after the initial implementation		927		(151)		7,317		8,093		320		8,413
Net profit for the period		-		-		183		183		9		192
Dividend		-		-		(105)		(105)		-		(105)
Other comprehensive income, after tax effect		-		37		-		37		1		38
Balance as at March 31, 2019		927		(114)		7,395		8,208		330		8,538
		For the three months ended March 31, 2018 (unaudited)
		Share capital and premium(1)		Accumulated other comprehensive loss		Retained earnings (2)		Total		Non- controlling interests		Total equity
Balance as at December 31, 2017 (audited)		927		(120)		6,949		7,756		290		8,046
Net profit for the period		-		-		137		137		8		145
Dividend		-		-		(95)		(95)		-		(95)
Other comprehensive loss, after tax effect		-		(24)		-		(24)		-		(24)
Temporary equity – non‑controlling interest.		-		-		(2)		(2)		-		(2)
Balance as at March 31, 2018		927		(144)		6,989		7,772		298		8,070
		For the year ended December 31, 2018 (audited)
		Share capital and premium(1)		Accumulated other comprehensive loss		Retained earnings (2)		Total		Non- controlling interests		Total equity
Balance as at December 31, 2017		927		(120)		6,949		7,756		290		8,046
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
(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 of US banks accepted accounting principles regarding financial instruments (ASU 2016-01).
The notes to the financial statements are an integral part thereof.

 

 

Contact:

Dafna Zucker 
First International Bank of Israel 
e-mail: [e-mail]  
Tel: [phone] 

Ehud Helft 
GK Investor & Public Relations 
e-mail: [e-mail]   
Tel: [phone]

 

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SOURCE First International Bank of Israel