Dear Investor

 

The First International Bank meets the economic crisis caused by the impact of the Corona pandemic with high financial stability and strength. The financial strength of the First International Bank is reflected across its high capital ratios, its high level of liquidity and in its qualitative and measured credit portfolio. This strength enables our Bank to confront the crisis and its impact, while assisting its customers in facing the new situation.

With the beginning of the crisis, the bank adopted a series of measures intended to maintain business continuity at the Bank,  while assisting its private and business customers.

 "There is no doubt that global developments following this health crisis have created a climate of uncertainty which has to be faced, and our Bank is prepared for the different scenarios, while continuing on its efficiency strategy, the results of which are clear given the improved efficiency ratios of our Bank.

 

In the first quarter of  2020, the Bank continued the trends which have characterized it over a number of years. That is: a growth in income while applying a strategy of focusing on our core businesses, and a reduction in expenses following the efficiency measures adopted by the Bank; a fact that has led to the improvement in the efficiency of the Bank, as well as its stability.

 

Crisis management and support of the Bank's customers during the Coronavirus period

With the outbreak of the Coronavirus pandemic in Israel, Management of the Bank and the Board of Directors focused on the management the crisis and on providing response to the changing reality. The bank adopted a series of measures aimed at business continuity, while maintaining the health of its employees and customers, strictly adhering to the rules set by the Ministry of Health and the Bank of Israel. These measures included establishing of an infrastructure for distance working, maintaining social distance and the split-up of business units, all these while continuing  to service its customers, also during the period in which economic activity has been reduced, and while expanding the call-center and the digital services. 

The bank adopted and initiated a serious of measures and relief for the benefit of its customers, both private and household customers as well as small and large business customers. Among the benefits granted to households, the Bank allowed the possibility of deferring payment of mortgages and loans, increasing overdraft facilities, and ease in digital services allowing the joining and wider use of the online services.

Special emphasis has been put on the senior citizen population, which were granted special benefits and singular services helping them in obtaining banking services while maintaining the social distance rules, such as: initiated telephone calls, priority in providing service, issue of debit cards, and more.

For the benefit of its business customers, the Bank extends loans in large volumes also within the framework of the Corona Fund, guaranteed by the State and allows deferral of loans.

As a Bank which specializes in the capital market and in investment consulting services, the Bank reacted quickly to the fierce fluctuations in the capital markets. Reinforced consulting services were put at the disposal of customers during this period, including extended service through the dealing rooms and the supporting infrastructure. As part of this, the Bank initiated consultation calls to customers in order to help them to better face the market volatility and uncertainty at this crisis period.     

 

• Net earnings : NIS 171 million;  

• Return on equity: 8.2%;

• Financing profits from current operations increased by 5.5% to NIS 712 million;

• The Bank continues to improve efficiency: operating and other expenses decreased by 5.3% and efficiency ratio improved to 62.2%;

• 2.5% growth in credit to the public and 4.4% growth when compared to the corresponding period last year;

• Ratio of Tier I equity capital to risk assets: 10.28%

 

 

 

The net earnings of the First International Bank Group in the first quarter of 2020 were NIS 171 million in comparison with NIS 183 million in the corresponding quarter last year. Return on equity reached 8.2%. Earnings for the quarter were affected by the impact of the spread of the Corona pandemic, mainly from increasing of expenses of credit losses by NIS 121 million, most of it related from the crises, as well as by tax income in respect of prior years, amounting to NIS 35 million.

 

 

Expenses in respect of credit losses amounted to NIS 157 million, as compared to NIS 36 million in the corresponding period last year, and to NIS 138 million for the full year of 2019. The rate of the provision for credit losses amounted to 0.71%, as compared to 0.17% in the corresponding period last year. 

This increase was due mostly to the effect of changes in the macro-economic environment due the Corona pandemic and resulting from uncertainty regarding its effect on the financial condition of borrowers and was seen in growth in the collective expense for credit losses. The expense for credit losses which related to the Corona pandemic crises amounted by NIS 129 million in the Quarter. The first quarter of the year reflects unrealized losses on investment in shares in the amount of NIS 41 million, due to the decline in the market value of shares on the capital market, as well as an impairment provision in respect of bonds amounting to NIS 18 million. Subsequent to the balance sheet date, market prices have risen, reducing the volume of unrealized losses.

 

Conversely, there was an increase in income due to the activity in the capital and foreign currency markets.

 

 

Financing profits from current operations increased by 5.5%, amounting to NIS 712 million. Total commission income increased by 15% (NIS 48 million) amounting to NIS 368 million. Most of the growth was due to increased activity on the capital and foreign currency markets, being specialized areas of the Bank. The growth in activity of the Group was also clear in balance sheet data, both on the credit side and on the deposit side. 

 

Deposits of the public grew by 5.8% in the first quarter and by 10.1% over the past year, amounting to NIS 126,997 million. Deposits by private customers grew by 15.6% in the first quarter of the year and by 17.4% over the past year. The credit to the public portfolio grew by 2.5% in the first quarter and by 4.4% over the past year, amounting to NIS 91,075 million.  

 

The growth in credit during the first quarter (in relation to that of the end of 2019) is marked by the continuing diversification of the credit: the household segment (excluding residential loans and credit cards) grew by 1%; the large and middle market businesses segment grew by 5.3%: and the small business segment grew by 3.8%.

 

 

The First International Bank continues to improve its efficiency in accordance with its strategic objectives, and the efficiency ratio improved to 62.2% as compared to 64.4% at the end of 2019, and to 67.2% in the corresponding period last year. Operating and other expenses amounted to NIS 637 million, a reduction of 5.3% in relation to the corresponding quarter last year. 

 

The reduction in expenses is clear across most expense items, including payroll and related benefits, which decreased by 5.7% and depreciation and maintenance of buildings and equipment which decreased by 6.5%. 

 

 

The equity attributed to the shareholders of the Bank amounted to NIS 8,542 million. The Tier I equity capital ratio amounted to 10.28%, in comparison to 10.81% at December 31, 2019, and the comprehensive capital ratio amounted to 13.09%.