CEO Statement

Dear Investor

The First International Bank continued its growth trend, while maintaining its high financial stability. The growth in credit is clear – mostly in the Bank's focus areas: within the customer assets portfolio whose growth reflects our leadership in the capital markets, as well as in the volume of capital which for the first time crossed the NIS 10 billion milestone. We continued our consistent trend of improving our efficiency ratio, by advancing work and automation processes, developing digital channels and promoting innovation, as well as via other activities.

The First International Bank, as a competition-generating bank, welcomes steps that encourages increased competition within our market, and stands at the forefront of the open banking reform, recently introduced by the Bank of Israel. We are the first bank to introduce Multibank - a service for the collection of financial data used by open banking. The Bank also promotes the service of transfer-at-a-click for the movement of bank accounts between different banks, and the transfer of customers within the framework of the service, which will support the continued growth of our Bank.  

Financial Highlights

Net profit of NIS 364 million in the third quarter of the year; Return on equity 15.5%;

Net profit of NIS 1,072 million in the first nine months of the year, representing growth of 99%; Return on equity 15.3%;

Growth of 8.5% in total income for the first nine months of the year in comparison with the corresponding period last year;

Growth of 6.8% in credit to the public in the past year: Residential loans increased by 13.4%, small businesses increased by 8.9%, middle-market businesses increased by 5.4% and credit to households increased by 4.2%;

The Bank continued to expand its activities in the capital markets and investment consulting: growth of 22.6% in the past year in the customer assets portfolio (deposits and securities); 

Ratio of tier I equity capital to risk components of 11.64%;

The Board of Directors of the Bank decided on a dividend distribution of NIS 320 million, comprising 30% of the net profit of the first nine months of the year;

Profitability

Record profit for the First International Bank: the net profit in the first nine month of the year amounted to NIS 1,072 million, an increase of 98.5% in comparison with the corresponding period of last year. Return on equity reached 15.3%. 

In the third quarter of the year, net profit amounted to NIS 364 million, as compared to NIS 201 million in the corresponding quarter of last year. Return on equity for the third quarter reached 15.5%.

Growth and Efficiency

Total income of the Bank in the first nine months of the year increased by 8.5% compared to the corresponding period of last year. Total financing income in the first nine months of the year increased by 10.9% compared to the corresponding period of last year. Commission income in the first nine months of the year increased by 3% compared to the corresponding period of last year, including commission income from capital market operations, which increased by 6.3%. 

Credit to the public in the past year increased by 6.8%, and amounted to NIS 96,965 million. The growth in credit was characterized by the continued diversity of the credit, while maintaining a balanced risk-management policy. The residential loan portfolio grew by 13.4%, small businesses grew by 8.9%, the middle market businesses grew by 5.4% and credit to households grew by 4.2%. Since the beginning of the year, credit to the public grew by 5.1%.

Growth was also evident in the capital markets field and investment consulting field: the customer assets portfolio (deposits and securities), grew by 22.6% in the past year and amounted to NIS 588.3 billion. In the first nine months of the current year, the customer assets portfolio grew by 11%. Deposits from the public increased by 9.1% in the past year and amounted to NIS 148,273 million. 

The First International Bank continued to improve efficiencies and the efficiency ratio improved to 57.9% in the first nine months of the year and 57.3% in the third quarter, as compared to 61.8% in 2020. Operating and other expenses in the first nine months of the year increased by NIS 59 million, representing a growth of 3.1% as compared to the corresponding period of last year. This growth was due to increased payroll expenses, mainly based on an adjustment of the variable compensation component which is related to the profitability of the Bank. The Bank introduced an early retirement plan and most of the retirees are expected to retire at the end of the year. 

Financial Stability

The upward trend in the capital attributable to the shareholders of the Bank continued, and grew by 9.6% in the first nine months of the year (representing growth of NIS 881 million) and as of September 30, 2021, amounted to NIS 10,022 million. The tier I equity capital ratio increased to 11.64%, compared with the required regulatory ratio of 8.25%, a positive difference of 3.4% (or 2.4% when disregarding the regulatory capital relief), which represents the highest positive difference in the Israeli banking system.

The Board of Directors of the Bank approved a dividend distribution of NIS 320 million, comprising 30% of net profit for the first nine months of the year. This is in addition to the dividend of NIS 225 million, which was distributed in September 2021 in respect of the profit of the Bank for 2020. 

The Bank's policy for the distribution of 50% of net profit remains unchanged, and its implementation continues to be examined in accordance with developments and regulation, and subject to guidelines of the Supervisor of Banks in Israel.

Quality of the Credit Portfolio

The ratio of deferred debts to total credit to the public at the end of September 2021 amounted to a negligible ratio of 0.09%, compared to 0.2% at the end of the second quarter, and 1.9% at the end of December 2020. This is an indication of the quality of the credit portfolio and the quality of the Bank's borrowers. The Bank continues to maintain appropriate provision cushions.

Income in respect of credit losses amounted to NIS 206 million in the first nine months of the year, compared to expenses of NIS 413 million in the corresponding period of last year. During 2020, given the high uncertainty caused by the Corona crisis, the Bank increased the credit loss provision by NIS 436 million.

In the first nine months of 2021, the Bank recorded income in respect of credit losses, primarily because of the decline in the collective provision. This was due to an improvement in macro-economic indicators, indicators showing the level of risk inherent in the credit portfolio of the Bank, and the continued decline in the volume of deferred repayment of debts. 

Smadar Barber-Tsadik

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