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.”
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%
Summary of the results
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%.
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.
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.
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