CEO Statement

Dear Investor

In the first half of the year, the First International Bank presented results that reflected continued growth across all segments of operation, including the credit portfolio and capital markets activity, while maintaining financial stability and a high quality of assets. We maintain this growth during times of global change and uncertainty, and it reflects the trust in the Bank by its customers, as well as their high satisfaction regarding our service, professionalism and technological innovation. 

Financial Highlights:

Net profit of NIS 390 million and return on equity of 17.2% in the second quarter of the year;

Net profit of NIS 677 million and return of equity of 15% in the first half of the year;

Growth of 6.6% in credit to the public over the past year and growth of 4.4% in the first half of the current year;

Continued reduction in the volume of loan repayment deferrals caused by the Corona crisis: the ratio of deferred debts to total credit amounted to 0.2% compared to 1.9% at the end of 2020;

Growth of 6.1% in total income;

The Bank continued to expand its services in the capital market and in investment consulting: growth of 32.7% in the past year in the
customer assets' portfolio (deposits and securities) and 9.5% in the first half of the current year;

Ratio of Tier I equity capital to risk components of 11.67%;

The Board of Directors of the Bank decided on a dividend distribution in the amount of NIS 225 million which amounted
to 30% of the net profit for 2020

Profitability

Net profit in the second quarter of 2021 of the First International Bank Group amounted to NIS 390 million, as compared to NIS 168 million in the corresponding quarter last year, a growth of 132.1%. Return on equity in the second quarter reached 17.2%. In the first half of the year net profit amounted to NIS 677 million, a growth of 99.7%. Return on equity reached 15%.

Growth and efficiency

Total income of the Bank increased by 6.1% in the first half of the year, as compared to the corresponding period last year. Total financing income increased in the first half of the year by 7.6% compared to the corresponding period last year, and amounted to NIS 1,484 million. Commission income increased by 2.9% compared to the corresponding period last year, which includes commission income from capital market operations which increased by 6.4%. 

Credit to the public increased last year by 6.6%, and in the first half of the current year, by 4.4%, and amounted to NIS 96.3 billion. In the second quarter of the year, credit grew by 2.9%. The growth in credit was characterized by the continued broadening of credit and this was evident in the residential loans sector, which grew by 12.6%, in the small businesses sector which grew by 10.5%, and in the household sector, which grew by 3%.

The Bank continued to grow in the capital markets and in the investment consulting field: the customer assets portfolio (deposits and securities) in the last year grew by 32.7% and amounted to NIS 580.3 billion. In the first half of the current year, the customer assets portfolio grew by 9.5%. Deposits from the public increased by 13.2% in the last year and by 3.2% in the first half of the current year, and reached NIS 146.3 billion. 

The First International Bank continued to improve efficiency in accordance with its strategic plan and the efficiency ratio improved to 59.5% in the first half of the year and to 58.6 % in the second quarter, as compared to 61.8% in 2020. As part of the efficiency measures taken, in June 2021, the Bank approved an early retirement plan under which employees which corresponded to defined criteria, would be entitled to retirement at beneficial terms.

Financial stability

The improving trend in the capital attributable to the shareholders of the Bank continued and grew in the first half of the year by 7.7% (representing growth of NIS 708 million) and amounted at June 30, 2021 to NIS 9,849 million. The Tier I equity capital ratio increased to 11.67%, as against the required regulatory ratio of 8.26% (or 9.26% excluding the relief granted by Bank of Israel to the Israeli banking system).

The Board of Directors of the Bank approved a dividend distribution of NIS 225 million, which comprised of 30% of the net profit for 2020. The dividend distribution policy of the Bank, according to which the Bank shall distribute up to 50% of the net profit, remains unchanged, and the application thereof will be examined in accordance with developments and regulation

Quality of the credit portfolio​

The volume of deferral of loan repayments due to the Corona crisis demonstrated a sharply improving downward trend, indicating the quality of the credit portfolio as well as the quality of the Bank's borrowers: the ratio of deferred debts to total credit to the public at the end of the second quarter amounted to 0.2%, compared to 0.5% at the end of the first quarter, and to 1.9% at the end of December 2020.

Income in respect of credit losses amounted to NIS 137 million in the first half of the year, compared to expenses of NIS 322 million in the corresponding period last year.

During 2020, in view of the high level of uncertainty caused by the Corona crisis, the Bank increased the credit loss provision by NIS 436 million.

In the first half of 2021, the Bank recorded income in respect of credit losses, mostly due to the decline in the collective provision, due to an improvement in macro-economic indices and indicators showing the level of risk inherent in the credit portfolio of the Bank, as well as the continued decline in the volume of deferred repayment of debts. 

Notwithstanding the above, the Bank maintains high provision cushions: the ratio of the provision for credit losses to the balance of credit to the public reached 1.19% in contrast to 1.05% at the end of 2019, prior to the outbreak of the Corona crisis.

The Corona crisis

Towards the end of the second quarter of 2021, the rates of morbidity in Israel began to increase again. The Bank is well prepared for the various scenarios monitoring the different risks and follows the guidelines issued by the Ministry of Health and Bank of Israel. All this while maintaining business continuity and continuity of service to customers, both at the branches and in the digital realm. The Bank is taking measures to ensure business continuity.

 Smadar Barber-Tsadik 

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