First International Bank of Israel Announces Second Quarter 2017 Results

FIBI-First International Bank of Israel Ltd. announced today its financial results for the second quarter and first half of 2017.

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FIBI-First International Bank of Israel Ltd.

Aug 15, 2017, 03:49 ET

TEL AVIV, Israel, Aug 15, 2017 /PRNewswire/ -- Financial Highlights

Growth of 12.7% in net earnings year-over-year for the second quarter of 2017 to NIS 151 million; return on equity of 8.3%;
Growth of 12.8% in net earnings year-over-year for the first half of 2017 to NIS 317 million; return on equity of 8.7%;
Growth of 8% in net interest income as compared to the corresponding half of last year;
Reduction of 3.8% in operating and other expenses as compared to the corresponding half of last year and an improvement to 69.2% in the efficiency ratio;
Growth of 2.3% in credit to the public in the first half of 2017 and 4% in the twelve months ended June 30, 2017;
Ratio of Tier I equity to risk weighted assets at 10.25%;
The Board of Directors declared a dividend distribution of NIS 70 million for the second quarter of 2017;

Management Comment

Smadar Barber-Tsadik, CEO of First International Bank Group (TASE: FTIN), commented, "The results of the First International Bank Group for the first half of the year reflect a continued growth in income due to ongoing growth in our credit portfolio and in our deposits, among other things. In line with our plans, we also continue to see a long-term downward trend in operating expenses which has led to a consistent and continuous improvement in our efficiency ratio. Our Bank has maintained a solid level of financial stability, reflected by an improvement in the capital adequacy, the liquidity ratio, and in the leverage ratio, which, among other factors has led to the recent upgrade in the Bank's credit rating outlook to positive."

Profitability and Growth

Net profit in the second quarter of 2017 increased by 12.7% amounting to NIS 151 million, compared with the corresponding quarter last year. Return on equity reached 8.3%. Net profit for the first half of 2017 increased by 12.8%, amounting to NIS 317 million, as compared to the corresponding half of last year, and the return on equity reached 8.7%.

The growth in the Group's finacials was demonstrated both on the credit side and on the deposit side. The credit to the public portfolio grew by 4% in the twelve months ended June 30, 2017, by 2.3% in the first half of 2017 and by 1.4% in the second quarter of 2017. The growth in the credit portfolio is marked by the continuing diversification of credit, focusing both on the private customer segment, which grew by 3.8% in the first half, and on the small and middle-market business segment, which grew by 2.6%.

Net interest income increased by 8% in the first half of the year, due to the growth in operations, primarily due to increases in the credit portfolio.

Expenses in respect of credit losses amounted to NIS 84 million in the first half of the year (0.22% out of the total credit to the public). Most of the expense was due to a collective allowance for credit losses. The total amount of bad debts decreased by 1.4% as compared with the level as of the end of 2016.

Efficiency

The Bank continued to improve its efficiency measures in accordance with its strategy, and a reduction was evident across all expense items: Payroll and related expenses decreased by 2.1%, maintenance and depreciation of buildings and equipment decreased by 6%, amortization and reduction in value of intangible assets decreased by 27% and other expenses decreased by 2%.

Overall operating and other expenses recorded a reduction of 3.8%, which amounted to NIS 52 million, totaling NIS 1,304 million.

The gradual and consistent improvement in the efficiency ratio continued, improving to 69.2% in the first half of the year, and to 69.6% in the second quarter of the year, as compared to 73.5% in 2016.

Financial Stability

The capital attributed to the shareholders of the Bank continued in its upward trend, growing by 3%, as compared to the end of corresponding period last year, and amounted to NIS 7,563 million.

Tier I equity ratio to risk weighted assets increased to 10.25%, as compared to 10.09% as at December 31, 2016, and total equity ratio to risk weighted assets increased to 13.8%. The financial stability is also reflected in the ratio of deposits to credit reaching 136%, and in the liquidity coverage ratio, which reached 125%.

The Board of Directors of the Bank decided to distribute a dividend of NIS 70 million for the second quarter, in addition to dividends which amounted to NIS 140 million which were distributed since the beginning of 2017.

In the third quarter of 2017, the Bank is expected to recognize income from taxes in respect of prior years, in the amount of NIS 32 million, following final tax assessments for those years which were issued to the Bank in July 2017.



Condensed principal financial information and principal execution indices

Principal financial ratios	For the six months ended		For the year ended
	30.6.17	30.6.16	31.12.16
			in %
Execution indices
Return on equity(1)	8.7%	8.0%	7.2%
Return on assets(1)	0.5%	0.4%	0.4%
Ratio of fees to assets(1)	1.0%	1.0%	1.0%
Ratio of equity capital tier 1	10.25%	9.97%	10.09%
Leverage ratio	5.63%	5.49%	5.52%
Liquidity coverage ratio	125%	109%	123%
Efficiency ratio	69.2%	73.8%	73.5%

Credit quality indices
Ratio of provision for credit losses to credit to the public	1.06%	1.11%	1.08%
Ratio of impaired debts or in arrears of 90 days or more to credit to the public	1.20%	1.25%	1.02%
Ratio of provision for credit losses to total impaired credit to the public	112%	115%	147%


Principal data from the statement of income	For the six months ended
	30.6.17	30.6.16	Change
		NIS million	%
Net profit attributed to shareholders of the Bank	317	281	12.8%
Interest Income, net	1,145	1,060	8.0%
Expenses from credit losses	87	25	248.0%
Total non Interest income	739	777	(4.9%)
Of which: Fees	651	656	(0.8%)
Total operating and other expenses	1,304	1,356	(3.8%)
Of which: Salaries and related expenses	821	839	(2.1%)
Primary net profit per share of NIS 0.05 par value (NIS)	3.16	2.81	12.8%


Principal data from the balance sheet			As of	Change vs.
	30.6.17	30.6.16	31.12.16	30.6.16	31.12.16
			NIS million		%
Total assets	128,836	127,307	127,907	1.2%	0.7%
of which: Cash and deposits with banks	30,969	30,635	29,150	1.1%	6.2%
Securities	13,047	14,917	15,776	(12.5%)	(17.3%)
Credit to the public, net	79,119	76,097	77,328	4.0%	2.3%
Total liabilities	120,661	119,367	119,973	1.1%	0.6%
of which: Deposits from banks	746	1,207	755	(38.2%)	(1.2%)
Deposits from the public	107,280	105,316	105,817	1.9%	1.4%
Bonds and subordinated capital notes	5,070	5,693	5,801	(10.9%)	(12.6%)
Capital attributed to the shareholders of the Bank	7,563	7,339	7,321	3.1%	3.3%


Additional data			As of
	30.6.17	30.6.16	31.12.16
Share price (NIS 0.01)	6,326	4,715	5,650
Dividend per share (NIS)	1.40	-	1.99
(1) Annualized.