First International Bank of Israel Presents Third Quarter and First Nine Months 2020 Results
TEL AVIV, Israel, Nov. 25, 2020 /PRNewswire/ -- First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the third quarter and first nine months of 2020.
Financial Highlights
- Net earnings of NIS 540 million for the first nine months of 2020.
- Return on equity: 8.4%
- Net earnings of NIS 201 million for the third quarter of 2020.
- Return on equity: 9.5%
- Since the start of the year, there was a 2.2% growth in the credit to the public and 21.1% in deposits from the public by households and private banking.
- Expenses due to Credit loss in the third quarter were NIS 91 million, as compared to NIS 33 million in the corresponding period last year, and in the first nine months of 2020 were NIS 413 million as compared to NIS 92 million in the corresponding period last year
- The efficiency ratio reached 61.0%, as compared to 64.9% in the corresponding period last year
- Ratio of Tier I equity capital: 10.93%
- Ratio of comprehensive capital: 14.23%
Profitability
Net earnings of the First International Bank Group in the third quarter of the year amounted to NIS 201 million. Return on equity reached 9.5%. In the first nine months of the year, net earnings amounted to NIS 540 million and return on equity reached 8.4%.
Earnings in the first nine months of the year and thereafter in the present quarter were affected by the impacts of the Corona crisis. This was mostly due to the sharp increase in credit loss expenses, mainly under the collective provision item, and this on the basis of the uncertainty surrounding the crisis and its impact on borrowers.
Implications of the Corona crisis on the Bank
Expenses in respect of credit losses in the first nine months of the year amounted to NIS 413 million, in contrast to NIS 92 million in the corresponding period last year. The rate of the provision for credit losses amounted to 0.62%, as compared to 0.14% in the corresponding period last year.
Credit loss expenses in the third quarter of the year amounted to NIS 91 million, compared to NIS 33 million in the corresponding quarter last year, a growth of 176%. The provision rate for credit losses in the third quarter of the year amounted to 0.41%, as compared with 0.15% in the corresponding quarter last year.
The growth in credit loss expenses was mostly due to the impact of the changes in the macro-economic environment, because of the Corona pandemic and the uncertainty with regard to the impact on the condition of borrowers. Due to the macro-economic uncertainty, the Bank decided to increase the collective provision, which in the first nine months of the year amounted to NIS 366 million, the majority of it (NIS 322 million) in respect of the crisis.
Until September 30, 2020, the Bank deferred repayment of loans to customers in an amount of NIS 144 million. The outstanding balance of the loans, repayment of which had been deferred, as of September 30, 2020, amounted to NIS 2,858 million, comprising 3.1% of total credit to the public. This rate is lower than the rate as reported in the second quarter, which amounted to 8.0%, and is significantly lower than the rate of deferred debts across the Israeli banking system as a whole.
Since the outbreak of the crisis, the Bank has implemented a series of measures, the aim of which is to assist customers and make banking services more accessible to customers, enabling them to overcome the challenges and implications of the crisis. Among other things, the Bank has provided a reprieve from loan repayments and mortgages, as well as offers and grants of credit to business customers out of loan funds guaranteed by the State. In addition, the Bank has introduced a series of assistance services for the older population, including courier service to their homes, avoiding lines at the branches, as well as introducing a series of new and advanced digital services. These include joining the Bank's advisory services, video meetings with investment consultants, prolonged business hours for telephone consultation, opening of an account digitally, fixing branch appointments using the online 'chat', and more.
Growth
In the first nine months of the year, financing profit from current operations increased by 1.2%, in comparison with the corresponding period last year. Total commission income increased by 7%. Most of the increase was due to the growth in capital market activity as a result of a growth in trading turnover on the Stock Exchange and from the growth in income from exchange spreads. This growth was partly offset by a decline in income from management fees and commissions on financing transactions, as a result of a decline in the volume of this activity resulting from the effect of the crisis.
The growth in the activity of the Group is noted also in the balance sheet data, both on the credit side and on the deposit side. The average outstanding balance of credit to the public amounted to NIS 89,475 million in the first nine months of the year, a growth of 4.9% in comparison with the corresponding period last year. Deposits from the public in the first nine months of the year increased by 13.2%, amounting to NIS 135,914 million, of which deposits by households and private banking increased by 21.1% amounting to NIS 71,816 million.
Efficiency
The Bank continued to increase efficiencies and the efficiency ratio continued to improve, reaching 61.0% as compared with 64.9% in the corresponding period last year. Operating and other expenses amounted to NIS 1,894 million, a reduction of 5.3% in relation to the corresponding period last year.
Financial stability
The capital attributed to the shareholders of the Bank reached NIS 8,944 million, a growth at the rate of 4.4% compared with that of the end of 2019. The Tier I equity capital ratio reached 10.93% (2.6 percentage points over the regulatory requirement) in comparison to 10.81% as at December 31, 2019, and the comprehensive capital ratio reached 14.23%.
The local credit rating companies have recently during the crisis period, reiterated the rating of the First International Bank, which is rated at AAA, the highest rating, similarly to that of the other large banks in Israel.
Ms. Smadar Barber-Tsadik, CEO of the First International Bank stated that: "The health crisis continues to affect economies and capital markets all over the world. Our Bank is confronting this new reality while demonstrating financial stability, noted across all stability indices: the capital ratio, being at a significantly higher level than that required by regulation, high liquidity, a high quality and broad credit portfolio, while continuing on our long-term efficiency measures. This stability enables us to continue to support our customers, both private and business, while maintaining functional and business continuity. The Bank continues to provide credit to its customers, also within the framework of funds guaranteed by the State, and even reached a leading rating compared with the other banks, under a survey conducted by the Ministry of Finance.
"The Bank continues its accelerated digital development across all banking areas, with a focus on advisory and investments areas. The usage rates, as well as customer satisfaction from the advanced digital channels, increased considerably during the crisis period."
CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES | ||||||
Principal financial ratios | For the nine months | For the year ended December 31, | ||||
2020 | 2019 | 2019 | ||||
in % | ||||||
Execution indices | ||||||
Return on equity attributed to shareholders of the Bank(1) | 8.4% | 10.6% | 10.5% | |||
Return on average assets(1) | 0.48% | 0.63% | 0.63% | |||
Ratio of equity capital tier 1 | 10.93% | 10.79% | 10.81% | |||
Leverage ratio | 5.39% | 5.91% | 5.81% | |||
Liquidity coverage ratio | 145% | 124% | 128% | |||
Ratio of total income to average assets(1) | 2.8% | 3.0% | 3.0% | |||
Ratio of interest income, net to average assets (1) | 1.8% | 1.9% | 1.9% | |||
Ratio of fees to average assets (1) | 0.9% | 0.9% | 0.9% | |||
Efficiency ratio | 61.0% | 64.9% | 64.4% | |||
Credit quality indices | ||||||
Ratio of provision for credit losses to credit to the public | 1.35% | 1.03% | 1.05% | |||
Ratio of impaired debts or in arrears of 90 days or more to credit to the public | 1.10% | 1.02% | 1.08% | |||
Ratio of provision for credit losses to total impaired credit to the public | 168% | 139% | 131% | |||
Ratio of net write-offs to average total credit to the public (1) | 0.15% | 0.09% | 0.10% | |||
Ratio of expenses for credit losses to average total credit to the public (1) | 0.62% | 0.14% | 0.16% | |||
Principal data from the statement of income | For the nine months | |||
2020 | 2019 | |||
NIS million | ||||
Net profit attributed to shareholders of the Bank | 540 | 643 | ||
Interest Income, net | 1,980 | 1,942 | ||
Expenses from credit losses | 413 | 92 | ||
Total non-Interest income | 1,126 | 1,140 | ||
Of which: Fees | 1,027 | 960 | ||
Total operating and other expenses | 1,894 | 2,000 | ||
Of which: Salaries and related expenses | 1,138 | 1,215 | ||
Dismissals expenses | 5 | 41 | ||
Primary net profit per share of NIS 0.05 par value (NIS) | 5.38 | 6.41 | ||
Principal data from the balance sheet | ||||||
30.9.20 | 30.9.19 | 31.12.19 | ||||
NIS million | ||||||
Total assets | 159,370 | 136,988 | 141,110 | |||
of which: Cash and deposits with banks | 52,366 | 34,516 | 37,530 | |||
Securities | 12,174 | 10,453 | 10,995 | |||
Credit to the public, net | 89,585 | 87,310 | 87,899 | |||
Total liabilities | 150,042 | 128,178 | 132,186 | |||
of which: Deposits from the public | 135,914 | 116,292 | 120,052 | |||
Deposits from banks | 1,717 | 464 | 1,137 | |||
Bonds and subordinated capital notes | 4,384 | 3,690 | 3,674 | |||
Capital attributed to the shareholders of the Bank | 8,944 | 8,461 | 8,568 |
Additional data | 30.9.20 | 30.9.19 | 31.12.19 | |||
Share price (0.01 NIS) | 7,108 | 9,257 | 9,989 | |||
Dividend per share (0.01 NIS) | 125 | 300 | 410 | |||
(1) Annualized. | ||||||
CONSOLIDATED STATEMENT OF INCOME | ||||||||||
For the three months | For the nine months | For the year Ended | ||||||||
2020 | 2019 | 2020 | 2019 | 2019 | ||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||
Interest Income | 731 | 699 | 2,160 | 2,337 | 3,085 | |||||
Interest Expenses | 69 | 57 | 180 | 395 | 483 | |||||
Interest Income, net | 662 | 642 | 1,980 | 1,942 | 2,602 | |||||
Expenses from credit losses | 91 | 33 | 413 | 92 | 138 | |||||
Net Interest Income after expenses from credit losses | 571 | 609 | 1,567 | 1,850 | 2,464 | |||||
Non- Interest Income | ||||||||||
Non-Interest Financing income | 36 | 63 | 97 | 175 | 225 | |||||
Fees | 336 | 325 | 1,027 | 960 | 1,286 | |||||
Other income | - | 3 | 2 | 5 | 9 | |||||
Total non- Interest income | 372 | 391 | 1,126 | 1,140 | 1,520 | |||||
Operating and other expenses | ||||||||||
Salaries and related expenses | 386 | 394 | 1,138 | 1,215 | 1,601 | |||||
Maintenance and depreciation of premises and equipment | 89 | 90 | 261 | 270 | 353 | |||||
Amortizations and impairment of intangible assets | 24 | 22 | 71 | 68 | 92 | |||||
Other expenses | 141 | 143 | 424 | 447 | 608 | |||||
Total operating and other expenses | 640 | 649 | 1,894 | 2,000 | 2,654 | |||||
Profit before taxes | 303 | 351 | 799 | 990 | 1,330 | |||||
Provision for taxes on profit | 109 | 119 | 254 | 357 | 478 | |||||
Profit after taxes | 194 | 232 | 545 | 633 | 852 | |||||
The bank's share in profit of equity-basis investee, after taxes | 19 | 15 | 24 | 39 | 51 | |||||
Net profit: | ||||||||||
Before attribution to non–controlling interests | 213 | 247 | 569 | 672 | 903 | |||||
Attributed to non–controlling interests | (12) | (11) | (29) | (29) | (38) | |||||
Attributed to shareholders of the Bank | 201 | 236 | 540 | 643 | 865 | |||||
NIS | ||||||||||
Primary profit per share attributed to the shareholders of the Bank | ||||||||||
Net profit per share of NIS 0.05 par value | 2.00 | 2.35 | 5.38 | 6.41 | 8.62 | |||||
STATEMENT OF COMPREHENSIVE INCOME | ||||||||||
For the three months | For the nine months | For the year Ended | ||||||||
2020 | 2019 | 2020 | 2019 | 2019 | ||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||
Net profit before attribution to non–controlling interests | 213 | 247 | 569 | 672 | 903 | |||||
Net profit attributed to non–controlling interests | (12) | (11) | (29) | (29) | (38) | |||||
Net profit attributed to the shareholders of the Bank | 201 | 236 | 540 | 643 | 865 | |||||
Other comprehensive income (loss) before taxes: | ||||||||||
Adjustments of available for sale bonds to fair value, net | 60 | 8 | (30) | 84 | 101 | |||||
Adjustments of liabilities in respect of employee benefits(1) | (16) | (57) | (31) | (45) | (74) | |||||
Other comprehensive income (loss) before taxes | 44 | (49) | (61) | 39 | 27 | |||||
Related tax effect | (14) | 17 | 21 | (14) | (9) | |||||
Other comprehensive income (loss) before attribution to non–controlling interests, after taxes | 30 | (32) | (40) | 25 | 18 | |||||
Less other comprehensive income (loss) attributed to non–controlling interests | (1) | (1) | (1) | - | (2) | |||||
Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes | 31 | (31) | (39) | 25 | 20 | |||||
Comprehensive income before attribution to non–controlling interests | 243 | 215 | 529 | 697 | 921 | |||||
Comprehensive income attributed to non–controlling interests | (11) | (10) | (28) | (29) | (36) | |||||
Comprehensive income attributed to the shareholders of the Bank | 232 | 205 | 501 | 668 | 885 | |||||
(1) Mostly reflects adjustments in respect of actuarial assessments as of the end of the period regarding defined benefits pension plans, of amounts recorded in the past in other comprehensive profit. | ||||||||||
CONSOLIDATED BALANCE SHEET | ||||||
September 30, | December 31, | |||||
2020 | 2019 | 2019 | ||||
(unaudited) | (unaudited) | (audited) | ||||
Assets | ||||||
Cash and deposits with banks | 52,366 | 34,516 | 37,530 | |||
Securities | 12,174 | 10,453 | 10,995 | |||
Securities which were borrowed | 14 | 126 | 9 | |||
Credit to the public | 90,810 | 88,218 | 88,829 | |||
Provision for Credit losses | (1,225) | (908) | (930) | |||
Credit to the public, net | 89,585 | 87,310 | 87,899 | |||
Credit to the government | 651 | 680 | 1,039 | |||
Investments in investee company | 629 | 607 | 605 | |||
Premises and equipment | 970 | 988 | 996 | |||
Intangible assets | 249 | 227 | 248 | |||
Assets in respect of derivative instruments | 1,438 | 1,078 | 1,091 | |||
Other assets(2) | 1,294 | 1,003 | 698 | |||
Total assets | 159,370 | 136,988 | 141,110 | |||
Liabilities and Shareholders' Equity | ||||||
Deposits from the public | 135,914 | 116,292 | 120,052 | |||
Deposits from banks | 1,717 | 464 | 1,137 | |||
Deposits from the Government | 426 | 368 | 353 | |||
Bonds and subordinated capital notes | 4,384 | 3,690 | 3,674 | |||
Liabilities in respect of derivative instruments | 1,669 | 1,298 | 1,247 | |||
Other liabilities(1)(3) | 5,932 | 6,066 | 5,723 | |||
Total liabilities | 150,042 | 128,178 | 132,186 | |||
Capital attributed to the shareholders of the Bank | 8,944 | 8,461 | 8,568 | |||
Non-controlling interests | 384 | 349 | 356 | |||
Total equity | 9,328 | 8,810 | 8,924 | |||
Total liabilities and shareholders' equity | 159,370 | 136,988 | 141,110 | |||
(1) Of which: provision for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 77 million and NIS 60 million and NIS 57 million at 30.9.20, 30.9.19 and 31.12.19, respectively. | ||||||
(2) Of which: other assets measured at fair value in the amount of NIS 90 million and NIS 49 million and NIS 42 million at 30.9.20, 30.9.19 and 31.12.19, respectively. | ||||||
(3) Of which: other liabilities measured at fair value in the amount of NIS 100 million and NIS 170 million and NIS 47 million at 30.9.20, 30.9.19 and 31.12.19, respectively. | ||||||
STATEMENT OF CHANGES IN EQUITY | ||||||||||||
For the three months ended September 30, 2020 (unaudited) | ||||||||||||
Share capital and premium (1) | Accumulated other comprehensive income (loss) | Retained earnings (2) | Total share-holders' equity | Non- controlling interests | Total equity | |||||||
Balance as of June 30, 2020 | 927 | (201) | 7,986 | 8,712 | 373 | 9,085 | ||||||
Net profit for the period | - | - | 201 | 201 | 12 | 213 | ||||||
Other comprehensive income (loss), after tax effect | - | 31 | - | 31 | (1) | 30 | ||||||
Balance as at September 30, 2020 | 927 | (170) | 8,187 | 8,944 | 384 | 9,328 | ||||||
For the three months ended September 30, 2019 (unaudited) | ||||||||||||
Share capital and premium (1) | Accumulated other comprehensive income (loss) | Retained earnings (2) | Total share-holders' equity | Non- controlling interests | Total equity | |||||||
Balance as of June 30, 2019 | 927 | (95) | 7,534 | 8,366 | 339 | 8,705 | ||||||
Net profit for the period | - | - | 236 | 236 | 11 | 247 | ||||||
Dividend | - | - | (110) | (110) | - | (110) | ||||||
Other comprehensive loss, after tax effect | - | (31) | - | (31) | (1) | (32) | ||||||
Balance as at September 30, 2019 | 927 | (126) | 7,660 | 8,461 | 349 | 8,810 | ||||||
For the nine months ended September 30, 2020 (unaudited) | ||||||||||||
Share capital and premium (1) | Accumulated other comprehensive income (loss) | Retained earnings (2) | Total share-holders' equity | Non- controlling interests | Total equity | |||||||
Balance as at December 31, 2019 (audited) | 927 | (131) | 7,772 | 8,568 | 356 | 8,924 | ||||||
Net profit for the period | - | - | 540 | 540 | 29 | 569 | ||||||
Dividend | - | - | (125) | (125) | - | (125) | ||||||
Other comprehensive loss, after tax effect | - | (39) | - | (39) | (1) | (40) | ||||||
Balance as at September 30, 2020 | 927 | (170) | 8,187 | 8,944 | 384 | 9,328 | ||||||
For the nine months ended September 30, 2019 (unaudited) | ||||||||||||
Share capital and premium (1) | Accumulated other comprehensive income (loss) | Retained earnings (2) | Total share-holders' equity | Non- controlling interests | Total equity | |||||||
Balance as at December 31, 2018 (audited) | 927 | (159) | 7,325 | 8,093 | 320 | 8,413 | ||||||
Cumulative effect of the initial implementation of US accepted | - | 8 | (8) | - | - | - | ||||||
Adjusted balance as at January 1, 2019 after the initial implementation | 927 | (151) | 7,317 | 8,093 | 320 | 8,413 | ||||||
Net profit for the period | - | - | 643 | 643 | 29 | 672 | ||||||
Dividend | - | - | (300) | (300) | - | (300) | ||||||
Other comprehensive income, after tax effect | - | 25 | - | 25 | - | 25 | ||||||
Balance as at September 30, 2019 | 927 | (126) | 7,660 | 8,461 | 349 | 8,810 | ||||||
STATEMENT OF CHANGES IN EQUITY (CONT'D) | ||||||||||||
For the year ended December 31, 2019 (audited) | ||||||||||||
Share capital and premium (1) | Accumulated other comprehensive income (loss) | Retained earnings (2) | Total | Non- controlling interests | Total equity | |||||||
Balance as at December 31, 2018 | 927 | (159) | 7,325 | 8,093 | 320 | 8,413 | ||||||
Cumulative effect of the initial implementation of US accepted | - | 8 | (8) | - | - | - | ||||||
Adjusted balance as at January 1, 2019 after the initial implementation | 927 | (151) | 7,317 | 8,093 | 320 | 8,413 | ||||||
Net profit for the year | - | - | 865 | 865 | 38 | 903 | ||||||
Dividend | - | - | (410) | (410) | - | (410) | ||||||
Other comprehensive income (loss), after tax effect | - | 20 | - | 20 | (2) | 18 | ||||||
Balance as at December 31, 2019 | 927 | (131) | 7,772 | 8,568 | 356 | 8,924 | ||||||
(1) Including share premium of NIS 313 million (as from 1992 onwards). | ||||||||||||
(2) Including an amount of NIS 2,391 million which cannot be distributed as dividend. | ||||||||||||
(3) Cumulative effect of the initial implementation regarding financial instruments of US accepted accounting standards at banks in respect of financial instruments (ASU 2016-01). | ||||||||||||
Contact:
Dafna Zucker
First International Bank of Israel e-mail: [email protected]
Tel: +972-3-519-6224
Ehud Helft
GK Investor & Public Relations e-mail: [email protected]
Tel: +1-646-201-924
SOURCE First International Bank of Israel
Share this article