First International Bank of Israel Reports Fourth Quarter and Full year 2022 Financial Results
TEL AVIV, Israel, March 21, 2023 /PRNewswire/ -- First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the fourth quarter and full year 2022.
Financial Highlights
- Full year 2022 net income of NIS 1,677 million and return on equity of 16.6%;
- Fourth quarter 2022 net income of NIS 536 million and return on equity 20.7%;
- Credit to the public increased in 2022 by 14.7% with growth evident in all areas of operation;
- The Bank continued its drive for efficiency and the efficiency ratio for 2022 amounted to 50.9% and in the fourth the efficiency ratio amounted to 45.2%;
- The tier-1 equity capital ratio was 10.42%;
- The Board of Directors approved a dividend distribution of 50% of net earnings;
Growth
The growth trend presented in First International Bank's financial statements was evident across all areas of the core operation of the Bank:
Credit to the public increased by 14.7% in 2022 and amounted to NIS 117,156 million. The growth in credit was achieved while maintaining proportional risk and was evident across all areas of operation: business credit grew in 2022 by 22.7%, and credit to households and residential loans grew by 7.6%.
Net deposits by the public grew by 9.7% compared with that of the corresponding period last year and amounted to NIS 168,269 million.
Financing income from current operations in 2022 grew to NIS 4,016 million, representing an increase of 41.2% compared with that of 2021. The growth was due to an expansion of business activity, the impact of the rise of the Israeli shekel and US dollar interest rate, and the impact of inflation. Income from commissions increased by 3.1% over 2021 due to an increase in bank activity.
Profitability
Net income for 2022 of the First International Bank Group amounted to NIS 1,667 million, growth of 18.6% compared with 2021. Return on equity amounted to 16.6%.
Net income for the fourth quarter amounted to NIS 536 million, representing growth of 61% compared with the corresponding period of last year. Return on equity reached 20.7%.
Credit loss expenses amounted in 2022 to NIS 123 million (representing a rate of 0.11%) in comparison to income of 216 million in 2021, a growth of NIS 339 million, due to an increase in the collective allowance for credit losses. Expenses of NIS 168 million were recorded in 2022, due to growth in the collective allowance following an increase in the volume of performing credit, and due to an increase in the subjective allowance from an expansion of the cushions because of the potential implications of changes in the domestic and global economic environment.
Credit loss expenses in the fourth quarter amounted to NIS 49 million, as compared with income of NIS 10 million in the corresponding period of last year.
A reduction in the volume of troubled credit in 2022 was reported at a rate of 22.7%, in comparison with that of the end of 2021.
Efficiency and technology
The efficiency ratio continued to improve and in 2022 amounted to 50.9%, compared with 58.3% in 2021. In the fourth quarter of the year, the efficiency ratio reached a rate of 45.2%. The Bank continued to invest in efficiency measures that include, amongst others, efficiency in work processes and integration of automation in processes, technological and digital innovation, and cooperation with fin-tech companies. The Bank leverages its data and develops advanced models, with a goal to offer a more advanced, focused and efficient service to its customers.
Financial stability
The capital attributed to the Bank's shareholders reached NIS 10,559 million, comprising growth of 5.6% compared with that of December 31, 2021. The Tier 1 equity capital ratio amounted to 10.42%, higher by 1.18% than the required regulatory ratio. The ratio on December 31, 2021 amounted to 11.46%. The year-over-year decline in the ratio was due to the growth of 16.5% in risk assets, stemming mostly from the growth in credit to the public.
Dividend
The Board of Directors of the Bank today approved a dividend distribution of 50% of net earnings, in the amount of NIS 268 million. Dividends of NIS 945 million were distributed in 2022. The annual dividend return as of December 31, 2022, reached 6.82%, comprising the highest dividend return in the Israeli banking system.
Management Comment
Ms. Smadar Berber-Tsadik, CEO of the First International Bank Group, stated: "The financial statements for 2022 of our Bank reflect growth and greater efficiency; all while maintaining high financial stability. We presented an improvement in profitability stemming from the continued growth in our diverse operations. This was both in credit – showing impressive growth, while maintaining commensurate risk, though growth, which slowed somewhat in the fourth quarter, mostly on the background of a decline in demand- and in the asset management field, while expanding the capital market operations. The rising interest rates in Israel and in most countries around the world, following many years of activity in a negligible interest-rate environment, also contributed to profitability. Today, we are gearing our offerings towards customers tailored toward the current interest rate environment, with a view of bringing them unique and rewarding investment products that include varied deposits, as well as capital markets activity in Israel and internationally."
"The Bank has recently approved the corporate strategy for the upcoming years of 2023 to 2025, a program whose purpose is to forge us ahead in an increasingly competitive banking environment. The program emphasizes growth, while providing our customers with added-value services in accordance with their needs, including in the digital and technological response fields. An additional emphasis in our program is maintaining our leadership in the capital market and in private banking, alongside continued development and innovation in these fields; we are placing an important emphasis on leading with efficiency measures and exposing ourselves to new areas, all the while cooperating and leveraging our data with a goal to provide an optimal and personal service to our customers, as well as adjusting our branch network to the new digital world."
CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES | ||||||||||
Principal financial ratios | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
percent | ||||||||||
Execution indices | ||||||||||
Return on equity attributed to shareholders of the Bank | 16.6 % | 14.7 % | 8.6 % | 10.5 % | 9.3 % | |||||
Return on average assets | 0.89 % | 0.82 % | 0.49 % | 0.63 % | 0.54 % | |||||
Ratio of equity capital tier 1 | 10.42 % | 11.46 % | 11.18 % | 10.81 % | 10.51 % | |||||
Leverage ratio | 5.19 % | 5.34 % | 5.29 % | 5.81 % | 5.76 % | |||||
Liquidity coverage ratio(1) | 127 % | 128 % | 150 % | 128 % | 122 % | |||||
Net stable funding ratio(2) | 133 % | *139% | ||||||||
Ratio of total income to average assets | 2.9 % | 2.6 % | 2.7 % | 3.0 % | 3.0 % | |||||
Ratio of interest income, net to average assets | 2.0 % | 1.6 % | 1.7 % | 1.9 % | 1.8 % | |||||
Ratio of fees to average assets | 0.8 % | 0.8 % | 0.9 % | 0.9 % | 1.0 % | |||||
Efficiency ratio | 50.9 % | 58.3 % | 61.8 % | 64.4 % | 68.4 % | |||||
Credit quality indices | ||||||||||
Ratio of provision for credit losses to credit to the public | 1.02 % | 1.05 % | 1.38 % | 1.05 % | 1.02 % | |||||
Ratio of non-accruing debts or in arrears of 90 days or | 0.48 % | **0.63% | 0.86 % | 1.08 % | 0.83 % | |||||
Ratio of provision for credit losses to total non-accruing | 220 % | **244% | 221 % | 131 % | 186 % | |||||
Ratio of net write-offs to average total credit to the public | 0.03 % | (0.01 %) | 0.10 % | 0.10 % | 0.16 % | |||||
Ratio of expenses (income) for credit losses to average | 0.11 % | (0.23 %) | 0.52 % | 0.16 % | 0.20 % | |||||
Principal data from the statement of income | 2022 | 2021 | 2020 | 2019 | 2018 | ||||||
NIS million | |||||||||||
Net profit attributed to shareholders of the Bank | 1,667 | 1,405 | 750 | 865 | 733 | ||||||
Interest Income, net | 3,803 | 2,794 | 2,637 | 2,602 | 2,486 | ||||||
Expenses (income) from credit losses | 123 | (216) | 464 | 138 | 166 | ||||||
Total non-interest income | 1,611 | 1,756 | 1,523 | 1,520 | 1,637 | ||||||
Of which: Fees | 1,489 | 1,444 | 1,371 | 1,286 | 1,325 | ||||||
Total operating and other expenses | 2,755 | 2,652 | 2,569 | 2,654 | 2,819 | ||||||
Of which: Salaries and related expenses | 1,680 | 1,601 | 1,532 | 1,601 | 1,696 | ||||||
Dismissal expenses | 4 | 36 | 26 | 48 | 35 | ||||||
Primary net profit per share of NIS 0.05 par value (NIS) | 16.62 | 14.00 | 7.48 | 8.62 | 7.31 |
Principal data from the balance sheet | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
NIS million | ||||||||||
Total assets | 195,955 | 180,470 | 167,778 | 141,110 | 134,120 | |||||
of which: Cash and deposits with banks | 57,130 | 57,370 | 57,802 | 37,530 | 31,303 | |||||
Securities | 16,010 | 15,091 | 13,105 | 10,995 | 12,595 | |||||
Credit to the public, net | 115,961 | 101,164 | 90,970 | 87,899 | 84,292 | |||||
Total liabilities | 184,920 | 170,033 | 158,243 | 132,186 | 125,707 | |||||
of which: Deposits from the public | 168,269 | 153,447 | 141,677 | 120,052 | 111,697 | |||||
Deposits from banks | 4,821 | 5,144 | 2,992 | 1,137 | 1,150 | |||||
Bonds and subordinated capital notes | 4,749 | 3,356 | 4,394 | 3,674 | 4,989 | |||||
Capital attributed to the shareholders of the Bank | 10,559 | 10,003 | 9,141 | 8,568 | 8,093 |
Additional data | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Share price (0.01 NIS) | 13,900 | 12,950 | 8,514 | 9,989 | 7,860 | |||||
Dividend per share (0.01 NIS) | 942 | 543 | 125 | 410 | 355 | |||||
Average number of positions (3) | 3,676 | 3,715 | 3,895 | 4,086 | 4,285 |
* | Restated. |
** | Restated in respect of the new disclosure format on non-accruing debts instead of impaired debts, since January 1, 2022. Comparative data for 2018, 2019 and 2020 have not been restated. |
(1) | The ratio is computed in respect of the three months ended at the end of the reporting period. |
(2) | According to instructions of the Bank of Israel the Net stable funding ratio was calculated since 2021, Therefor no comparative data is stated. |
(3) | The number of positions includes conversion of overtime in terms of positions. |
STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31 | ||||||||||||
(NIS million) | ||||||||||||
Consolidated | The Bank | |||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||
Interest Income | 5,161 | 3,150 | 2,878 | 4,833 | 2,907 | 2,647 | ||||||
Interest Expenses | 1,358 | 356 | 241 | 1,339 | 358 | 253 | ||||||
Interest Income, net | 3,803 | 2,794 | 2,637 | 3,494 | 2,549 | 2,394 | ||||||
Expenses (income) from credit losses | 123 | (216) | 464 | 118 | (213) | 443 | ||||||
Net Interest Income after expenses from credit losses | 3,680 | 3,010 | 2,173 | 3,376 | 2,762 | 1,951 | ||||||
Non-Interest Income | ||||||||||||
Non-Interest Financing income | 113 | 303 | 148 | 111 | 301 | 148 | ||||||
Fees | 1,489 | 1,444 | 1,371 | 1,331 | 1,285 | 1,234 | ||||||
Other income | 9 | 9 | 4 | 66 | 49 | 45 | ||||||
Total non-Interest income | 1,611 | 1,756 | 1,523 | 1,508 | 1,635 | 1,427 | ||||||
Operating and other expenses | ||||||||||||
Salaries and related expenses | 1,680 | 1,601 | 1,532 | 1,564 | 1,491 | 1,429 | ||||||
Maintenance and depreciation of premises and equipment | 332 | 340 | 344 | 306 | 313 | 316 | ||||||
Amortizations and impairment of intangible assets | 113 | 105 | 96 | 111 | 103 | 94 | ||||||
Other expenses | 630 | 606 | 597 | 604 | 584 | 570 | ||||||
Total operating and other expenses | 2,755 | 2,652 | 2,569 | 2,585 | 2,491 | 2,409 | ||||||
Profit before taxes | 2,536 | 2,114 | 1,127 | 2,299 | 1,906 | 969 | ||||||
Provision for taxes on profit | 884 | 728 | 368 | 801 | 656 | 315 | ||||||
Profit after taxes | 1,652 | 1,386 | 759 | 1,498 | 1,250 | 654 | ||||||
The bank's share in profit of equity-basis investee, after taxes | 74 | 69 | 29 | 169 | 155 | 96 | ||||||
Net profit: | ||||||||||||
Before attribution to non-controlling interests | 1,726 | 1,455 | 788 | 1,667 | 1,405 | 750 | ||||||
Attributed to non-controlling interests | (59) | (50) | (38) | - | - | - | ||||||
Attributed to shareholders of the Bank | 1,667 | 1,405 | 750 | 1,667 | 1,405 | 750 | ||||||
Consolidated and The Bank | 2022 | 2021 | 2020 | |||
Primary profit per share attributed to the shareholders of the Bank | NIS | |||||
Net profit per share of NIS 0.05 par value | 16.62 | 14.00 | 7.48 | |||
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31 | ||||||
(NIS million) | ||||||
Consolidated | ||||||
2022 | 2021 | 2020 | ||||
Net profit before attribution to non-controlling interests | 1,726 | 1,455 | 788 | |||
Net profit attributed to non-controlling interests | (59) | (50) | (38) | |||
Net profit attributed to the shareholders of the Bank | 1,667 | 1,405 | 750 | |||
Other comprehensive income (loss) before taxes: | ||||||
Adjustments of available for sale bonds to fair value, net | (441) | 27 | (4) | |||
Adjustments of liabilities in respect of employee benefits(1) | 235 | (24) | (74) | |||
Other comprehensive income (loss) before taxes | (206) | 3 | (78) | |||
Related tax effect | 71 | (1) | 26 | |||
Other comprehensive income (loss) before attribution to non-controlling interests, after taxes | (135) | 2 | (52) | |||
Less other comprehensive loss attributed to non-controlling interests | (13) | - | - | |||
Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes | (122) | 2 | (52) | |||
Comprehensive income before attribution to non-controlling interests | 1,591 | 1,457 | 736 | |||
Comprehensive income attributed to non-controlling interests | (46) | (50) | (38) | |||
Comprehensive income attributed to the shareholders of the Bank | 1,545 | 1,407 | 698 | |||
(1) Mostly reflects adjustments in respect of actuarial assessments as of the end of the period regarding | ||||||
BALANCE SHEET AS AT DECEMBER 31 | ||||||||
(NIS million) | ||||||||
Consolidated | The Bank | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Assets | ||||||||
Cash and deposits with banks | 57,130 | 57,370 | 56,403 | 56,601 | ||||
Securities | 16,010 | 15,091 | 15,215 | 14,348 | ||||
Securities which were borrowed | 12 | 845 | 12 | 845 | ||||
Credit to the public | 117,156 | 102,240 | 111,019 | 96,599 | ||||
Provision for Credit losses | (1,195) | (1,076) | (1,115) | (1,010) | ||||
Credit to the public, net | 115,961 | 101,164 | 109,904 | 95,589 | ||||
Credit to the government | 866 | 811 | 158 | 48 | ||||
Investment in equity-basis investees | 687 | 713 | 1,403 | 1,351 | ||||
Premises and equipment | 902 | 931 | 879 | 906 | ||||
Intangible assets | 317 | 300 | 311 | 294 | ||||
Assets in respect of derivative instruments | 2,825 | 1,709 | 2,825 | 1,712 | ||||
Other assets(2) | 1,245 | 1,536 | 1,166 | 1,460 | ||||
Total assets | 195,955 | 180,470 | 188,276 | 173,154 | ||||
Liabilities and Shareholders' Equity | ||||||||
Deposits from the public | 168,269 | 153,447 | 161,540 | 147,012 | ||||
Deposits from banks | 4,821 | 5,144 | 7,223 | 7,578 | ||||
Deposits from the Government | 237 | 960 | 237 | 960 | ||||
Bonds and subordinated capital notes | 4,749 | 3,356 | 2,365 | 962 | ||||
Liabilities in respect of derivative instruments | 2,322 | 2,038 | 2,332 | 2,038 | ||||
Other liabilities(1)(3) | 4,522 | 5,088 | 4,020 | 4,601 | ||||
Total liabilities | 184,920 | 170,033 | 177,717 | 163,151 | ||||
Capital attributed to the shareholders of the Bank | 10,559 | 10,003 | 10,559 | 10,003 | ||||
Non-controlling interests | 476 | 434 | - | - | ||||
Total equity | 11,035 | 10,437 | 10,559 | 10,003 | ||||
Total liabilities and shareholders' equity | 195,955 | 180,470 | 188,276 | 173,154 | ||||
(1) Of which: provisions for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 117 million | ||||||||
(2) Of which: other assets measured at fair value in the amount of NIS 26 million consolidated and the Bank (31.12.21 - NIS 333 million | ||||||||
(3) Of which: other liabilities measured at fair value in the amount of NIS 26 million consolidated and the Bank (31.12.21 - NIS 641 | ||||||||
STATEMENT OF CHANGES IN EQUITY | ||||||||||||
(NIS million) | ||||||||||||
Share capital and premium (1) | Accumulated | Retained earnings(2) | Total share-holders' equity | Non- controlling interests | Total equity | |||||||
Balance as at January 1, 2020 | 927 | (131) | 7,772 | 8,568 | 356 | 8,924 | ||||||
Changes during 2020 - | ||||||||||||
Net profit for the year | - | - | 750 | 750 | 38 | 788 | ||||||
Dividend | - | - | (125) | (125) | - | (125) | ||||||
Other comprehensive loss, after tax effect | - | (52) | - | (52) | - | (52) | ||||||
Balance as at December 31, 2020 | 927 | (183) | 8,397 | 9,141 | 394 | 9,535 | ||||||
Changes during 2021 - | ||||||||||||
Net profit for the year | - | - | 1,405 | 1,405 | 50 | 1,455 | ||||||
Dividend | - | - | (545) | (545) | (10) | (555) | ||||||
Other comprehensive income, after tax effect | - | 2 | - | 2 | - | 2 | ||||||
Balance as at December 31, 2021 | 927 | (181) | 9,257 | 10,003 | 434 | 10,437 | ||||||
Adjustment of the opening balance, net of tax, due to the effect of initial implementation* | - | - | (44) | (44) | (4) | (48) | ||||||
Adjusted balance at January 1, 2022, following initial implementation | 927 | (181) | 9,213 | 9,959 | 430 | 10,389 | ||||||
Changes during 2022 - | ||||||||||||
Net profit for the year | - | - | 1,667 | 1,667 | 59 | 1,726 | ||||||
Dividend | - | - | (945) | (945) | - | (945) | ||||||
Other comprehensive loss, after tax effect | - | (122) | - | (122) | (13) | (135) | ||||||
Balance as at December 31, 2022 | 927 | (303) | 9,935 | 10,559 | 476 | 11,035 | ||||||
* Cumulative effect of the initial implementation of US accounting principles in the matter of financial instruments - credit losses (ASC-326). For details, see Note 1.c below. | ||||||||||||
(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. | ||||||||||||
Contact:
Dafna Zucker
First International Bank of Israel
e-mail: [email protected]
Tel: +972-3-519-6224
Ehud Helft
Tel: +1 212 378 8040
e-mail: [email protected]
SOURCE First International Bank of Israel
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