First International Bank of Israel Reports Third Quarter 2022 Financial Results
TEL AVIV, Israel, Nov. 23, 2022 /PRNewswire/ --First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the third quarter of 2022 ended September 30, 2022.
Financial Highlights
Net income of NIS 1,131 million in the first nine months of 2022; Return on equity – 15.1%;
Net income of NIS 467 million in the third quarter of 2022; Return on equity – 18.5%;
Management Comment
Ms. Smadar Barber-Tsadik, CEO of the First International Bank Group, stated, "The First International Bank presented another quarter of growth, via its strict and quality management of capital over the long-term, enabling growth in credit and in operations in general. The growth was evident across a broad range of our activity, while at the same time maintaining the balanced risk profile that characterizes the Bank, both during periods of growth, as well as periods of increased risk."
"The First International Bank continued to cement its position within its areas of market leadership: namely, investment management and capital markets, providing customers with a broad range of high-value offerings and innovative investment products which are tailored to customer needs and to changing trends in the financial markets, today marked by high volatility and rising interest rates."
Growth
The trend of improvement in First International Bank's third quarter results is evident across all the core operations of the Bank. The growth in activity, both in credit and deposits, combined with the impact of rising interest rates, contributed to the increase in profits from credit and deposits. Financing income from current operations in the third quarter of the year increased by 48.5%, as compared with the corresponding quarter last year and totaled NIS 1,075 million.
Commission income increased by 6.9% compared with the corresponding quarter last year, due to the growth in the activity of the Bank. Total income in the third quarter increased by 27%, and increased by 12.9% in the first nine months of the year.
Credit to the public increased by 19.3% in the past year (as compared with the corresponding period last year) and increased by 13.2% in the year-to-date, totaling NIS 115,708 million. The growth in credit is evident across all areas of operations: the large business segment grew by 54% over the past year; the middle market business segment grew by 36.4%; the small business segment grew by 8.7%; household credit grew by 7.5%; and residential loans grew by 13.4%. In the third quarter of the year, credit to the public grew by 1.6%. Deposits by the public grew by 11.2% compared with that of the corresponding period last year, totaling NIS 164,902 million.
Profitability
The net income of the First International Bank Group in the third quarter of the year was NIS 467 million, reflecting growth of 28.3% compared with that of the corresponding period of last year. Return on equity was 18.5%. In the first nine months of the year, net income was NIS 1,131 million, reflecting growth of 5.5% compared with the corresponding period of last year, with return on equity at 15.1%.
Credit loss expenses in the third quarter of the year were NIS 43 million, as compared to income of NIS 69 million in the corresponding quarter of last year, representing an increase of NIS 112 million. In the first nine months of the year, credit loss expenses were 74 million, as compared to income of NIS 206 million in the corresponding period last year, representing an increase of NIS 280 million.
The increase in the provision for credit losses was due to an increase in the collective provision, which was due to an increase in the volume of working credit, and the increase in the safety-cushion allowance, which was increased as a result of the potential implications from changes in the local and global economic environment, as well as the sharp increase in interest rates, an increase in inflation and fears of an economic slowdown, among other impacts.
In the corresponding period last year, it is noted that a one-time income from credit losses was recorded totaling NIS 183 million which was due to a decrease in the collective allowance, which in turn was due to an improvement in macro-economic indicators following the exit from the Corona downturn as well as improved indicators pointing at the level of risk inherent in the Bank's credit portfolio.
The volume of problematic credit was reduced by 18.5% as compared to that at the end of 2021.
Efficiency and Technology
The efficiency ratio continued to improve and was 47.7% in the third quarter of the year. In the first nine months of the year, the ratio improved to 53.3%, as compared to 57.9% in the corresponding period of last year. The Bank continued to invest in its efficiency measures, which included, among other aspects, automation, improved efficiency of work procedures, digital innovation and co-operation with fintech companies. The Bank leverages data and develops advanced models, in order to provide an advanced and efficient service to its customers.
Financial Stability
The shareholders equity of the Bank reached NIS 10,237 million, reflecting an increase of 2.3% in relation to that of December 31, 2021.
The Tier 1 equity capital ratio reached 10.17%, which is 0.93% higher than the required regulatory ratio.
Dividend
The Board of Directors of the Bank today approved a dividend distribution of NIS 235 million. This distribution is in addition to dividends totaling NIS 710 million which have been distributed in the current year. The annual dividend return as of November 6, 2022, amounted to 7.75%, representing the highest dividend return in the Israeli banking system.
CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES | ||||||
Principal financial ratios | For the nine months | For the year | ||||
2022 | 2021 | 2021 | ||||
in % | ||||||
Execution indices | ||||||
Return on equity attributed to shareholders of the Bank(1)(3) | 15.1 % | 15.1 % | 14.7 % | |||
Return on average assets(1) | 0.82 % | 0.84 % | 0.82 % | |||
Ratio of equity capital tier 1 | 10.17 % | 11.64 % | 11.46 % | |||
Leverage ratio | 5.10 % | 5.54 % | 5.34 % | |||
Liquidity coverage ratio | 127 % | 133 % | 128 % | |||
Net stable funding ratio (2) | 134 % | *139% | ||||
Ratio of total income to average assets(1) | 2.7 % | 2.6 % | 2.6 % | |||
Ratio of interest income, net to average assets (1) | 1.9 % | 1.6 % | 1.6 % | |||
Ratio of fees to average assets (1) | 0.8 % | 0.8 % | 0.8 % | |||
Efficiency ratio | 53.3 % | 57.9 % | 58.3 % | |||
Credit quality indices | ||||||
Ratio of provision for credit losses to credit to the public | 1.01 % | 1.12 % | 1.05 % | |||
Ratio of non-accruing debts or in arrears of 90 days or more to credit to the public | 0.47 % | 0.72 % | **0.62% | |||
Ratio of provision for credit losses to total non-accruing credit to the public | 224 % | 222 % | **244% | |||
Ratio of net write-offs to average total credit to the public (1) | 0.03 % | (0.02 %) | (0.01 %) | |||
Ratio of expenses (income) for credit losses to average total credit to the public (1) | 0.09 % | (0.30 %) | (0.23 %) | |||
Principal data from the statement of income | For the nine months | |||||
2022 | 2021 | |||||
NIS million | ||||||
Net profit attributed to shareholders of the Bank | 1,131 | 1,072 | ||||
Interest Income, net | 2,613 | 2,090 | ||||
Expenses (income) from credit losses | 74 | (206) | ||||
Total non-Interest income | 1,194 | 1,281 | ||||
Of which: Fees | 1,125 | 1,057 | ||||
Total operating and other expenses | 2,028 | 1,953 | ||||
Of which: Salaries and related expenses | 1,231 | 1,199 | ||||
Primary net profit per share of NIS 0.05 par value (NIS) | 11.27 | 10.68 | ||||
Principal data from the balance sheet | 30.9.22 | 30.9.21 | 31.12.21 | |||
NIS million | ||||||
Total assets | 194,987 | 173,758 | 180,470 | |||
of which: Cash and deposits with banks | 56,012 | 57,083 | 57,370 | |||
Securities | 15,331 | 14,803 | 15,091 | |||
Credit to the public, net | 114,539 | 95,877 | 101,164 | |||
Total liabilities | 184,290 | 163,301 | 170,033 | |||
of which: Deposits from the public | 164,902 | 148,273 | 153,447 | |||
Deposits from banks | 4,998 | 5,471 | 5,144 | |||
Bonds and subordinated capital notes | 5,030 | 2,851 | 3,356 | |||
Capital attributed to the shareholders of the Bank | 10,237 | 10,022 | 10,003 | |||
Additional data | 30.9.22 | 30.9.21 | 31.12.21 | |||
Share price (0.01 NIS) | 14,500 | 11,820 | 12,950 | |||
Dividend per share (0.01 NIS) | 708 | 224 | 543 | |||
* Immaterial adjustment of comparative data. | ||||||
CONSOLIDATED STATEMENT OF INCOME | ||||||||||
(NIS million) | ||||||||||
For the three months ended September 30 | For the nine months ended September 30 | For the year Ended December 31 | ||||||||
2022 | 2021 | 2022 | 2021 | 2021 | ||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||
Interest Income | 1,382 | 807 | 3,357 | 2,392 | 3,150 | |||||
Interest Expenses | 372 | 97 | 744 | 302 | 356 | |||||
Interest Income, net | 1,010 | 710 | 2,613 | 2,090 | 2,794 | |||||
Expenses (income) from credit losses | 43 | (69) | 74 | (206) | (216) | |||||
Net Interest Income after expenses from credit losses | 967 | 779 | 2,539 | 2,296 | 3,010 | |||||
Non- Interest Income | ||||||||||
Non-Interest Financing income | 48 | 63 | 60 | 214 | 303 | |||||
Fees | 370 | 346 | 1,125 | 1,057 | 1,444 | |||||
Other income | 1 | 6 | 9 | 10 | 9 | |||||
Total non- Interest income | 419 | 415 | 1,194 | 1,281 | 1,756 | |||||
Operating and other expenses | ||||||||||
Salaries and related expenses | 416 | 399 | 1,231 | 1,199 | 1,601 | |||||
Maintenance and depreciation of premises and equipment | 86 | 84 | 249 | 255 | 340 | |||||
Amortizations and impairment of intangible assets | 29 | 27 | 84 | 78 | 105 | |||||
Other expenses | 151 | 135 | 464 | 421 | 606 | |||||
Total operating and other expenses | 682 | 645 | 2,028 | 1,953 | 2,652 | |||||
Profit before taxes | 704 | 549 | 1,705 | 1,624 | 2,114 | |||||
Provision for taxes on profit | 249 | 193 | 597 | 570 | 728 | |||||
Profit after taxes | 455 | 356 | 1,108 | 1,054 | 1,386 | |||||
The bank's share in profit of equity-basis investee, after taxes | 27 | 21 | 64 | 57 | 69 | |||||
Net profit: | ||||||||||
Before attribution to non–controlling interests | 482 | 377 | 1,172 | 1,111 | 1,455 | |||||
Attributed to non–controlling interests | (15) | (13) | (41) | (39) | (50) | |||||
Attributed to shareholders of the Bank | 467 | 364 | 1,131 | 1,072 | 1,405 | |||||
NIS | ||||||||||
Primary profit per share attributed to the shareholders | ||||||||||
Net profit per share of NIS 0.05 par value | 4.65 | 3.62 | 11.27 | 10.68 | 14.00 | |||||
STATEMENT OF COMPREHENSIVE INCOME | |||||||||
(NIS million) | |||||||||
For the three months ended September 30 | For the nine months ended September 30 | For the year December 31 | |||||||
2022 | 2021 | 2022 | 2021 | 2021 | |||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | |||||
Net profit before attribution to non–controlling interests | 482 | 377 | 1,172 | 1,111 | 1,455 | ||||
Net profit attributed to non–controlling interests | (15) | (13) | (41) | (39) | (50) | ||||
Net profit attributed to the shareholders of the Bank | 467 | 364 | 1,131 | 1,072 | 1,405 | ||||
Other comprehensive income (loss) before taxes: | |||||||||
Adjustments of available for sale bonds to fair value, net | (95) | (8) | (472) | (4) | 27 | ||||
Adjustments of liabilities in respect of employee benefits(1) | 42 | 12 | 238 | 58 | (24) | ||||
Other comprehensive income (loss) before taxes | (53) | 4 | (234) | 54 | 3 | ||||
Related tax effect | 18 | - | 80 | (18) | (1) | ||||
Other comprehensive income (loss) before attribution to non–controlling interests, | (35) | 4 | (154) | 36 | 2 | ||||
Less other comprehensive income (loss) attributed to non–controlling interests | (2) | 1 | (11) | 2 | - | ||||
Other comprehensive income (loss) attributed to the shareholders of the Bank, | (33) | 3 | (143) | 34 | 2 | ||||
Comprehensive income before attribution to non–controlling interests | 447 | 381 | 1,018 | 1,147 | 1,457 | ||||
Comprehensive income attributed to non–controlling interests | (13) | (14) | (30) | (41) | (50) | ||||
Comprehensive income attributed to the shareholders of the Bank | 434 | 367 | 988 | 1,106 | 1,407 | ||||
(1) Mostly reflects adjustments in respect of actuarial assessments as of the end of the period regarding defined benefits pension plans, | |||||||||
CONSOLIDATED BALANCE SHEET | ||||||
(NIS million) | ||||||
September 30, | December 31, | |||||
2022 | 2021 | 2021 | ||||
(unaudited) | (unaudited) | (audited) | ||||
Assets | ||||||
Cash and deposits with banks | 56,012 | 57,083 | 57,370 | |||
Securities | 15,331 | 14,803 | 15,091 | |||
Securities which were borrowed | 630 | 232 | 845 | |||
Credit to the public | 115,708 | 96,965 | 102,240 | |||
Provision for Credit losses | (1,169) | (1,088) | (1,076) | |||
Credit to the public, net | 114,539 | 95,877 | 101,164 | |||
Credit to the government | 862 | 859 | 811 | |||
Investment in investee company | 679 | 699 | 713 | |||
Premises and equipment | 894 | 929 | 931 | |||
Intangible assets | 297 | 275 | 300 | |||
Assets in respect of derivative instruments | 3,800 | 1,565 | 1,709 | |||
Other assets(2) | 1,943 | 1,436 | 1,536 | |||
Total assets | 194,987 | 173,758 | 180,470 | |||
Liabilities and Shareholders' Equity | ||||||
Deposits from the public | 164,902 | 148,273 | 153,447 | |||
Deposits from banks | 4,998 | 5,471 | 5,144 | |||
Deposits from the Government | 891 | 417 | 960 | |||
Bonds and subordinated capital notes | 5,030 | 2,851 | 3,356 | |||
Liabilities in respect of derivative instruments | 3,303 | 1,751 | 2,038 | |||
Other liabilities(1)(3) | 5,166 | 4,538 | 5,088 | |||
Total liabilities | 184,290 | 163,301 | 170,033 | |||
Capital attributed to the shareholders of the Bank | 10,237 | 10,022 | 10,003 | |||
Non-controlling interests | 460 | 435 | 434 | |||
Total equity | 10,697 | 10,457 | 10,437 | |||
Total liabilities and shareholders' equity | 194,987 | 173,758 | 180,470 | |||
(1) Of which: provision for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 101 million and NIS 86 (2) Of which: other assets measured at fair value in the amount of NIS 738 million and NIS 263 million and NIS 333 million at 30.9.22, 30.9.21 (3) Of which: other liabilities measured at fair value in the amount of NIS 808 million and NIS 440 million and NIS 641 million at 30.9.22, 30.9.21 | ||||||
STATEMENT OF CHANGES IN EQUITY | ||||||||||||
(NIS million) | ||||||||||||
For the three months ended September 30, 2022 (unaudited) | ||||||||||||
Share | Accumulated | Retained | Total | Non- | Total | |||||||
Balance as of June 30, 2022 | 927 | (291) | 9,337 | 9,973 | 447 | 10,420 | ||||||
Net profit for the period | - | - | 467 | 467 | 15 | 482 | ||||||
Dividend | - | - | (170) | (170) | - | (170) | ||||||
Other comprehensive loss, after tax effect | - | (33) | - | (33) | (2) | (35) | ||||||
Balance as at September 30, 2022 | 927 | (324) | 9,634 | 10,237 | 460 | 10,697 | ||||||
For the three months ended September 30, 2021 (unaudited) | ||||||||||||
Share | Accumulated | Retained | Total | Non- | Total | |||||||
Balance as of June 30, 2021 | 927 | (152) | *9,105 | 9,880 | 421 | 10,301 | ||||||
Net profit for the period | - | - | 364 | 364 | 13 | 377 | ||||||
Dividend | - | - | (225) | (225) | - | (225) | ||||||
Other comprehensive income, after tax effect | - | 3 | - | 3 | 1 | 4 | ||||||
Balance as at September 30, 2021 | 927 | (149) | 9,244 | 10,022 | 435 | 10,457 | ||||||
For the nine months ended September 30, 2022 (unaudited) | ||||||||||||
Share | Accumulated | Retained | Total | Non- | Total | |||||||
Balance as at December 31, 2021 (audited) | 927 | (181) | 9,257 | 10,003 | 434 | 10,437 | ||||||
Adjustment of the opening balance, net of tax, due to the effect of initial | - | - | (44) | (44) | (4) | (48) | ||||||
Adjusted balance at January 1, 2022, following initial implementation | 927 | (181) | 9,213 | 9,959 | 430 | 10,389 | ||||||
Net profit for the period | - | - | 1,131 | 1,131 | 41 | 1,172 | ||||||
Dividend | - | - | (710) | (710) | - | (710) | ||||||
Other comprehensive loss, after tax effect | - | (143) | - | (143) | (11) | (154) | ||||||
Balance as at September 30, 2022 | 927 | (324) | 9,634 | 10,237 | 460 | 10,697 | ||||||
For the nine months ended September 30, 2021 (unaudited) | ||||||||||||
Share | Accumulated | Retained | Total | Non- | Total | |||||||
Balance as at December 31, 2020 (audited) | 927 | (183) | 8,397 | 9,141 | 394 | 9,535 | ||||||
Net profit for the period | - | - | 1,072 | 1,072 | 39 | 1,111 | ||||||
Dividend | - | - | (225) | (225) | - | (225) | ||||||
Other comprehensive income, after tax effect | - | 34 | - | 34 | 2 | 36 | ||||||
Balance as at September 30, 2021 | 927 | (149) | 9,244 | 10,022 | 435 | 10,457 | ||||||
STATEMENT OF CHANGES IN EQUITY (CONT'D) | ||||||||||||
(NIS million) | ||||||||||||
For the year ended December 31, 2021 (audited) | ||||||||||||
Share | Accumulated | Retained | Total | Non- | Total | |||||||
Balance as at December 31, 2020 | 927 | (183) | 8,397 | 9,141 | 394 | 9,535 | ||||||
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 | ||||||
* Cumulative effect of the initial implementation of US accounting principles in the matter of financial instruments – credit losses (ASC-326). | ||||||||||||
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
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