First International Bank of Israel Presents Fourth Quarter and Full Year 2020 Results

TEL AVIV, Israel, March 17, 2021 /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 of 2020. 

Financial Highlights:

  • Net earnings of NIS 750 million in 2020;
  • Return on equity: 8.6%;
  • Net earnings of NIS 210 million in the fourth quarter;
  • Return on equity: 9.6%;
  • Growth in credit – the average balance of credit to the public grew by 5%;
  • The average balance of deposits from the public grew by 13.1%;
  • The average balance of private customer’s deposits grew by 15.9%;
  • The Bank continues to increase efficiency: operating and other expenses decreased by 3.2%;
  • Ratio of Tier I equity capital to risk assets: 11.18%;
  • High quality credit portfolio: low rate of loan payment deferrals standing at 1.9% at December-end and 1.0% at end of January;

Profitability

Net earnings in 2020 of the First International Bank Group amounted to NIS 750 million, as compared to NIS 865 million in 2019. Return on equity was 8.6%. In the fourth quarter of the year, net earnings amounted to NIS 210 million, as compared to NIS 201 million in the third quarter, and fourth quarter return on equity was 9.6%.

Implications of the Corona Crisis on the Bank’s Financial Statements

Given the background of the Corona pandemic, its impact on the macro-economic environment and the considerable uncertainty that followed, the Bank increased expenses in respect of credit losses. Total Credit loss expenses in 2020 amounted to NIS 464 million, in contrast to NIS 138 million in 2019, an increase of NIS 326 million. All expenses for credit losses stem from the growth in the collective provision. The total amount of credit loss expenses includes expenses of NIS 402 million, were recorded in respect of the uncertainty following the widening Corona pandemic and its implications on the macro-economic environment. The ratio of credit loss expenses to total credit to the public in 2020 amounted to 0.52% compared with 0.16% in 2019.

The provisions in the fourth quarter of the year amounted to NIS 51 million, (collective provisions) compared with NIS 46 million in the corresponding quarter last year. The ratio of credit loss expenses to total credit to the public was significantly reduced compared with earlier quarters of the year, and amounted to 0.23% in the fourth quarter as compared to 0.22% in the corresponding quarter last year.

The volume of loan repayment deferrals showed an improved and steep downward trend, which indicates the quality of the credit portfolio and the quality of the Bank’s borrowers. The amount of credit, under which repayments had been deferred, declined by 75% in the period from June 30, 2020 to December 31, 2020, and until January 31, 2021, by 86%. The ratio of deferred repayments to total credit reached 1.9% at the end of December and 1% at the end of January, a low ratio when compared with the Israeli Banking system as a whole.

Growth

Net interest income increased by 1.3% in comparison to that of 2019, and amounted to NIS 2,637 million, with the increase due mainly due to the growth in volume of operations. Commission income demonstrated growth at the rate of 6.6% in 2020, amounting to NIS 1,371 million. Most of the growth was due to growth in income from capital market activity and currency exchange, the increase explained by growth in operations. The growth in activity of the Group is also demonstrated by the balance sheet data, both on the loan and deposits sides: the average balance of credit to the public increased by 5% reaching NIS 89,742 million. The accelerated growth rate was characterized by the continuous diversity of credit and is evident in the corporate market business segment, which has grown by 5%, in the small businesses segment, which has grown by 7% and in the residential loan segment, which has grown by 8.4%.

The average balance of deposits from the public grew by 13.1% to NIS 129,859 million. The average balance of deposits by private customers grew by 15.9% to NIS 67,817 million.

The customer assets’ portfolio grew by 14.7% to a total amount of NIS 530 billion, when compared with that of December 31, 2019.

Financial stability

The Bank has a significant capital surplus: the growth trend continued with respect to capital attributed to shareholders of the Bank, which grew by 6.7% (NIS 573 million) to NIS 9,141 million. The Tier I equity capital ratio reached 11.18% as compared to the required regulatory ratio of 8.3%.

Efficiency

The First International Bank continued to improve efficiencies in accordance with its strategic plan and in 2020 the efficiency ratio improved to 61.8%, in comparison to 64.4% in 2019.

Operating and other expenses in 2020 amounted to NIS 2,569 million, a decrease of 3.2% when compared to that of 2019. The decrease in expenses was due to efficiency measures applied by the Bank and is noted across all expense items. The efficiency trend is reflected by the decrease in the number of employee positions, which declined by 5.3% in 2020, due to efficiency measures taken, which, among other activities, included a voluntary retirement plan implemented towards the end of the year. Settlement expenses in respect of this plan were recorded in the fourth quarter, and the outcome of this plan is expected to be reflected in reduced expenses in the upcoming years.

Digital

The social distancing imposed by the Corona pandemic led to a significant increase in the use of digital. The Bank has invested in the development of new digital services, which led to a continuation of progress and technological growth at the Bank. A sharp increase has been noted in the use of digital banking by the public, including the use of the many advanced innovations introduced by the Bank. Among these include FibiPay – the new digital wallet of the First International Bank, the opening of an account digitally, digital pension consulting as well as further unique services, such financial consulting over Zoom, among others. These have come in addition to innovative  developments such as the digital consultation system Advise.me,  and the unique  trading system allowing independent traders to conduct advanced investment strategies – SmarTrade.

Management Comment

Ms. Smadar Barber-Tsadik, CEO of the First International Bank Group stated that:The date of publication of the financial results of the First International Bank for 2020 marks one year of the Corona crisis, a global health crisis, the impact of which on society and on the economy has been highly significant. Despite the improvements brought about by the significant immunization process going on here in Israel, uncertainty still remains high.

“The First International Bank faced the current crisis by being preparing to provide optimal service to its customers which is demonstrated by the growth that is noted in the credit portfolio and in the customer asset portfolio. Throughout the crisis, the Bank has demonstrated its stability and its solidness, due to its qualitative and diverse credit portfolio, high liquidity, adequate capital cushions, high quality customers, and diversified growth from various market sectors. The Bank continues to implement efficiency measures, and notwithstanding the above, and in consequence of the uncertainty – has increased significantly its collective provisions for credit losses, increasing its security cushions for the future.

“Throughout the crisis period, the Bank has provided customers with support and service across all areas of operation, providing credit guaranteed by the State, and allowing its customers to defer repayments of loans and mortgages. Since the beginning of the crisis, the Bank has acted for the benefit of its private and business customers, it has located and identified those who had been affected by the crisis, and provided them with solutions that would help them in overcoming the difficult period.

“Another facet of the Corona epidemic has been the accelerated use of digital banking. Over the past few years, the First International Bank has updated its technological infrastructure, allowing it to show leadership in providing digital services across all banking areas. The Bank met the crisis, which created an ever-growing need for digital banking services, with advanced digital capabilities. In the current year, these capabilities have made it possible for us to create a series of breakthrough developments in all areas of operation, some of which are unique and exclusive in the capital markets, where we have made available: investment consulting, pension consulting and self-trading by digital means, enabling our customers to operate in the markets conveniently and efficiently.”

 

CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES

Principal financial ratios

2020

2019

2018

2017

2016

percent

Execution indices

Return on equity attributed to shareholders of the Bank

8.6%

10.5%

9.3%

9.1%

7.2%

Return on average assets

0.49%

0.63%

0.54%

0.52%

0.41%

Ratio of equity capital tier 1

11.18%

10.81%

10.51%

10.38%

10.09%

Leverage ratio

5.29%

5.81%

5.76%

5.50%

5.52%

Liquidity coverage ratio(1)

150%

128%

122%

123%

123%

Ratio of total income to average assets

2.7%

3.0%

3.1%

2.9%

2.9%

Ratio of interest income, net to average assets

1.7%

1.9%

1.8%

1.8%

1.7%

Ratio of fees to average assets

0.9%

0.9%

1.0%

1.0%

1.0%

Efficiency ratio

61.8%

64.4%

68.4%

69.5%

73.5%

Credit quality indices

Ratio of provision for credit losses to credit to the public

1.38%

1.05%

1.02%

1.03%

1.08%

Ratio of impaired debts or in arrears of 90 days or more to credit to the public

0.86%

1.08%

0.83%

0.92%

1.02%

Ratio of provision for credit losses to total impaired credit to the public

221%

131%

186%

155%

147%

Ratio of net write-offs to average total credit to the public

0.10%

0.10%

0.16%

0.18%

0.09%

Ratio of expenses for credit losses to average total credit to the public

0.52%

0.16%

0.20%

0.15%

0.10%

Principal data from the statement of income

2020

2019

2018

2017

2016

NIS million

Net profit attributed to shareholders of the Bank

750

865

733

678

521

Interest Income, net

2,637

2,602

2,486

2,302

2,169

Expenses from credit losses

464

138

166

121

80

Total non-interest income

1,523

1,520

1,637

1,450

1,480

  Of which:  Fees

1,371

1,286

1,325

1,305

1,300

Total operating and other expenses

2,569

2,654

2,819

2,607

2,683

  Of which:  Salaries and related expenses

1,532

1,601

1,696

1,579

1,581

               Dismissal expenses

26

48

35

16

57

Primary net profit per share of NIS 0.05 par value (NIS)

7.48

8.62

7.31

6.76

5.19

Principal data from the balance sheet

2020

2019

2018

2017

2016

NIS million

Total assets

167,778

141,110

134,120

135,717

127,907

  of which:  Cash and deposits with banks

57,802

37,530

31,303

39,186

29,150

               Securities

13,105

10,995

12,595

10,238

15,776

               Credit to the public, net

90,970

87,899

84,292

80,378

77,328

Total liabilities

158,243

132,186

125,707

127,333

119,973

  of which:  Deposits from the public

141,677

120,052

111,697

113,511

105,817

               Deposits from banks

2,992

1,137

1,150

1,133

755

               Bonds and subordinated capital notes

4,394

3,674

4,989

5,249

5,801

Capital attributed to the shareholders of the Bank

9,141

8,568

8,093

7,756

7,321

Additional data

2020

2019

2018

2017

2016

Share price (0.01 NIS)

8,514

9,989

7,860

7,202

5,650

Dividend per share (0.01 NIS)

125

410

355

310

199

Average number of positions(2)

3,895

4,086

4,285

4,429

4,650

(1)   The ratio is computed in respect of the three months ended at the end of the reporting period.

(2)   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

2020

2019

2018

2020

2019

2018

Interest Income

2,878

3,085

3,001

2,647

2,847

2,312

Interest Expenses

241

483

515

253

491

511

Interest Income, net

2,637

2,602

2,486

2,394

2,356

1,801

Expenses from credit losses

464

138

166

443

127

117

Net Interest Income after expenses from credit losses

2,173

2,464

2,320

1,951

2,229

1,684

Non-Interest Income

Non-Interest Financing income 

148

225

231

148

233

203

Fees

1,371

1,286

1,325

1,234

1,144

995

Other income

4

9

81

45

54

151

Total non-Interest income

1,523

1,520

1,637

1,427

1,431

1,349

Operating and other expenses

Salaries and related expenses

1,532

1,601

1,696

1,429

1,487

1,303

Maintenance and depreciation of premises and equipment

344

353

376

316

326

282

Amortizations and impairment of intangible assets

96

92

91

94

89

86

Other expenses

597

608

656

570

583

508

Total operating and other expenses

2,569

2,654

2,819

2,409

2,485

2,179

Profit before taxes

1,127

1,330

1,138

969

1,175

854

Provision for taxes on profit

368

478

408

315

418

319

Profit after taxes

759

852

730

654

757

535

The bank’s share in profit of equity-basis investee, after taxes

29

51

37

96

108

198

Net profit:

Before attribution to non-controlling interests

788

903

767

750

865

733

Attributed to non-controlling interests

-38

-38

-34

Attributed to shareholders of the Bank

750

865

733

750

865

733

Consolidated and The Bank

Note

2020

2019

2018

Primary profit per share attributed to the shareholders of the Bank

9

NIS

Net profit per share of NIS 0.05 par value

7.48

8.62

7.31

 

 

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31

(NIS million)

Consolidated

2020

2019

2018

Net profit before attribution to non-controlling interests

788

903

767

Net profit attributed to non-controlling interests

(38)

(38)

(34)

Net profit attributed to the shareholders of the Bank

750

865

733

Other comprehensive income (loss) before taxes:

Adjustments of available for sale bonds (2018 – securities) to fair value, net

(4)

101

(102)

Adjustments of liabilities in respect of employee benefits(1)

(74)

(74)

37

Other comprehensive income (loss) before taxes

(78)

27

(65)

Related tax effect

26

(9)

22

Other comprehensive income (loss) before attribution to non-controlling interests, after taxes

(52)

18

(43)

Less other comprehensive loss attributed to non-controlling interests

(2)

(4)

Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes

(52)

20

(39)

Comprehensive income before attribution to non-controlling interests

736

921

724

Comprehensive income attributed to non-controlling interests

(38)

(36)

(30)

Comprehensive income attributed to the shareholders of the Bank

698

885

694

(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.

 

BALANCE SHEET AS AT DECEMBER 31

(NIS million)

Consolidated

The Bank

2020

2019

2020

2019

Assets

Cash and deposits with banks

57,802

37,530

56,757

36,528

Securities

13,105

10,995

12,480

10,736

Securities which were borrowed

11

9

11

9

Credit to the public

92,247

88,829

87,009

83,713

Provision for Credit losses

(1,277)

(930)

(1,204)

(871)

Credit to the public, net

90,970

87,899

85,805

82,842

Credit to the government

656

1,039

35

415

Investment in equity-basis investees

636

605

1,198

1,278

Premises and equipment

965

996

936

964

Intangible assets

272

248

264

238

Assets in respect of derivative instruments

1,897

1,091

1,904

1,096

Other assets(2)

1,464

698

1,389

667

Total assets

167,778

141,110

160,779

134,773

Liabilities and Shareholders’ Equity

Deposits from the public

141,677

120,052

135,527

114,836

Deposits from banks

2,992

1,137

5,511

2,640

Deposits from the Government

459

353

459

353

Bonds and subordinated capital notes

4,394

3,674

2,086

2,055

Liabilities in respect of derivative instruments

2,314

1,247

2,314

1,247

Other liabilities(1)(3)

6,407

5,723

5,741

5,074

Total liabilities

158,243

132,186

151,638

126,205

Capital attributed to the shareholders of the Bank

9,141

8,568

9,141

8,568

Non-controlling interests

394

356

Total equity

9,535

8,924

9,141

8,568

Total liabilities and shareholders’ equity

167,778

141,110

160,779

134,773

(1)   Of which: provisions for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 86 million and NIS 57 million (consolidated) and NIS 83 million and NIS 55 million (the Bank) as of December 31, 2020 and 2019, respectively.

(2)   Of which: other assets measured at fair value in the amount of NIS 247 million consolidated and the Bank (31.12.19 – NIS 42 million consolidated and the Bank).

(3)   Of which: other liabilities measured at fair value in the amount of NIS 258 million consolidated and the Bank (31.12.19 – NIS 47 million consolidated and the Bank).

 

STATEMENT OF CHANGES IN EQUITY

(NIS million)

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 January 1, 2018

927

(120)

6,949

7,756

290

8,046

Changes during 2018

Net profit for the year

733

733

34

767

Dividend

(355)

(355)

(355)

Other comprehensive loss, after tax effect

(39)

(39)

(4)

(43)

Temporary equity – non-controlling interest

(2)

(2)

(2)

Balance as at December 31, 2018

927

(159)

7,325

8,093

320

8,413

Cumulative effect of the initial implementation of US accepted accounting principals(3)

8

(8)

Adjusted balance as at January 1, 2019 after the initial implementation

927

(151)

7,317

8,093

320

8,413

Changes during 2019

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

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

(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

 

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SOURCE First International Bank of Israel

First International Bank of Israel Presents Fourth Quarter and Full Year 2020 Results WeeklyReviewer

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First International Bank of Israel Presents Fourth Quarter and Full Year 2020 Results WeeklyReviewer
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