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Classified in: Business
Subject: ERN

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 
ended September 30,


For the year
ended
December 31,



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
ended September 30,




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.
**      Restated. 
***    Restated in respect of the new disclosure format on nonaccrual debts instead of impaired debts. 
(1)     Annualized. 
(2)     According to instructions of the Bank of Israel the Net stable funding ratio was calculated since 2021. Therefor no comparative data for
the nine months ended September 30, 2021 is stated.
(3)     According to instructions of the Bank of Israel, beginning in 2022, the method for the conversion of return per period into annualized
terms was changed, from exponential calculation to linear calculation. Comparative data have been restated.

 

 

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 
of the Bank











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
Ended

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,
after taxes

(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,
after taxes

(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,
of amounts recorded in the past in other comprehensive income.

 

 

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
million and NIS 79 million at 30.9.22, 30.9.21 and 31.12.21, respectively.

(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
and 31.12.21, respectively.

(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
and 31.12.21, respectively.

 

 

STATEMENT OF CHANGES IN EQUITY

(NIS million)



For the three months ended September 30, 2022 (unaudited)



Share
capital and
premium(1) 


Accumulated
other
comprehensive
loss


Retained
earnings
(2) 


Total
share-
holders'
equity


Non-
controlling
interests


Total
equity

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
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, 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
capital and
premium (1) 


Accumulated
other
comprehensive
loss


Retained
earnings
(2) 


Total
share-
holders'
equity


Non-
controlling
interests


Total
equity

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
implementation*

-

-

(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
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, 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
capital and
premium (1) 


Accumulated
other
comprehensive
income (loss)


Retained
earnings
(2) 


Total


Non-
controlling
interests


Total 
equity

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).
(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
GK Investor & Public Relations
e-mail: [email protected]
Tel: +1-646-201-924

 

 

SOURCE First International Bank of Israel


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