First International Bank of Israel Reports Second Quarter 2022 Results

Published: Aug. 16, 2022 at 4:23 AM CDT

TEL AVIV, Israel, Aug. 16, 2022 /PRNewswire/ -- First International Bank of Israel (TASE: FIBI) one of Israel's major banking groups, today announced its results for the second quarter and first half of 2022, ended June 30, 2022.

Second Quarter Financial Highlights:                                                                           

  • Net income of NIS 342 million            
  • Return on Equity – 13.8%
  • BoD approved dividend distribution of 50% of net income
  • YoY growth of 24% in financing income from ongoing operations
  • Cost/Income ratio continues to improve reaching 54.8%

Management Comment

Ms. Smadar Barber-Tsadik, CEO of the First International Bank Group, stated: "The profitability of the First International Bank in the second quarter of 2022 reflects growth that comes from increase in the ongoing operations of the Bank, in a variety of areas, with an emphasis on customer wealth management and credit growth, while maintaining the stability of the Bank and an adequate risk profile. This, together with the continuation of efficiency measures, which allows consistent and gradual improvement in the efficiency ratio. The first International Bank provides optimal service to customers by means of both, its wide branch network, which is twice as large as the Bank's proportionate share in the banking system, and by means of the Bank's advanced and innovative digital capabilities".

Growth

The growth trend is evident in all  core areas of activities of the Bank:

Interest income  grew in the second quarter of the year by 21% year over year, financing income from ongoing operations grew in the second quarter of the year by 24%, year over year. Commission income increased by 6% year over year, due to growth of the Bank activities.

Credit to the public grew by 18.3% in the past twelve months (as compared with the corresponding period last year)  and by 11.4% since the beginning of the current year, amounting to NIS 113,932 million. Growth in credit is seen in all fields of operation: the large business segment grew in the past twelve months by 39%, the middle market business segment grew by 33.4%, the small business segment by 13.8%, credit to  households grew by 6.6%, and housing related loans grew by 15%. Credit to the public grew in the second quarter of the year by 6.1%.

Deposits by the public grew by 6.8% in the second quarter of the year compared with the first quarter, amounting to NIS 164,539 million. Since the beginning of the year, deposits by the public grew by 7.2%.

Profitability

Net earning of the First International Bank Group in the second quarter of 2022 amounted to NIS 342 million, as compared to earnings of NIS 322 million in the first quarter of the year, and earnings of NIS 404 million in the corresponding quarter last year, in which the Bank recorded exceptional credit loss income, on background of the exit from the Corona crisis. Return on equity reached 13.8%. In the first half of the year, net earnings amounted to NIS 664 million, as compared to NIS 708 million in the corresponding first half of last year, with return on equity reaching 13.3%.

Credit loss expenses amounted in the second quarter of the year to NIS 31 million, as compared to income of NIS 128 million in the corresponding quarter last year, representing growth of NIS 159 million. This growth stems ,mostly, from exceptional income that was recorded last year in respect of credit losses in the amount of NIS 114 million, representing the decline in the collective credit loss allowance, explained by improvement in the economic indicators upon exit from the Corona crisis. An increase in the collective allowance was recorded in the second quarter of the year following the growth in volume of performing credit.

The volume of problematic credit declined by approximately 21%, as compared to the corresponding period last year, and by 15%  as compared to the end of 2021.

Efficiency

Cost/income ratio continues to improve reaching 54.8% in the second quarter of the year, as compared with 57.5% in the corresponding period last year. The Bank continues to implement efficiency measures, which include, inter alia, improvement and automation of work procedures, innovation in digital and the advanced use of data. All these allow consistent and gradual improvement in the cost/income ratio.

Operating and other expenses amounted in the second quarter of the year to NIS 662 million, a reduction of 3.2% as compared to the first quarter of 2022, and a rise of 1.5% as compared to the second quarter of last year. Maintenance and depreciation of building and equipment expenses decreased by 4.7% in the second quarter of the year in relation to the corresponding period last year, following efficiency measures employed with respect to the real estate assets of the Group.

Financial stability

Equity attributed to the shareholders of the Bank reached an amount of NIS 9,973 millionThe Tier I equity capital ratio reached 10.15%, which is higher by 0.9% than the required regulatory ratio.

In accordance with the profit distribution policy adopted by the Board of Directors of the Bank, the Bank distributes a dividend at the rate of up to 50% of the annual net earnings. The Board of Directors of the Bank, approved today a dividend distribution of NIS 170 million, representing 50% of net earnings for the second quarter of 2022, this in addition to dividends of NIS 540 million distributed so far in the current year. The annual dividend yield as of July 31, 2022, amounted to 8.6%, the highest dividend yield in the banking system.

CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES








Principal financial ratios


For the six months
ended June 30,


For the year
ended
December 31,



2022


2021


2021







percent

Execution indices







Return on equity attributed to shareholders of the Bank(1)(3)

13.30 %

*15.1%

14.70 %

Return on average assets(1)

0.73 %

*0.83%

0.82 %

Ratio of equity capital tier 1

10.15 %

*11.70%

11.46 %

Leverage ratio

5.02 %

*5.51%

5.34 %

Liquidity coverage ratio

125 %

137 %

128 %

Net stable funding ratio (2)

134 %


**139%

Ratio of total income to average assets(1)

2.60 %

2.60 %

2.60 %

Ratio of interest income, net to average assets (1)

1.80 %

1.60 %

1.60 %

Ratio of fees to average assets (1)

0.80 %

0.80 %

0.80 %

Efficiency ratio

56.60 %

*58.2%

58.30 %





Credit quality indices




Ratio of provision for credit losses to credit to the public

0.98 %

1.19 %

1.05 %

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

0.55 %

***0.71%

***0.62%

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

185 %

***239%

***244%

Ratio of net write-offs to average total credit to the public (1)

0.04 %

-

(0.01 %)

Ratio of expenses (income) for credit losses to average total credit to the public (1)

0.06 %

(0.30 %)

(0.23 %)















Principal data from the statement of income


For the six months



ended June 30,





2022


2021







NIS million



Net profit attributed to shareholders of the Bank


664


*708   



Interest Income, net

1,603

1,380



Expenses (income) from credit losses

31

(137)



Total non-Interest income

775

*866   



Of which:  Fees

755

711



Total operating and other expenses

1,346

1,308



Of which:  Salaries and related expenses

815

800



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

6.62

*7.06   

















Principal data from the balance sheet


30.6.22


30.6.21


31.12.21







NIS million

Total assets


192,026


*173,075   


180,470

of which: Cash and deposits with banks

56,305

56,673

57,370

                Securities

15,349

*16,291   

15,091

                Credit to the public, net

112,811

95,191

101,164

Total liabilities

181,606

*162,774   

170,033

of which: Deposits from the public

164,539

146,276

153,447

               Deposits from banks 

5,429

5,035

5,144

               Bonds and subordinated capital notes

4,187

2,833

3,356

Capital attributed to the shareholders of the Bank

9,973

*9,880   

10,003















Additional data


30.6.22


30.6.21


31.12.21

Share price (0.01 NIS)


13,010


10,440


12,950

Dividend per share (0.01 NIS)

538

-

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 six months ended June 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 June 30


For the six months
ended June 30


For the year Ended
December 31



2022


2021


2022


2021


2021


(unaudited)

(unaudited)

(unaudited)

(unaudited)


(audited)

Interest Income


1,104


856


1,975


1,585

3,150

Interest Expenses

245

146

372

205

356

Interest Income, net

859

710

1,603

1,380

2,794

Expenses (income) from credit losses

31

(128)

31

(137)

(216)

Net Interest Income after expenses from credit losses

828

838

1,572

1,517

3,010

Non- Interest Income






Non-Interest Financing income (expenses)

(22)

*75

12

*151

303

Fees

371

350

755

711

1,444

Other income

-

-

8

4

9

Total non- Interest income

349

425

775

866

1,756

Operating and other expenses






Salaries and related expenses

401

402

815

800

1,601

Maintenance and depreciation of premises and equipment

82

86

163

171

340

Amortizations and impairment of intangible assets

28

25

55

51

105

Other expenses

151

139

313

286

606

Total operating and other expenses

662

652

1,346

1,308

2,652

Profit before taxes

515

611

1,001

1,075

2,114

Provision for taxes on profit

179

*216

348

*377

728

Profit after taxes

336

395

653

698

1,386

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

20

23

37

36

69

Net profit:






Before attribution to non‑controlling interests

356

418

690

734

1,455

Attributed to non‑controlling interests

(14)

(14)

(26)

(26)

(50)

Attributed to shareholders of the Bank

342

404

664

708

1,405









NIS

Primary profit per share attributed to the shareholders
of the Bank











Net profit per share of NIS 0.05 par value

3.41

4.03

6.62

7.06

14.00

*          Immaterial adjustment of comparative data.

STATEMENT OF COMPREHENSIVE INCOME

(NIS million)














For the three months
ended June 30


For the six months
ended June 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


356


*418


690


*734


1,455

Net profit attributed to non‑controlling interests

(14)

(14)

(26)

(26)

(50)

Net profit attributed to the shareholders of the Bank

342

404

664

708

1,405

Other comprehensive income (loss) before taxes:






Adjustments of available for sale bonds to fair value, net

(161)

(7)

(377)

4

27

Adjustments of liabilities in respect of employee benefits(1)

65

(20)

196

46

(24)

Other comprehensive income (loss) before taxes

(96)

(27)

(181)

50

3

Related tax effect

32

8

62

(18)

(1)

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

(64)

(19)

(119)

32

2

Less other comprehensive income (loss) attributed to non‑controlling interests

(4)

-

(9)

1

-

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

(60)

(19)

(110)

31

2

Comprehensive income before attribution to non‑controlling interests

292

399

571

766

1,457

Comprehensive income attributed to non‑controlling interests

(10)

(14)

(17)

(27)

(50)

Comprehensive income attributed to the shareholders of the Bank

282

385

554

739

1,407

*          Immaterial adjustment of comparative data.

(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)












June 30,


December 31,



2022


2021


2021


(unaudited)

(unaudited)

(audited)

Assets




Cash and deposits with banks

56,305

56,673

57,370

Securities

15,349

*16,291

15,091

Securities which were borrowed

289

32

845

Credit to the public

113,932

96,340

102,240

Provision for Credit losses

(1,121)

(1,149)

(1,076)

Credit to the public, net

112,811

95,191

101,164

Credit to the government

939

101

811

Investments in investee company

669

675

713

Premises and equipment

904

945

931

Intangible assets

300

279

300

Assets in respect of derivative instruments

2,880

1,307

1,709

Other assets(2)

1,580

1,581

1,536

Total assets

192,026

173,075

180,470

Liabilities and Shareholders' Equity




Deposits from the public

164,539

146,276

153,447

Deposits from banks

5,429

5,035

5,144

Deposits from the Government

570

435

960

Bonds and subordinated capital notes

4,187

2,833

3,356

Liabilities in respect of derivative instruments

2,412

1,440

2,038

Other liabilities(1)(3)

4,469

*6,755

5,088

Total liabilities

181,606

162,774

170,033

Capital attributed to the shareholders of the Bank

9,973

*9,880

10,003

Non-controlling interests

447

421

434

Total equity

10,420

10,301

10,437

Total liabilities and shareholders' equity

192,026

173,075

180,470

*          Immaterial adjustment of comparative data.

(1)     Of which: provision for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 109 million and NIS 79 million and NIS 79 million at 30.6.22, 30.6.21 and 31.12.21, respectively.
(2)    Of which: other assets measured at fair value in the amount of NIS 283 million and NIS 353 million and NIS 333 million at 30.6.22, 30.6.21 and 31.12.21, respectively.
(3)     Of which: other liabilities measured at fair value in the amount of NIS 337 million and NIS 382 million and NIS 641 million at 30.6.22, 30.6.21 and 31.12.21, respectively.

STATEMENT OF CHANGES IN EQUITY

(NIS million)
















For the three months ended June 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 March 31, 2022

927

(231)

9,155

9,851

437

10,288

Net profit for the period

-

-

342

342

14

356

Dividend

-

-

(160)

(160)

-

(160)

Other comprehensive loss, after tax effect

-

(60)

-

(60)

(4)

(64)

Balance as at June 30, 2022

927

(291)

9,337

9,973

447

10,420
















For the three months ended June 30, 2021 (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 March 31, 2021

927

(133)

**8,701

9,495

407

9,902

Net profit for the period

-

-

**404

404

14

418

Other comprehensive loss, after tax effect

-

(19)

-

(19)

-

(19)

Balance as at June 30, 2021

927

(152)

9,105

9,880

421

10,301
















For the six months ended June 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

-

-

664

664

26

690

Dividend

-

-

(540)

(540)

-

(540)

Other comprehensive loss, after tax effect

-

(110)

-

(110)

(9)

(119)

Balance as at June 30, 2022

927

(291)

9,337

9,973

447

10,420
















For the six months ended June 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

-

-

**708

708

26

734

Other comprehensive income, after tax effect

-

31

-

31

1

32

Balance as at June 30, 2021

927

(152)

9,105

9,880

421

10,301

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 loss, 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).
**     Immaterial adjustment of comparative data.

(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: zucker.d@fibi.co.il
Tel: +972-3-519-6224

Ehud Helft
GK Investor & Public Relations
e-mail: fibi@gkir.com
Tel: +1-646-201-924

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SOURCE First International Bank of Israel

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