1Q18 Financial Results Highlights of 1Q18 Solid Execution of our - PowerPoint PPT Presentation

1Q18 Financial Results

Highlights of 1Q18 Solid Execution of our Financial and Strategic Plans Net Income Financial Highlights NIS 319 m  Net Income is up 5.3% Y-o-Y (1Q17: NIS 303 m)  Credit Loss Expenses were 22.8% lower Y-o-Y  Credit to the Public is up 7.0% Y-o-Y, up 3.2% in 1Q18 ROE  First Dividend payout after 20 years, 10% of net income 8.4% (1Q17: 8.6%) Cost-Income Strategic Highlights Ratio 70.3%  Consumer operating model roll out nearly complete (1Q17: 68.8%)  New Business Banking Website and Cash Management launched  IDBNY embarked on it’s 5 Year Strategic Plan Core Tier-1 Ratio  CAL successfully launched Shufersal Club, over 300,000 new members in 1Q18 alone 9.8% (1Q17: 9.7%) Investor presentation 2

Income Statement Highlights P&L Highlights (NIS m) 1Q18 4Q17 1Q17 Vs. 4Q 17 Vs. 1Q 17 Net Interest Income 1,274 1,297 1,167 (1.8%) 9.2% Credit Loss Expenses 112 31 145 261.3% (22.8%) Non-interest, Fees and other income 813 827 913 (1.7%) (11.0%) Total Expenses 1,468 1,491 1,432 (1.5%) 2.5% Net Profit attributed to Shareholders 319 371 303 (14.0%) 5.3% Key Financial Metrics 1Q18 4Q17 1Q17 Return on Equity 8.4% 10.0% 8.6% Cost Income Ratio 70.3% 70.2% 68.8% Interest Spread 2.40% 2.46% 2.22% Investor presentation 3

Solid Balance Sheet Supports Growth 7.0% Loan Growth and 7.9% Total Equity Growth 153.6 181.1 7.0% 5.5% 148.8 175.2 3.2% 3.4% 171.6 143.5 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Key Financial Ratios Credit to the Public, net (NIS Bn) Deposits from the Public (NIS Bn) 1Q 18 4Q 17 1Q 17 Common Tier-1 9.8% 10.0% 9.7% Leverage Ratio 6.6% 6.8% 6.6% 16.4 228.8 7.9% 16.1 LCR 135.1% 126.7% 150.8% 4.4% 1.9% 221.2 3.4% 219.1 15.2 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Total Equity (NIS Bn) Total Assets (NIS Bn) Investor presentation 4

Credit Growth Continues Across all Segments Particular Strength in Corporate Credit 153.6 29.5 11.2% 28.9 27.9 7.7% 7.0% 27.5 148.8 26.5 1.8% 2.2% 25.9 143.5 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Mortgages (Bn) Consumer credit (Bn) 3.2% 35.2 11.0% 31.3 4.6% 30.8 32.7 31.8 7.8% 29.9 1.6% 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Micro & small enterprises (Bn) Corporate (Bn) Credit to the Public, net (NIS Bn) Investor presentation 5

Income from Regular Banking Activity & Fees Increasing Income From Banking and Finance Activity (NIS m) Y-o-Y 2,087 2,081 2,058 Change 696 666 703 +5.6% 1.0% 72 72 45 45 195 195 1,333 +11.4% 1,319 1.1% 1,197 1Q17 4Q17 1Q18 Income from regular financing activity * Other Fees * Excludes CPI, income from realization and adjustment to fair value of bonds, investments in shares, loans sold, adjustments to Investor presentation 6 fair value of derivative instruments.

Income from Core Banking Activities Trending Up Core Banking Activities (NIS m) 2.2% Compound quarterly growth rate 1,333 1,319 1,270 1,255 1,200 1,197 1,169 1,130 1,095 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 * Excludes CPI, income from realization and adjustment to fair value of bonds, investments in shares, loans sold, adjustments to Investor presentation 7 fair value of derivative instruments.

Group Expenses Disciplined Expense Management Remains Top Priority Total Expenses, Group (NIS m) Y-o-Y Change 1,491 (1.5%) 2.5% 1,468 1,432 395 (0.3%) 11.0% 394 355 272 (3.0%) 256 264 (5.9%) 0.6% 824 (0.7%) * 813 818 1Q17 4Q17 1Q18 Salary & Related (reported) Maintenance and dep. Other * Includes ILS 31 million reversal from tax assessment of excess provisions Investor presentation 8

Adequate Capital & Liquidity Position Supporting Future Growth Total Equity (NIS Bn) and Core Tier-1 Capital Ratio Liquidity Coverage Ratio (LCR) Target 10.0 10.0 9.8 9.8 9.5 9.4 150.8% 135.1% 16.4 16.1 126.7% 14.9 13.6 13.0 2014 2015 2016 2017 1Q18 2019 1Q17 4Q17 1Q18 Total Equity CET 1 Ratio Investor presentation 9

Credit Loss Expenses Group Provisions Remain Below 2017 Average Rate Credit Loss Expenses (NIS m) Group Provisions (NIS m) 2016: 0.34% 2017: 0.39% Long term average range 0.66% 0.58% 0.4% - 0.5% 0.51% 0.42% 0.40% 0.18% 0.08% 0.29% 224 Average Group Provision: ILS 130m 211 187 159 157 145 147 145 141 143 120 112 88 82 58 31 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Credit loss expenses Credit loss expenses / average balance of credit Investor presentation 10

Further Decline in Problematic Credit Risk Quality Indicators Trending Positively Credit Risk by Classification (NIS B) Credit Quality Indicators 1.8% 5,191 1.5% 1.4% 1.3% 1Q18 Vs. 1Q17 4,656 0.9% 4,296 - 895 (17.2%) 0.8% 1,645 1,583 1,499 - 146 (8.9%) 692 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Impaired Debt / Total Credit (gross) NPL / Total Credit (gross) 766 - 62 (9.0%) 630 89.5% 1.4% 83.2% 1.4% 1.4% 2,854 68.5% 2,307 2,167 - 687 (24.1%) 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 Impaired Substandard Special Mention Coverage Ratio Allowance for LLPs/ Total Credit (gross) * Coverage Ratio - Allowance for credit losses\ (Impaired credit + Non-impaired credit in arrears for 90 days and over) Investor presentation 11

Subsidiaries at a Glance Strong Start of the Year at Mercantile and IDBNY USD (m) 13.0% 13.3% 77 30 10.8% 62 13.8% 12.5% 7.6% 7.5% 50 7.3% 49 18 41 16 7.1% 29 1Q17 4Q17 1Q18 1Q17 4Q17 1Q18 1Q17 4Q17 * 1Q18 Net income (NIS m) ROE, % Net income (NIS m) ROE, % Net income (USD m) ROE, % * Excludes a USD 16 m impact of the US tax reform. Including this impact, Net Income was USD 2m USD and ROE was 0.9% Investor presentation 12

Clear Strategy Guides Ahead Main Focus Areas for 2018 Superior customer satisfaction Reached through meeting customers expectations and needs Growth & Efficiency Transforming traditional Developing new banking banking models  Invest in driving top line growth  Complete roll-out of CRM and  Further develop innovative  Disciplined cost management consumer operating model solutions including Paybox,  Progress towards 2021 targets  Launch pilot for small business iCount and Didi  Advance additional initiatives - 60% CIR operating model  New digital solutions - 10% ROE from pipe line  Roll out new Cash Management systems Investor presentation 13

Appendix Investor presentation 14

Improvement of Financial Performance Main P&L Metrics Actual Compared to NIS m 1Q18 4Q17 1Q17 4Q17 1Q17 1,274 1,297 1,167 ) 1.8% ( 9.2% Interest income, net 112 31 145 261.3% ) 22.8% ( Credit loss expenses 104 94 225 10.6% ) 53.8% ( Non-interest financing income 703 696 666 1.0% 5.6% Commissions 6 37 22 ) 83.8% ( ) 72.7% ( Other income 813 827 913 ) 1.7% ( ) 11.0% ( Total non-interest income 2,087 2,124 2,080 ) 1.7% ( 0.3% Total income 818 824 813 ) 0.7% ( 0.6% Salaries and related expenses 256 272 264 ) 5.9% ( ) 3.0% ( Maintenance & depreciation 394 395 355 ) 0.3% ( 11.0% Other expenses 1,468 1,491 1,432 ) 1.5% ( 2.5% Total operating and other expenses 507 602 503 ) 15.8% ( 0.8% Income before taxes 319 371 303 ) 14.0% ( 5.3% Net income attributable to shareholders Investor presentation 15

CAL Financial Performance Main P&L and Balance Sheet metrics ILS (m) 1Q18 4Q17 1Q17 4Q17 1Q17 281 279 252 0.7% 11.5% Credit card transactions 111 110 101 0.9% 9.9% Net interest income 4 2 8 100.0% ) 50.0% ( Non-interest financing income 396 391 361 1.3% 9.7% Total income 40 31 27 29.0% 48.1% Credit loss expenses 356 322 290 10.6% 22.8% Total expenses 40 69 71 ) 42.0% ( ) 43.7% ( Income before tax 29 49 50 ) 40.8% ( ) 42.0% ( Net income ILS (Bn) 14.6 13.6 12.6 7.6% 15.6% Total Credit Card debt 15.1 14.1 13.1 7.7% 15.6% Total assets 4.3 4.2 3.7 2.5% 14.5% Consumer credit 1.7 1.7 1.5 1.7% 12.1% Total equity Investor presentation 16

IDBNY Financial Performance Main P&L and Balance Sheet metrics ILS (m) 1Q18 4Q17 * 1Q17 4Q17 1Q17 60 55 49 8.5% 21.9% Net interest income ) 5 ( 3 5 ) 248.5% ( ) 198.0% ( Credit loss expenses 15 10 16 56.6% ) 7.6% ( Non-interest income 41 37 38 12.2% 9.5% Operating & other expenses 38 24 22 56.6% 70.7% Income before tax 30 18 16 68.8% 84.0% Net income USD (Bn) 9.14 9.32 9.31 ) 1.9% ( ) 1.8% ( Total assets 5.93 5.87 5.68 0.9% 4.4% Loans, net 2.67 2.50 2.76 6.8% ) 3.1% ( Securities 7.39 7.74 7.38 ) 4.6% ( 0.1% Deposits from the public 0.91 0.90 0.89 1.2% 2.6% Total equity * 4Q17 Net Income excludes a USD 16 m impact from the US tax reform. Including this impact, Net Income was USD 2m USD. Investor presentation 17