Financial statements December 31, 2019 1
Disclaimer • This document has been prepared by Mizrahi-Tefahot Bank Ltd (UMTB) solely for use at the company's presentation. The information contained in this document constitutes information from the bank's 2019 annual and/or quarterly reports and/ or immediate reports, as well as the periodic, quarterly and annual reports and/or immediate reports published by the bank in previous years. • Accordingly, the information contained in this document is only partial, is not exhaustive and does not include the full details regarding the bank and its operations or regarding the risk factors involved in its activity and certainly does not replace the information included in the periodic, quarterly or immediate reports published by the bank. In order to receive the full picture regarding the bank's 2019 annual and/or quarterly reports, the aforesaid reports should be perused fully, as published to the public. • None of the company, or any of their employees or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. • The bank's results in practice may be significantly different from those included in the forecasting information, as a result of a large number of factors, including, inter alia , changes in the domestic and global equity markets, macro-economic changes, geo-political changes, legislation and regulation changes, and other changes that are not under the bank's control, which may lead to the estimations not realizing and/or to changes in the business plans. • The forecasting information may change subject to risks and uncertainty, due to being based on the management's estimations regarding future events, which include, inter alia : global and local economic development forecasts, particularly regarding the economic situation in the market, including the effect of macro-economic and geo-political conditions; expectations for changes and developments in the currency and equity markets; forecasts related to other various factors affecting exposure to financial risks; forecasts with respect to changes to borrowers' financial strength, public preferences, changes in legislation and the provisions of regulators, competitors' behavior, the status of the bank's perception, technological developments and human resources developments. • This document does not constitute an offer to sell, or a solicitation of an offer to buy, or a recommendation of any kind regarding any security or any interest in security. 2
It ’ s all about (long term) growth ילוי2019 3
Continuous loan growth while focusing on business segments (NIS mil) 204,708 194,381 181,118 171,341 159,204 2015 2016 2017 2018 2019 4
Credit growth in small and micro businesses (NIS mil) 20,857 18,977 16,717 15,122 13,909 2015 2016 2017 2018 2019 5
Credit growth in medium businesses (NIS mil) 7,063 6,585 5,779 4,785 4,786 2015 2016 2017 2018 2019 6
Leading the mortgage market – continuous growth of balance and revenues Total balance (average)(NIS bil) Total interest revenue (NIS mil) 129 119 384 115 109 348 96 307 249 216 7 * Operating segments in conformity with management approach. Note 12 to quarterly reports, note 29 to the annual report
Continuous deposit growth (NIS mil) 210,984 199,492 183,573 178,252 162,380 2015 2016 2017 2018 2019 8
Continuous growth of core * deposits (NIS mil) 136,575 126,892 113,536 105,617 95,524 2015 2016 2017 2018 2019 9 * Households/small businesses/medium businesses
The result is continuous growth in income (NIS mil) 7,306 6,889 6,000 5,640 5,392 2015 2016 2017 2018 2019 10
Financing revenues from current operations continue to grow every quarter (NIS mil) 5,466 4,939 4,333 1,388 3,5103,876 1,324 1,124 1,372 1,018 909 1,253 1,095 990 904 1,357 1,221 1,067 946 851 1,349 1,141 1,047 846 922 2015 2016 2017 2018 2019 ןועבר1 ןועבר2 ןועבר3 ןועבר4 Q1 Q2 Q3 Q4 11
Income growth combined with controlled expenses result in improving efficiency ratio 63.6% 60.2% 59.8% 58.5% * 57.2% 54.6% 2015 2016 2017 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 12 profitability from current operations, and the tax expenses derived from these
Continuous growth in net profit (NIS mil) 1,842 11.8% 1,647 * 1,347 1,266 1,134 1,206 2015 2016 2017 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 13 profitability from current operations, and the tax expenses derived from these
Return on equity increasing while broadening the equity base האושת ROE* (%) Equity (NIS mil) 14% * 11.9% 11.6% 12% 10.2% 10.2% 10.0% 16,034 14,681 10% 13,685 12,714 11,847 8% 8.5% 6% 4% 2% 0% 2015 2016 2017 2018 2019 * For 2018 Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the 14 level of profitability from current operations, and the tax expenses derived from these
Achieving the strategic plan targets two years in advance 15 ילוי2019
Achieving ROE target ROE 2021 target according to the strategic plan 11.9% 11.6%* 8.5% 11.5% 2021 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 16 profitability from current operations, and the tax expenses derived from these
Achieving cost/income ratio target Cost/income ratio 2021 target according to the strategic plan 63.6% 57.2%* 54.6% 55% 2021 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 17 profitability from current operations, and the tax expenses derived from these
Growing while taking market share Credit to the public Deposits from the public in Israel in Israel 2021 2021 strategic strategic plan target plan target 17.6% 17.0% 20.1% 20.1% 20.0% 16.4% 19.7% 16.1% 16.2% 18.8% 20.0% 17.5% 2015 2016 2017 2018 1-9/19 2021 2015 2016 2017 2018 1-9/19 2021 * Out of the five major banks and credit cards companies 18
Income and expenses Actual gap between income and expenses for 2017-2019 was 2.5% compared to 2% forecasted in the strategic plan 2015 2016 2017 2018 2019 1 תוסנכה-תיגטרטסא תינכת תואצוה-תיגטרטסא תינכתלעופב תוסנכהלעופב תואצוה Income Expenses strategic plan Expenses Income strategic plan actual actual 19
It’s time for a new strategic plan! Achieving the strategic plan targets ahead of time led the Bank’s Board of Directors to instruct management to present a new strategic plan for the years 2021-2025, during Q3/2020 . 20
Together with the merger of Union bank • The antitrust court has approved the Union Bank transaction under several conditions • The agreement with Union Bank controlling share holders was extended to May 2020 • The merger would be one of the main pillars of the new strategic plan • The transaction would significantly increase the competitive position of the merged entity, as well as the competition level in the banking system 21
The new plan together with the merger of Union Bank Strategic plan 2021-2025 will take the Bank to the next level 22
Continue to distribute dividend of 40% of net profit * (NIS mil) 737 700 Q4/19 176 600 404 500 400 Q1-Q3/19 300 561 190 200 137 120 122 75 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 * For the relevant period 23
Financial Statements 24 ילוי2019
Net profit (NIS mil) 1,842 1,647 * 1,347 1,206 2017 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 25 profitability from current operations, and the tax expenses derived from these
Net profit - ROE 11.9% 11.6% * 8.5% 2018 2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 26 profitability from current operations, and the tax expenses derived from these
Net profit - ROE 15.8% 14.1% 13.4% 11.3% 11.5% 11.1% 10.7% 10.3% 6.1% 5.7% Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019 Q3/2019 Q4/2019 *Excluding the provisions for the US Department of Justice's investigation, and taking into account provisions for bonuses in line with the level of 27 profitability from current operations, and the tax expenses derived from these
Equity (NIS mil) 16,033 14,681 2018 2019 28
Condensed P&L report (NIS mil) % of change 2019 2018 5,340 4,922 8.5 Interest revenue, net 1,966 1,967 ) 0.1 ( Non interest revenues 7,306 6,889 6.1 Total Expenses with respect to 364 310 17.4 credit losses 3,988 4,384 ) 9.0 ( Operating and other expenses 1,842 1,206 52.7 Net profit 29
Total revenues (NIS mil) 7,306 6,889 6,000 2017 2018 2019 30
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