First International Bank of Israel Presents Fourth Quarter and Full Year 2021 Results

Rhea-AI Summary

First International Bank of Israel reported a net profit of NIS 1,405 million for 2021, an impressive 87.3% increase from 2020, with a return on equity of 14.7%. The fourth quarter alone saw a net profit of NIS 333 million, up 58.6% year-over-year. Credit to the public grew by 10.8%, reaching NIS 102,240 million, and efficiency improved with a ratio of 58.3%. The Tier I capital ratio was robust at 11.46%. A dividend of NIS 165 million was approved, marking a 6.07% annual return. The bank also advanced in digital banking innovations, enhancing customer satisfaction.

Positive

• Net profit increased by 87.3% to NIS 1,405 million in 2021.
• Return on equity rose to 14.7%, up from 8.6% in 2020.
• Credit to the public grew by 10.8% to NIS 102,240 million.
• Efficiency ratio improved to 58.3% from 61.8% in 2020.
• Approved dividend of NIS 165 million, adding to NIS 215 million in January 2022.

Negative

• Operating and other expenses increased by 3.2% in 2021, primarily due to salary adjustments.

TEL AVIV, Israel, March 7, 2022 /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 2021.

Financial Highlights

• Net profit of the First International Bank in 2021 was NIS 1,405 million, an increase of 87.3% compared to 2020, and return on equity of 14.7%;

• Net profit of NIS 333 million in the fourth quarter of 2021, an increase of 58.6% year over year and return on equity: 14%;

• Growth in credit to the public of 10.8% in 2021 and 5.4% in the fourth quarter;

• The Bank continued to increase efficiencies and the efficiency ratio improved in 2021 to 58.3%;

• Ratio of Tier I equity capital to risk assets of 11.46%;

Profitability

Record profit for the First International Bank: 2021 net profit for the Group was NIS 1,405 million, as compared to NIS 750 million in 2020, representing growth of 87.3%. Return on equity was 14.7%, as compared to return on equity of 8.6% in 2020.

In the fourth quarter, net profit amounted to NIS 333 million, as compared to NIS 210 million in the corresponding quarter of 2020, representing growth of 58.6% and return on equity of 14.0%.

Growth and Efficiency

The First International Bank continued its consistent growth trend, which is reflected across all areas of operations.

Bank revenues increased by 9.4% in 2021 year over year and amounted to NIS 4,550 million. Net financing income increased by 11.2% year over year, and amounted to NIS 3,097 million. Commission income showed growth of 5.3%, and amounted to NIS 1,444 million, commission income from capital market operations grew at a rate of 7.3%.

Credit to the public increased by 10.8% over the past year, and reached NIS 102,240 million. The growth in credit was characterized by the diverse distribution of credit and the maintenance of the Group's balanced risk management policy. The residential loan portfolio grew by 13.8%, the small business segment grew by 11.5%, the middle market segment by 13.3%, the large businesses segment by 11.0%, and credit to the household segment grew by 6.0%.

In the fourth quarter, credit to the public grew by 5.4% compared with the fourth quarter of last year.

Growth was also reflected in the capital market and investment consulting fields: The customer asset portfolio (deposits and securities) increased in the past year by 13.5%, and amounted to NIS 601 billion.

The First International Bank continued to improve its efficiencies – the efficiency ratio amounted to 58.3% in 2021, an improvement when compared with 61.8% in 2020.

Operating and other expenses increased by 3.2% in 2021, as compared to the corresponding period last year. The growth was due to an increase in salary expenses due to the adjustment of the variable compensation component related to the profitability of the Bank. Likewise, salary expenses for the year included settlement expenses due to the early retirement plan that had mostly been implemented in the fourth quarter of 2021. The efficiency measures applied by the Bank and the early retirement plan implemented towards the end of 2021, led to a reduction of 4.6% in the average number of positions at the Bank versus that at year-end 2020.

Financial Stability

The growth trend related to the capital attributed to the shareholders of the Bank continued, growing by 9.4% in 2021 (a growth of NIS 862 million), and as of December 31, 2021, amounted to NIS 10,003 million. The Tier I equity capital ratio reached 11.46% as compared to the required regulatory ratio of 8.25%, a difference of 3.2% (or 2.2% when excluding the easing of regulatory capital requirements). This is the highest difference in the Israeli banking system.

The Board of Directors of the Bank today approved a dividend distribution, amounting to NIS 165 million, comprising 50% of net earnings for the fourth quarter of 2021. This in addition to a dividend of NIS 215 million distributed in January 2022. Over the year 2021, the Bank distributed dividends, totaling NIS 545 million. The dividend annual return as at December 31, 2021, was 6.07%.

Quality of the Credit Portfolio

Income in respect of credit losses in 2021 amounted to NIS 216 million (a reversed provision of 0.23%), as compared to expenses of NIS 464 million (a provision of 0.52%) in 2020.

The income in respect of credit losses recorded in 2021 was mostly due to the reduction in the collective provision, which itself was due to improvements in macro-economic indices and indicators pointing at the risk level inherent in the credit portfolio of the Bank and from the continued reduction in the volume of debts, the repayment of which had been deferred (which comprised of 0.08% of total credit to the public).

In 2020, expenses in respect of credit losses was mostly due to the growth in the collective allowance following the continued changes in the macro-economic environment due to the Corona pandemic and the prevailing uncertainty and its impact on the economy and condition of borrowers.

Innovation and Digital

The First International Bank continues to develop innovative products and services on its mobile application and website, resulting in high usage rates and high customer satisfaction.

2021 was the year in which the First International Bank entered the world of digital wallets: at the beginning of the year, the digital wallet FibiPay was developed, and in addition, the Bank offered its customers Apple Pay and Google Pay services.

With the introduction of open banking and "Transfer at a click," the First International Bank was the first to introduce MultiBank, a multi-banking aggregation allowing service comparison, and increased ability to compete. In addition, the Bank introduced a variety of innovations and upgrades in its digital activity in investment fields on which the Bank is focused and is leading: the consulting system Advise.Me, pension consultation, mortgage consultation (including a digital application for applying for a mortgage and obtaining an approval in principle), as well as innovations for business customers with respect to foreign currency and guarantees.

The First International Bank continues to invest in the development of innovative digital services that bring about improved and a more efficient service to customers.   

Management Comment

Ms. Smadar Barber-Tsadik, President and CEO of the First International Bank Group stated, "The results we have presented for 2021 reflect the growth of the Bank across all its strategic focus areas: it reflects accelerated growth across both credit and customer assets. It is important to emphasize the high level of profitability of The First International Bank over time, with a low level of volatility while maintaining a high level of stability.

"These days, I note the two years of the global health crisis which has affected the whole world in both social and economic aspects. All throughout this period, the First International Bank strictly continued to provide customers with assistance and support, which has been characterized by the deferral of loan repayments, extension of credit to businesses and households, and we initiated investment consultation services during the periods of volatility and uncertainty in financial markets. Furthermore, the Bank developed diverse innovative digital tools across all areas of operation, facilitating and enabling the obtaining of service more efficient, especially in a socially-distanced reality. The high stability of the Bank together with strong management, enabled us to overcome the crisis in the best possible form, with continued growth, efficiency and innovation.

"As the first Bank to introduce a comparative system on the basis of open banking - the MultiBank system - the First International Bank will continue to compete and grow in the fields in which are a leader – the investments market, as well as in our various fields of banking activity. The Bank, as a creator of competition, will continue to develop innovative digital offerings and bring our customers competitive offerings."

CONDENSED PRINCIPAL FINANCIAL INFORMATION AND PRINCIPAL EXECUTION INDICES

Principal financial ratios		2021		2020		2019		2018		2017
										percent
Execution indices
Return on equity attributed to shareholders of the Bank		14.7%		8.6%		10.5%		9.3%		9.1%
Return on average assets		0.82%		0.49%		0.63%		0.54%		0.52%
Ratio of equity capital tier 1		11.46%		11.18%		10.81%		10.51%		10.38%
Leverage ratio		5.34%		5.29%		5.81%		5.76%		5.50%
Liquidity coverage ratio(1)		128%		150%		128%		122%		123%
Net stable funding ratio(2)		147%
Ratio of total income to average assets		2.6%		2.7%		3.0%		3.0%		2.9%
Ratio of interest income, net to average assets		1.6%		1.7%		1.9%		1.8%		1.8%
Ratio of fees to average assets		0.8%		0.9%		0.9%		1.0%		1.0%
Efficiency ratio		58.3%		61.8%		64.4%		68.4%		69.5%
Credit quality indices
Ratio of provision for credit losses to credit to the public		1.05%		1.38%		1.05%		1.02%		1.03%
Ratio of impaired debts or in arrears of 90 days or more to credit to the public		0.73%		0.86%		1.08%		0.83%		0.92%
Ratio of provision for credit losses to total impaired credit to the public		197%		221%		131%		186%		155%
Ratio of net write-offs to average total credit to the public		(0.01%)		0.10%		0.10%		0.16%		0.18%
Ratio of expenses (income) for credit losses to average total credit to the public		(0.23%)		0.52%		0.16%		0.20%		0.15%

Principal data from the statement of income		2021		2020		2019		2018		2017
										NIS million
Net profit attributed to shareholders of the Bank		1,405		750		865		733		678
Interest Income, net		2,794		2,637		2,602		2,486		2,302
Expenses (income) from credit losses		(216)		464		138		166		121
Total non-interest income		1,756		1,523		1,520		1,637		1,450
Of which:    Fees		1,444		1,371		1,286		1,325		1,305
Total operating and other expenses		2,652		2,569		2,654		2,819		2,607
Of which:    Salaries and related expenses		1,601		1,532		1,601		1,696		1,579
Dismissal expenses		36		26		48		35		16
Primary net profit per share of NIS 0.05 par value (NIS)		14.00		7.48		8.62		7.31		6.76

Principal data from the balance sheet		2021		2020		2019		2018		2017
										NIS million
Total assets		180,470		167,778		141,110		134,120		135,717
of which:   Cash and deposits with banks		57,370		57,802		37,530		31,303		39,186
Securities		15,091		13,105		10,995		12,595		10,238
Credit to the public, net		101,164		90,970		87,899		84,292		80,378
Total liabilities		170,033		158,243		132,186		125,707		127,333
of which: Deposits from the public		153,447		141,677		120,052		111,697		113,511
Deposits from banks		5,144		2,992		1,137		1,150		1,133
Bonds and subordinated capital notes		3,356		4,394		3,674		4,989		5,249
Capital attributed to the shareholders of the Bank		10,003		9,141		8,568		8,093		7,756

Additional data		2021		2020		2019		2018		2017
Share price (0.01 NIS)		12,950		8,514		9,989		7,860		7,202
Dividend per share (0.01 NIS)		543		125		410		355		310
Average number of positions (3)		3,715		3,895		4,086		4,285		4,429

(1) The ratio is computed in respect of the three months ended at the end of the reporting period.
(2) According to instructions of the Bank of Israel the Net stable funding ratio was calculated since 2021, therefor no comparative data is stated.
(3) 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
		2021		2020		2019		2021		2020		2019
Interest Income		3,150		2,878		3,085		2,907		2,647		2,847
Interest Expenses		356		241		483		358		253		491
Interest Income, net		2,794		2,637		2,602		2,549		2,394		2,356
Expenses (income) from credit losses		(216)		464		138		(213)		443		127
Net Interest Income after expenses from credit losses		3,010		2,173		2,464		2,762		1,951		2,229
Non-Interest Income
Non-Interest Financing income		303		148		225		301		148		233
Fees		1,444		1,371		1,286		1,285		1,234		1,144
Other income		9		4		9		49		45		54
Total non-Interest income		1,756		1,523		1,520		1,635		1,427		1,431
Operating and other expenses
Salaries and related expenses		1,601		1,532		1,601		1,491		1,429		1,487
Maintenance and depreciation of premises and equipment		340		344		353		313		316		326
Amortizations and impairment of intangible assets		105		96		92		103		94		89
Other expenses		606		597		608		584		570		583
Total operating and other expenses		2,652		2,569		2,654		2,491		2,409		2,485
Profit before taxes		2,114		1,127		1,330		1,906		969		1,175
Provision for taxes on profit		728		368		478		656		315		418
Profit after taxes		1,386		759		852		1,250		654		757
The bank's share in profit of equity-basis investee, after taxes		69		29		51		155		96		108
Net profit:
Before attribution to non-controlling interests		1,455		788		903		1,405		750		865
Attributed to non-controlling interests		(50)		(38)		(38)		-		-		-
Attributed to shareholders of the Bank		1,405		750		865		1,405		750		865

Consolidated and The Bank		2021		2020		2019
Primary profit per share attributed to the shareholders of the Bank		NIS
Net profit per share of NIS 0.05 par value		14.00		7.48		8.62

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31
(NIS million)

		Consolidated
		2021		2020		2019
Net profit before attribution to non-controlling interests		1,455		788		903
Net profit attributed to non-controlling interests		(50)		(38)		(38)
Net profit attributed to the shareholders of the Bank		1,405		750		865
Other comprehensive income (loss) before taxes:
Adjustments of available for sale bonds to fair value, net		27		(4)		101
Adjustments of liabilities in respect of employee benefits(1)		(24)		(74)		(74)
Other comprehensive income (loss) before taxes		3		(78)		27
Related tax effect		(1)		26		(9)
Other comprehensive income (loss) before attribution to non-controlling interests, after taxes		2		(52)		18
Less other comprehensive loss attributed to non-controlling interests		-		-		(2)
Other comprehensive income (loss) attributed to the shareholders of the Bank, after taxes		2		(52)		20
Comprehensive income before attribution to non-controlling interests		1,457		736		921
Comprehensive income attributed to non-controlling interests		(50)		(38)		(36)
Comprehensive income attributed to the shareholders of the Bank		1,407		698		885

(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
		2021		2020		2021		2020
Assets
Cash and deposits with banks		57,370		57,802		56,601		56,757
Securities		15,091		13,105		14,348		12,480
Securities which were borrowed		845		11		845		11
Credit to the public		102,240		92,247		96,599		87,009
Provision for Credit losses		(1,076)		(1,277)		(1,010)		(1,204)
Credit to the public, net		101,164		90,970		95,589		85,805
Credit to the government		811		656		48		35
Investment in equity-basis investees		713		636		1,351		1,198
Premises and equipment		931		965		906		936
Intangible assets		300		272		294		264
Assets in respect of derivative instruments		1,709		1,897		1,712		1,904
Other assets(2)		1,536		1,464		1,460		1,389
Total assets		180,470		167,778		173,154		160,779
Liabilities and Shareholders' Equity
Deposits from the public		153,447		141,677		147,012		135,527
Deposits from banks		5,144		2,992		7,578		5,511
Deposits from the Government		960		459		960		459
Bonds and subordinated capital notes		3,356		4,394		962		2,086
Liabilities in respect of derivative instruments		2,038		2,314		2,038		2,314
Other liabilities(1)(3)		5,088		6,407		4,601		5,741
Total liabilities		170,033		158,243		163,151		151,638
Capital attributed to the shareholders of the Bank		10,003		9,141		10,003		9,141
Non-controlling interests		434		394		-		-
Total equity		10,437		9,535		10,003		9,141
Total liabilities and shareholders' equity		180,470		167,778		173,154		160,779

(1) Of which: provisions for credit losses in respect of off-balance sheet credit instruments in the amount of NIS 79 million and NIS 86 million (consolidated) and NIS 76 million and NIS 83 million (the Bank) as of December 31, 2021 and 2020, respectively.
(2) Of which: other assets measured at fair value in the amount of NIS 333 million consolidated and the Bank (31.12.20 - NIS 247 million consolidated and the Bank).
(3) Of which: other liabilities measured at fair value in the amount of NIS 641 million consolidated and the Bank (31.12.20 - NIS 258 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, 2019		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
Changes during 2021
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

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

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

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SOURCE First International Bank of Israel

FAQ

What were the financial results of First International Bank for 2021?

First International Bank reported a net profit of NIS 1,405 million for 2021, representing an 87.3% increase compared to 2020.

How did First International Bank perform in Q4 2021?

In the fourth quarter of 2021, First International Bank achieved a net profit of NIS 333 million, a 58.6% increase year-over-year.

What is the Tier I capital ratio of First International Bank?

The Tier I capital ratio of First International Bank stood at 11.46%, well above the required regulatory ratio.

How much credit did First International Bank extend to the public in 2021?

The bank's credit to the public increased by 10.8% in 2021, reaching NIS 102,240 million.

What dividend did First International Bank declare for Q4 2021?

First International Bank declared a dividend of NIS 165 million for the fourth quarter of 2021.