Mizrahi Tefahot Bank Ltd · TASE:MZTF

Mizrahi Tefahot Bank — Q3 2017 Earnings Presentation

35 slides from Mizrahi Tefahot Bank's earnings presentation, November 2017

  1. Slide 1: Financial Statements September 2017

    Financial Statements September 2017 Financial Statements 31 December 2008 1

  2. Slide 2: Disclaimer

    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 2017 quarterly reports and/ or immediate reports, as well as the periodic, quarterly and ann

  3. Slide 3: Facing new challenges and opportunities

    Facing new challenges and opportunities: - Possible acquisition and merger of Union Bank into Mizrahi Tefahot - A new collective agreement 2016 - 2021 3

  4. Slide 4: Mizrahi Tefahot Bank's acquisition of Union Bank would be credit positive

    “Mizrahi Tefahot Bank’s acquisition of Union Bank would be credit positive”* “Union Bank is significantly weaker than Mizrahi as a brand and in terms of profitability and efficiency. The bank was loss making in 2016 and had a cost-to-income ratio (adjusted for one-offs) of around 85% during 2016, mu

  5. Slide 5: The acquisition received the support of the supervisor of banks

    The acquisition received the support of the supervisor of banks “Israel bank regulator signals support for Mizrahi – Union deal - Merger would boost competition in Israel’s banking sector - Mizrahi hopes to take on Israel’s leaders in corporate landing”* “We are for a merger between Mizrahi and Unio

  6. Slide 6: MOU regarding a new collective agreement

    MOU regarding a new collective agreement • Synchronizing the agreement with the strategic plan – including industrial peace until end of 2021 • Full support for M&A’s of banks in Israel • For the first time in the Israeli banking system – part of the remuneration of all employees is linked to ROE go

  7. Slide 7: It is all about GROWTH

    oo MIZRAHI TEFAHOT “It is all about GROWTH”

  8. Slide 8: Continuous loan growth

    Continuous loan growth Credit to the public 178,621 NIS mil 171,341 159,204 147,569 138,565 128,651 2012 2013 2014 2015 2016 3Q2017 3Q2017 Average annual growth rate 7.2% 8

  9. Slide 9: Continuous loan growth (quarterly)

    Continuous loan growth Credit to the public 178,621 NIS mil 177,133 173,068 171,341 168,620 165,515 162,073 159,204 157,996 152,317 150,694 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 9

  10. Slide 10: Credit growth in most segments

    Credit growth in most segments Double digit growth in small businesses and medium businesses in accordance with the strategic plane Loans to the public (NIS mil) 30.9.2017 30.9.2016 of change % Housing loans 118,685 112,273 5.7% Households and 19,511 18,241 7.0% Private banking Small and micro 16,11

  11. Slide 11: Continuous deposit growth

    Continuous deposit growth Deposits from the public NIS mil 184,221 178,252 162,380 152,379 141,244 128,081 2012 2013 2014 2015 2016 3Q2017 3Q2017 Average annual growth rate 8 % 11

  12. Slide 12: Continuous deposit growth (quarterly)

    Continuous deposit growth Deposits from the public NIS mil 184,221 180,680 180,722 178,252 173,748 169,621 165,001 162,380 158,107 153,736 153,002 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 12

  13. Slide 13: Financing revenues from current operations continue to grow

    Financing revenues from current operations continue to grow (NIS m) 1,105 1,071 1,047 1,018 990 946 922 909 898 854 849 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 13

  14. Slide 14: Financing revenues from current operations continue to grow

    Financing revenues from current operations continue to grow (NIS m) Financing revenues from Financing revenues from current operations current operations 3,223 1,105 11.6% 12.8% 2,858 990 3Q2016 3Q2017 1-9/2016 1-9/2017 14

  15. Slide 15: Growth in financing revenues in all main business segments

    Growth in financing revenues in all main business segments Double digit growth in financing revenues in most of the business segments Financing revenues (NIS m) 1-9/2017 1-9/2016 % of change Housing loans 956 811 17.9% Households 844 746 13.1% Private banking 43 37 16.2% Small and micro 654 594 10.1

  16. Slide 16: And taking market share in relevant segments

    “And taking market share in relevant segments” 16

  17. Slide 17: Market share in Israel in business credit and deposit

    Market share in Israel* in business credit and deposit – growth** and targets*** Credit to medium businesses Deposits from medium businesses Credit to small and micro businesses Deposits from small and micro businesses * According to supervisory operating segments, % out of 5 major banking groups **

  18. Slide 18: Mortgages – balance and revenues

    Mortgages –balance and revenues* 284 )₪ ‫יתרה ממוצעת (במיליארדי‬ 262 275 249 244 114 235 111 112 215 109 108 105 102 100 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 )₪ Total balance ‫במיליארדי‬ ( ‫יתרה ממוצעת‬ Total interest revenues, net (average)(NIS, bil) (NIS, mil) * Operating segments in conformity

  19. Slide 19: Net profit analysis (NIS mil)

    Net profit analysis (NIS mil) The effect of negative CPI and collective agreement 1,001 104 373 40 104 982 261 1-9/2016 1-9/2017 3Q2016 3Q2017 Reported Reported Collective net Collective Negative ‫נקי‬ net‫רווח‬ profit ‫השכר‬ ‫הסכם‬effect agreement ‫השפעת‬ ‫נקי‬ ‫רווח‬ profit ‫השכר‬ ‫הסכם‬effect agr

  20. Slide 20: ROE analysis

    ROE analysis The effect of negative CPI and collective agreement 11% 12.4% 1.1% 1.3% 3.3% 10.1% 8.0% 1-9/2016 1-9/2017 3Q2016 3Q2017 Reported Collective Reported Collective Negative ‫להון‬ ROE‫תשואה‬ ‫השכר‬ ‫השפעת הסכם‬ agreement effect ‫להון‬ ROE‫תשואה‬ ‫השכר‬ ‫השפעת הסכם‬ agreement effect ‫שלילי‬

  21. Slide 21: Efficiency ratio analysis

    Efficiency ratio analysis The effect of negative CPI and collective agreement 67.2% 60.7% 2.4% 57.8% 55.2% 11.0% 3.6% 1-9/2016 1-9/2017 3Q2016 3Q2017 Collective Collective Negative ‫יחס יעילות‬ ‫השכר‬ ‫השפעת הסכם‬ agreement effect ‫יחס יעילות‬ ‫השכר‬ ‫השפעת הסכם‬ agreement effect ‫שלילי‬ CPI ‫מדד‬ ‫

  22. Slide 22: Increasing equity base

    Increasing equity base Core tier 1 as of Q3/2017 – 10.16% 13,399 12,714 11,847 10,797 9,681 8,730 7,601 2011 2012 2013 2014 2015 2016 3Q2017 3Q2017 Average annual growth rate 10.4% 22

  23. Slide 23: Double digit ROE despite dramatic increase in equity and extremely low interest rate

    Double digit ROE despite dramatic increase in equity and extremely low interest rate Equity ROE (NIS mil) 13,399 16% 12,714 13,000 14% 13.1% 11,847 11.8% 12,000 12% 10.6% 10.1% 10% 2% 10.0% 10.2% 11,000 8% 9,681 10,797 10,000 6% 8,730 4% 1% 9,000 2% 0.25% 0.1% 0.1% 8,000 0.1% 0% 7,000 2012 2013 2014

  24. Slide 24: Dividend distribution – dividend payout of 30% of net profit

    Dividend distribution –dividend payout of 30% of net profit Dividend distribution for the relevant period (NIS mil) 295 190 120 122 75 2010 2011 2012 2013 2014 2015 2016 1-9/2017 24

  25. Slide 25: Financial results

    oo MIZRAHI TEFAHOT Financial results 25

  26. Slide 26: Net profit (NIS mil)

    Net profit (NIS mil) 400 373 340 321 288 265 261 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 26

  27. Slide 27: Net profit (NIS mil)

    Net profit (NIS mil) 1,001 982 1-9/2016 1-9/2017 27

  28. Slide 28: Return on equity

    Return on equity 11.0 10.1 1-9/2016 1-9/2017 28

  29. Slide 29: Equity (NIS bil)

    Equity (NIS bil) 13.4 12.8 30.9.2016 30.9.2017 29

  30. Slide 30: Loans to the public (NIS bil)

    Loans to the public (NIS bil) 178.6 171.3 159.2 147.6 138.6 31.12.2013 31.12.2014 31.12.2015 31.12.2016 30.9.2017 30

  31. Slide 31: Deposits from the public (NIS bil)

    Deposits from the public (NIS bil) 184.2 178.2 162.4 152.4 141.2 31.12.2013 31.12.2014 31.12.2015 31.12.2016 30.9.2017 31

  32. Slide 32: Financing Revenues (NIS mil)

    Financing Revenues (NIS mil) Rate of 1-9/2017 1-9/2016 change Interest revenues, net 3,211 2,830 Non-interest financing revenues 81 176 Total financing revenues 3,292 3,006 9.5 Less: Linkage differentials with respect to CPI position 22 (19) Revenues from collection of interest on troubled debt 33 3

  33. Slide 33: Provisions / loans to the public

    Provisions / loans to the public 0.19% 0.14% 0.14% 0.12% 0.09% 0.09% 0.01% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 33

  34. Slide 34: Cost / income ratio

    Cost / income ratio 67.2 60.8 57.8 58.5 59.0 56.3 55.2 )1( 53.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 (1) Excluding the effect the collective agreement and the negative CPI 34

  35. Slide 35: Capital adequacy

    Capital adequacy 13.52% 13.80% 13.48% Total Ratio 9.85% 10.10% 10.16% Tier I 30.9.2016 31.12.2016 30.9.2017 35

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