Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — FY2018 Earnings Presentation
33 slides from Israel Discount Bank Limited Class A's earnings presentation, March 2019
Slide 1: 2018 Review: Strategic and Financial Highlights
ISRAEL eee ~_—” 2018 REVIEW STRATEGIC AND FINANCIAL HIGHLIGHTS Investor Relations March 2019
Slide 2: presentation of its Q4-18 reports, as well as in strategic updates referred to in
© This document has been prepared by Israel Discount Bank Ltd. (the “Bank”) solely for use by the Bank in its presentation of its Q4-18 reports, as well as in strategic updates referred to in the Bank’s reports. ® The information contained herein may be partial and may include information that has n
Slide 3: Forward-looking information
o © This slideshow includes forward-looking information, as defined in the Israeli Securities Law, 5728- 1968. Such information as found on pages 6,9, 11,12 and 13 of the slideshow includes, among other things, projections, objectives, estimates and assessments of the Bank, which relate to future ev
Slide 4: Agenda
AGENDA © Opening and Strategy Overview Lilach Asher Topilsky, CEO. © Financials Ziv Biron, CFO © QA Lilach Asher Topilsky, CEO Ziv Biron, CFO Yossi Beressi, Chief Accountant
Slide 5: Another Year of Record Results
ANOTHER YEAR OF RECORD RESULTS NET INCOME p ] ROE ! COMMON COST-INCOME EQUITY TIER1 | RATIO 9.3% 10.24% 68.2%
Slide 6: Our Challenges Became Our Accomplishments
OUR CHALLENGES BECAME OUR ACCOMPLISHMENTS Allowing us to enhance our core business today and in the future 2018 Future > Robust capital position > Growth across all business lines =6 Capital > Above regulatory target (>) > Further investment in infrastructure > Increased dividend payout > Collaborat
Slide 7: Our Strategy: Disciplined Execution Continues
FINANCIAL PERFORMANCE Key indicators MAIN FOCUS AREAS OUR STRATEGY Disciplined execution continues SUBSIDIARIES Performance and strategy
Slide 8: Positive Momentum Across All Indicators
POSITIVE MOMENTUM ACROSS ALL INDICATORS NET INCOME CIR ROE CETI ee \ 78.7% ' 932 72.6 68.3: 68.2 Nism 1,505 10.24. Sao, (Bi: BB 10.00: 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 H 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Slide 9: Achieved by Rigorously Executing on Our Strategy
ACHIEVED BY RIGOROUSLY EXECUTING ON OUR STRATEGY ULTIMATE TARGET: SUPERIOR CUSTOMER SATISFACTION Reached through meeting customers expectations and needs ) Growth & Efficiency Growth across segments and group subsidiaries Disciplined cost management v Continue toward CIR and ROE targets of 60% and 1
Slide 10: Becoming More Productive & Efficient
BECOMING MORE PRODUCTIVE & EFFICIENT By focusing on both growth and cost management 10 Productivity Ratio Income per Position* In thousands ral 1,041 CAGR 8.4% Lo 964 901 2014 2015 «2016 «2017 2018 * Total income / average positions Credit Growth NISm CaeR > Bs 1648 v4og 488 y201 1272 2014 2015 2016
Slide 11: To Transform Traditional Retail Banking
41 a @ x TO TRANSFORM TRADITIONAL RETAIL BANKING The Goal Superior customer satisfaction reached through => The way “Banking the way meeting customers expectations and needs that fits you” New InApp chat with bankers and further improvements in “DID?” - our Al based BOT Meeter greeter Express bankin
Slide 12: To Transform Traditional Corporate Banking
12 a QO * TO TRANSFORM TRADITIONAL CORPORATE BANKING The Goal Superior customer satisfaction reached through => The way “Banking the way meeting customers expectations and needs that fits you” New mobile App for businesses (Roll out underway) New online banking, foreign trading website Shifting oper
Slide 13: To Adapt Ourselves to the Changing Banking Industry
TO ADAPT OURSELVES TO THE CHANGING BANKING INDUSTRY N Disruptive trends to How we collaborate traditional banking ' with disruptors npn Digital-only banks ' Develop digital native products ninpia> H web and mobile only, 1po'Ta Unbundling of services \ independent of physical branch pooaw2 Tn nH and
Slide 14: Our Efforts Are Already Being Awarded
44 OUR EFFORTS ARE ALREADY BEING AWARDED MARKETEST Our customers are the most likely to recommend their bank to their friends PBENK 76 e 74 e 74 @ 7.0 e 65 ‘Source: Annual customer oxpericneo survey, Marketest, October 2018 Satisfaction with our mobile App scored highest in the industry 96% Source:
Slide 15: Our Subsidiaries Are Focused on Execution
a ok @ OUR SUBSIDIARIES IDBBANK —— 10.5% > Improved financials (record results) > Upgraded IT and HR infrastructure ~~ ROE, % @ Net income, usp M 2016 2017 2018 15 ARE FOCUSED ON EXECUTION MERCANTILE ~~ > Continued credit 9.4% ~ 29, 7 925 growth in targeted si segments 239 > New CRM system 220 193 >
Slide 16: Group Income Almost Tripled in Four Years
16 GROUP INCOME ALMOST TRIPLED IN FOUR YEARS Discount Solo is the most significant contributor to the growth Group Net Income —— NISm @ Subsidiaries Contribution 1,505 @ Discount Bank solo 1,259 — Cost-income ratio, Discount Bank Solo 905 742 750 505 685 Six 665 __— 543 ~ 46x] 451 28% 27% 763 Tk 574
Slide 17: Agenda
47 AGENDA © Opening and Strategy overview Lilach Asher Topilsky, CEO © Financials Ziv Biron, CFO © QéA Lilach Asher Topilsky, CEO Ziv Biron, CFO Yossi Beressi, Chief Accountant
Slide 18: Balance Sheet Driving Growth and Profits
BALANCE SHEET DRIVING GROWTH AND PROFITS A strong growth platform for the future Total income 8,333 9,020 Total expenses 5,694 6148 Credit loss expenses P&L (ism) RATIOS Interest spread 18 Credit to the Public, Net NIS Bn 164.8 140g 1488 a 10.8% 2016 «2017-2018 Total Equity NIS Bn 2016 «2017 «2018 D
Slide 19: Credit Growth Across All Business Lines in Israel
Households NIS Bn, 620 561 508 10.5, 10.54] CREDIT GROWTH ACROSS ALL BUSINESS LINES IN ISRAEL 2018 focused mainly on mortgages and corporate segments Consumer credit* NISBn 163 15.0 2.0% 142 6.2% 2016 2017 2018 Micro & small enterprises is Bn sop = 386 291 2016 ©2017-2018 Medium enterprises Nis Bn 2
Slide 20: Supported by Responsible Underwriting
20 SUPPORTED BY RESPONSIBLE UNDERWRITING Credit loss expenses are within our long term range Credit Loss Expenses NISm FY 16: FYI: FY 18: 034% — | 0.39% 0.34% 0.68% ame 040, SS O5te 044, longterm gern a — Bee seg 0.4%-0.5% awe, 620, 0338 O3lx an 0.08% 187 76 145 129 a 123 af I [| 4Qis 1Q17 2Q17 3Q17
Slide 21: Resulting in Improved Credit Quality
24 RESULTING IN IMPROVED CREDIT QUALITY As our credit balances continues to grow Credit Risk by Classification NISBn 5.664 ~-17.8:~5 12.005 4656 ~ 4,097 14.2% | Be? 2016 @ impaired @ substandard @ Special Mention Credit Quality Indicators 2.37% 168%, 1.24% 2016 ©«-2017_—s 2018 Impaired+90 days arrea
Slide 22: Banking and Financing Income Increasing
BANKING AND FINANCING INCOME INCREASING Driven by core banking activity Income From Banking Activity Income from current operations NISm NISm _ 8.3%? 8963 CAGR i 3.0% a ' 1319-1333)” ' 1255 «(1270 ' 1200 (1197 13.8177 ' | | =. ' 2016 2017 2018 ' 4qie1qi7,—2Q7,— ss 8QI7, 4Qy,—sigis 2qi8 Ss sqis. ais
Slide 23: Total Expenses Increase Supporting Our Growth
23 TOTAL EXPENSES INCREASE SUPPORTING OUR GROWTH Related to our strategic pillar of Growth and Efficiency Total expenses NIS M =— — 6148 5.785 “VB 5694 — 8.0 @ Other @ Maintenance and dep. @ Salary & Related
Slide 24: Majority of Expenses Increase Related to Subsidiaries
24 MAJORITY OF EXPENSES INCREASE RELATED TO SUBSIDIARIES CAL & IDBNY are executing on their strategies Salary and related expenses NISm sQ a’ off ce @ 3,204 3,385 a‘ ~ = Salary& Performance Mercantile Reversclof Base Salary & Related based one-time provisions salary* Related as bonuses bonus as repo
Slide 25: Reduction in Headcount Remains High Priority
REDUCTION IN HEADCOUNT REMAINS HIGH PRIORITY @ Abroad @ Local Subsidiaries ® Discount Bank, solo Predominantly at Discount Solo Workforce balance FTEs 10,047 eoee 784 vee 8.068 ass 8578 —-8.550 501 Growth in positions in IDB NY 486 aan 527 to epee growth strategy 3,090 3,086 3,037 2946 2885 3.055 Gr
Slide 26: Adjusting Physical Footprint to Meet Future Needs
26 ADJUSTING PHYSICAL FOOTPRINT TO MEET FUTURE NEEDS Continuous decrease in number of branches and overall real estate space Branch Footprint* 138 ae ee 122 a 677 = 64.0 50.5 55.4 '. 541 2014 2015 2016 2017 2018 -~@ Number of branches, Discount Bank @ Real estate space, Disount Bank. in thousands me
Slide 27: Agenda
27 AGENDA © Opening and Strategy overview Lilach Asher Topilsky, CEO © Financials Ziv Biron, CFO © Qé6a Lilach Asher Topilsky, CEO Ziv Biron, CFO Yossi Beressi, Chief Accountant
Slide 28: Appendices
APPENDICES
Slide 29: Improvement of Financial Performance
29: IMPROVEMENT OF FINANCIAL PERFORMANCE Main Metrics From the P&L Compared to NISm 2018 2017 2016 2017 Interest income, net 5526 4975 4,567 1% Credit loss expenses 540 874 469 -5.9% Non-interest financing income 586 595 754 “1.5% Commissions 2,851 2,676 2,556 6.5% Otherincome 7 87 ~ 100 --345% Tota
Slide 30: Improvement of Financial Performance
IMPROVEMENT OF FINANCIAL PERFORMANCE Main Metrics From the P&L Compared to Nism 4Q18 3qis aq; 318 4Qi7 Interestincome,net OO AN 187 25% Credit loss expenses . 176 123 . 31 467.7% Non-interest financing income 77 160 94 88.3% Commissions 732 730 685 6.9% Other income 28 B 37 24.3% Total non-interest
Slide 31: Financial Performance
31 FINANCIAL PERFORMANCE Main P&L and Balance Sheet Metric NISm 2018 2017 2018 vs. 2017 _.Income from credit card transactions en _Netinterest income an co 464 | AQ __ Non: OTE perenne ood een pas Se eee terest financing income No 4 Total income | _ oe . . ____.ot Credit loss expenses - 156 126 Tota
Slide 32: Mercantile Financial Performance
32 MERCANTILE ~~” FINANCIAL PERFORMANCE Main P&L and Balance Sheet Metric NiSm 2018 2017 2016 2018 vs. 2017 Netinterestincome _ 1,080 1,019 . 983 6.0% Credit loss expenses 88M 88, 98% Non-interestincome 374_ _331 349 13.0% Operating & other expenses 991 889 910 15% Income before tax 367 342 336 7.3%
Slide 33: IDBBANK Financial Performance
33 IDBBANK “Sse” FINANCIAL PERFORMANCE Main P&L and Balance Sheet Metric usDm 2018 2017 2018 vs. 2017 _Creditloss expenses Operating & other expenses . cece tB2 188 _Netinterest 9Come eee MB OO IO Income before tax - 124 89 Net income USDBn eS _ Securities _ Deposits from the pi Total equity