Mizrahi Tefahot Bank Ltd · TASE:MZTF
Mizrahi Tefahot Bank — Investor Presentation (July 2012)
33 slides from Mizrahi Tefahot Bank's investor presentation, July 2012
Slide 1: Strategic plan 2013-2017
Strategic plan 2013--2017 2013 Capital market presentation July 2012 1
Slide 2: General Comments regarding Legal Responsibility
The following translation to English of the Presentation, is intended solely for the convenience of the reader. This translation has no legal status and the bank does not assume any responsibility whatsoever as to its accuracy and its contents. Only the original Hebrew text is the official one, and
Slide 3: New plan: Higher targets, Better bank
New plan N l Higher targets Better bank 3
Slide 4: More of the same
Strategic More of the same Highlights F the For th pastt 8 years we have h sett goals l and d performed accordingly. It is the time for a new plan The following plan aims to continue the success story. Our future growth path is embedded in our strategy and the required i f infrastructure t t and d c
Slide 5: The main engines and targets
Strategic The main engines and targets Highlights 1 Credit portfolio mix of at least 60% households 2 Continuing the organic growth while increasing the Bank Bank’s s market share in core areas of activity 3 Growing while achieving operational efficiency (maintaining, and even improving our efficien
Slide 6: What you see is what you get!
Strategic What you see is what you get! Highlights Youngest g and most educated force in the 1 Human H banking system* Resources Better relationships 2 4 Competitive Better understanding Technology Better achievements Advantage Integrated CRM and efficient back office systems enable more than 3,000
Slide 7: Human Resources at UMTB
HR Human Resources at UMTB* We grew our workforce by 35% since 2005. the growth followed revenue growth 4,636 4,387 3,977 4,135 3,841 , 3,671 3,660 3,439 Jan 05 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09** Dec 10 Dec 11 SOURCE: banks’ financial reports * Not including Yahav Bank **From 2009 onwards – includ
Slide 8: Composition of workforce is a powerful engine for being a better bank
HR Composition of workforce is a powerful engine for being a better bank Management positions Academic employees Distribution by age and seniority Highest rate among the banking system Male Female * 76.4% including students Average seniority in years Constant improvement of the work force of UMTB SO
Slide 9: Comparison of the human infrastructure in the Israeli banking system
HR Comparison of the human infrastructure in the Israeli banking system 45.2 38.9 19.3 11.6 64% 55% UMTB Average of the banking system Academic employees Average age Average seniority (years) UMTB presents a superior work force composition in the banking system – youngest, shortest seniority and mos
Slide 10: Technology and operational efficiency
Tech Technology and operational efficiency All the technological, logistical, educational and operational units of the Bank are moving to one location UMTB is the only bank that moved its HO to the Diamond District, where local taxes are substantially lower 10
Slide 11: Efficiency ratio
Tech Efficiency ratio The result of UMTB’s implementation of our plans in technology and HR made us the most efficient bank in the banking system Cost to income ratio (Consolidated)* 2004 2011 71% 62% 58% 60% ≤55** UMTB Average of the banking system SOURCE: banks’ financial reports * Cost to income
Slide 12: Hybrid banking and Live banking
Tech Hybrid banking and Live banking – utilizing technology and operation to change culture and relationships Breakthrough banking products live side by side, in order to meet clients preferences client A client that has preference: Technology a personal Personal banker and Hybrid relations brings c
Slide 13: Hybrid banking: all channels lead to the personal banker
Hybrid banking – instead of putting barriers between the client and the Tech banker, all channels are leading our clients to their personal banker Ideal combination between personal and digital banking Internet SMS B k Banker Branch Branch team IVR
Slide 14: Live banking
Live banking – focused on specific segments with common Tech characteristics but distant geographical locations LIVE 14
Slide 15: Compensation plans are closely tied to targets and performance
Culture Compensation plans are closely tied to targets and performance Management has reached an agreement with the union which enables managing both cost and incentive plans Top level management Specific option plan (gave up bonus plan until 2013) closely tied to strategic plan and achieving ROE ta
Slide 16: Two brands, one group
Culture Two brands, one group In the world of growing public tension regarding cost of services, the group can provide a dual solution Clients’ added value “Value for money” “Price The focused banking service” system Clients’ cost Yahav Mizrahi Tefahot Bank • Branded as low cost bank Bank • Branded
Slide 17: Yahav bank performance
Culture Yahav bank performance 16,755 Total Loans to assets 14,162 14,795 the 5,820 5,432 12,701 public 5,195 4,698 , 2008 2009 2010 2011 2008 2009 2010 2011 11.8% 14,309 , 10 4% 10.4% Deposits 12,020 12,572 ROE from the 11,013 6.0% 5.3% public 3.1% 2008 2009 2010 2011 2008 2009 2010 2011 Q1 2012 Ya
Slide 18: Housing loans – market share, ROE and margins
Culture Housing loans – market share, ROE and margins Our backbone is keeping our #1 position in mortgage banking by assuring professional advice and quality service 0.84% 0.63% 14.7% 0.32% 7.6% 4.1% 4.0% 0.09% UMTB* UMTB* Hapoalim* Hapoalim* Leumi** Leumi Discount** Discount Market share margin Le
Slide 19: Corporate banking – focusing on trade and trade finance
Corporate banking – focusing on trade and trade finance Being there for our clients – with solutions tailored to their needs and where we can provide high value added services UMTB was the th first fi t in i the th banking b ki system t that th t unified ifi d allll trading t di floors fl under d on
Slide 20: All these led to our competitive advantage
Competitive All these led to our competitive advantage Advantage superior human resources and flexible work relations Harnessing technology and operations as tool to support Better relationships relations with clients Competitive advantage Better understanding Culture of success – the success of the
Slide 21: Best combination of high return with low risk
Competitive While keeping the best combination of high return with low risk Advantage Risk Adjusted Return On Capital - comparison between the five major banking groups and the system, average 2004 - 2010 Israeli Banking System SOURCE: Bank of Israel – Israeli banking system, annual review 2010 21
Slide 22: 2013 – 2017 strategic plan – main targets
2013 – 2017 strategic plan – main targets 22
Slide 23: The group credit portfolio mix
The group credit portfolio mix - we are targeting to keep our unique credit profile and low risk associated with it UMTB (incl. Yahav) Average of the banking system 31.3.2012 Corporates 30% 31.3.12 Households 39% Households 70% Corporates 61% Corporates 35% 2017* Housholds 65% SOURCE: banks’ financi
Slide 24: Targeted growth in net new accounts
The target: we plan to continue our organic growth by recruiting growing numbers of net new accounts 75,000 , 60,000 35,000 2008 2012* 2017 SOURCE: bank’s systems * 1-6/2012 in annual terms 24
Slide 25: Targeted loans to the public
Targeted loans to the public Loans to the public (NIS bil) Loans to the public – market share 174 17 5% 17.5% 15.1% 119 2011 2017 2011 2017 Subject to the assumption that the banking system’s loans to the public growth rate will be similar to the rate in the past four years (about 4%) and considerin
Slide 26: Targeted balance sheet credit risk to the public (in Israel)
Targeted balance sheet credit risk to the public (in Israel) Balance sheet credit risk to the Balance sheet credit risk to the public (in Israel) (NIS bil)* public (in Israel) – market share 176 18.0% 16.5% 120 2011 2017 2011 2017 The Bank plans to strengthen its position as the third largest bank i
Slide 27: Targeted deposits from the public
Targeted deposits from the public Deposits from the public (NIS bil) Deposits from the public – market share 176 16.0% 13.5% 119 2011 2017 2011 2017 In line with the increase of loans to the public, the Bank plans to increase its market share in deposits from the public Subject to the assumption tha
Slide 28: Targeted market share
Targeted market share 2011 2017 M k t share Market h M k t share Market h Total loans to the public 15.1% 17.5% Balance sheet Credit risk to the public in Israel 16.5% 18% Mortgages (new initiations) 34% 35+% Corporate and SME credit 9.1% 11.5% Based on a main macroeconomic scenario of average GDP g
Slide 29: 2013 – 2017 strategic plan – Yahav bank targets
2013 – 2017 strategic plan – Yahav bank targets Synergies • launching new product utilizing UMTB’s UMTB s platform with the • continuing integrating mortgage representatives in the branches Group • receiving operational services from the Group Internal • preserving the perception and branding of Yah
Slide 30: 2013 – 2017 strategic plan – efficiency as a focal point
2013 – 2017 strategic plan – efficiency as a focal point Ongoing and strict managing of the budget Back office – continuing transferring areas of activities The technology gy and logistics g center in Lod – functional efficiency y and cost saving Culture of efficiency and improvement New incentive p
Slide 31: 2013 – 2017 strategic plan targets
2013 – 2017 strategic plan targets Incom Expenes 4,610 4 326 4,326 3,849 3,518 2,667 2,470 2,562 2,153 2008* 2009** 2010 2011 2017E ROE based on core tier 1 ratio of at least 9% (gradual increase) 14.5% ROE 10.4% 10.4% 11.7% 14.6% ROE based on core tier 1 ratio of at least 7.5% 17% Net profit 601 65
Slide 32: Dividend policy
Dividend policy We will keep current dividend policy and resume dividend distributions accordingly, subject to the Board of Directors resolution instructing the Bank’s management to make all efforts to reach core tier 1 level of at lest 9%, if possible, early 2014 Distributed dividend Payment y y ye
Slide 33: 2013 – 2017 strategic plan – risk factors
Strategic 2013 – 2017 strategic plan – risk factors principles Some major risk factors that may fundamentally influence the group’s financial results Regulatory risks Global economy risks Regulatory orders that will substantially change The the business environment in Israel are not The World econom
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