Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — FY2023 Earnings Presentation
32 slides from Israel Discount Bank Limited Class A's earnings presentation, Mar 11, 2024
Slide 1: 2023 Review: Financial Highlights
2023 REVIEW Financial Highlights Investor Relations March 11, 2024
Slide 2: Disclaimer
Disclaimer: This document has been prepared by Israel Discount Bank Ltd. (the “Bank”) solely for use by the Bank in its presentation of its 2023 full year and 4th quarter report, as well as in strategic updates referred to in the Bank’s reports. This presentation is not a substitute for the Bank’s 2
Slide 3: Agenda: Opening Remarks
AGENDA Opening Remarks Avi Levi, CEO 3
Slide 4: 2023 – Keeping Strong Performance Amidst Market Turbulence
2023 – KEEPING STRONG PERFORMANCE AMIDST MARKET TURBULENCE NET INCOME ROE EFFICIENCY RATIO 4,192M 15.7% 49.6% Banking in Israel * 3,704M 19.8%** 42.3%** TOTAL EQUITY DIVIDEND PAYOUT NII GROWTH CREDIT GROWTH YoY YoY 29.2BN 20% 25.8% 7.6% ** Consolidated figures for banking operations of Discount & Me
Slide 5: Continue Our Journey
CONTINUE OUR JOURNEY Net Income ROE Efficiency Ratio 2014 505m 4.2% 87.1% WHERE WE STARTED(1) 2019 1,702m 9.4% 65.2% WHERE WE WERE 2022 3,495m 15.1% 55.8% 2023 4,192m 15.7% 49.6% WHERE WE ARE Source: Company filings. (1) In 2014 the Bank implemented its long-term strategic plan to improve its profit
Slide 6: Navigating the Economic Challenges in 2024
NAVIGATING THE ECONOMIC CHALLENGES IN 2024 The Israeli economy demonstrates resilience and has a history of fast recovery after war. The macro indicators exhibiting an upward momentum as of Jan 2024. Governmental aid-plan for the business sector is essential for enduring economic growth with emphasi
Slide 7: Cultivating a Culture of Change & Excellence
CULTIVATING A CULTURE OF CHANGE & EXCELLENCE Completing the transition to our new campus – shifting residence and change our operational approach. The new 150,000 sqm facility is aimed at leveraging the employee experience and improve cooperation among employees and departments. Set up a framework f
Slide 8: Standing by Our Customers and Supporting the Community
STANDING BY OUR CUSTOMERS AND SUPPORTING THE COMMUNITY Philanthropic activity for the residents of the south and for IDF soldiers Discount has inaugurated the "Keren-Or”, a specialized assistance fund with an initial allocation of NIS 50 million , dedicated to children and youths adversely affected
Slide 9: Agenda: Financial and Strategic Review
AGENDA Financial and Strategic Review Asaf Pasternak, CFO 9
Slide 10: The Economy Regains Momentum Following the Fourth Quarter Setback
THE ECONOMY REGAINS MOMENTUM FOLLOWING THE FOURTH QUARTER SETBACK GDP Growth (%) is poised to revert to pre-war levels, primarily Bank of Israel’s Rate has decreased to 4.50% in January driven by increased public expenditure * 2024 and expected to decrease in 50-75bps * (%) 3.40 ** Pre-war forecast
Slide 11: Discount Strong Fundamentals
DISCOUNT STRONG FUNDAMENTALS Diversified loan book throughout the Bank and its subsidiaries in Israel and the USA. Ample liquidity- LCR 130.7% ; Solid CET-1 10.71%. Dividend payout has returned to 20%, keeping the commitment to our shareholder and for future growth. The local capital market demonstr
Slide 12: 2023 Highlights
2023 HIGHLIGHTS Net income of NIS 4,192m and ROE of 15.7% in 2023, and net income of 919m and ROE of 13.2% in 4Q23, a record year. Higher collective allowances: Credit loss expenses ratio mounted to 0.59% in 2023, and 0.59% in 4Q23, driven mainly by increase collective allowances to reflect our cons
Slide 13: Robust Growth in Total Credit in 2023
ROBUST GROWTH IN TOTAL CREDIT IN 2023 Total Credit Well Balanced Loan Book Mortgages * Medium Enterprises in NIS bn; growth % in NIS bn; growth % in NIS bn; growth % 7.6% 6.4% 16.4% 0.7% 3.9% 0.2% Small Enterprises Corporates in NIS bn; growth % in NIS bn; growth % 2.5% 15.5% 0.5% 2.6% International
Slide 14: Significant Income Growth in 2023
SIGNIFICANT INCOME GROWTH IN 2023 Total Income Financing Income From Current Operations (NIS m) NIS m 2023 ver. 2022 Period end BOI rate 3.25% 4.25% 4.75% 4.75% 4.75% 24.2% Average BOI rate* 2.92% 3.89% 4.58% 4.75% 4.75% 8.6% -1.6% 2.7% 25.8% 2.98% 3.18% 3.33% 3.02% 2.83% Net Interest Income Fees No
Slide 15: Maintaining a Positive Long-Term Jaws Ratio
MAINTAINING A POSITIVE LONG-TERM JAWS RATIO Total Expenses Total Expenses Cost Income Ratio Is maintained low Due To Positive Jaws QoQ YoY NIS m NIS m 2022 ver. 2023 67.5% 65.4% 55.8% 49.6% 10.4% 12.5% JAWS 11.5% JAWS 2022 18.2% 13.4% 7.9% Other Maintenance and depreciation Cost Income Ratio Expense
Slide 16: Credit Loss Expenses Are Decreasing as War Impact Is Contained
CREDIT LOSS EXPENSES ARE DECREASING AS THE IMPACT OF THE WAR ON THE ECONOMY IS CONTAINED Collective allowances drives most of the overall Credit Steady NPL/Total Credit* Ratio Loss Expenses the impact of the war has been mitigated (in NIS m and %) FY23 0.59% Ample allowance for Loan Loss Provisions
Slide 17: Robust and Diversified Funding Base and Ample Liquidity
ROBUST AND DIVERSIFIED FUNDING BASE AND AMPLE LIQUIDITY Diversified domestic public deposit base with high share of Shifting from non-bearing deposits to time-deposits households deposits 31.12.23 NIS m Non-interest bearing demand deposit Interest bearing Private Individuals demand deposit Total Tim
Slide 18: Our Strategy
OUR STRATEGY We aim to be the best financial institution for its customers, which creates maximum value to its shareholders over time Key Strategic Pillars 1 2 3 Winning in Groundbreaking Maximizing Group Value Traditional Banking Innovation - Best customer experience - PayBox - Mercantile - Acceler
Slide 19: Our Strategy: 2025 Targets
OUR STRATEGY We aim to be the best financial institution for its customers, which creates maximum value to its shareholders over time Net Income ROE Efficiency Ratio 2025 3,500m 12.5% 55.0% TARGETS * 2023 4,192m 15.7% 49.6% WHERE WE ARE In 2024 we intend to strengthen the focus on efficiency & banki
Slide 20: Solid Performance Across Our Main Subsidiary Companies
SOLID PERFORMANCE ACROSS OUR MAIN SUBSIDIARY COMPANIES 15.2% 15.7% 19.7% 11.9% 13.2% 12.0% In NIS m YoY growth in In NIS m 7.7% Total credit YoY growth in 8.8% Credit card transactions ROE Cost income ROE Net income 38.8% ratio Net income YoY growth in as reported as reported 10.1% consumer credit A
Slide 21: PayBox
PAYBOX Deposits Turnover Engaged subscribers Unique active users 747.0M 6.6B 2.4M ₪ 1.4M YOY +51% +32% +20% +8% NIS millions NIS billions millions Active 90 days; millions 747.0 6.6 2.4 1.4 1.3 2.0 5.0 1.0 495.0 1.6 1.3 0.8 353.0 3.2 218.0 2.0 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2
Slide 22: CET-1 Capital Ratio Is Effectively Protected Against Market Volatility
CET-1 CAPITAL RATIO IS EFFECTIVELY PROTECTED AGAINST MARKET VOLATILITY Growing our buffer Effect of 1.00% change on CET-1 ratio* Total Capital Ratio & Tier I Capital Ratio (% , selected, separated scenarios) 13.48% 0.00% 10.71% 10.61% 10.71% 10.67% 10.51% QoQ +0.35% (0.1%) 0.00% (0.04%) 1.51% - (0.2
Slide 23: Dividend Ratio Has Been Increased to 20%
DIVIDEND RATIO HAS BEEN INCREASED TO 20% (NIS million) 30% 20% 20% 15% 15% * Exp. 15% Dividend suspension during COVID 19 pandemic 1Q20- 2Q21 Net Income Dividend Dividend distribution, % Dividend Yield, %, as calculated 23
Slide 24: To Summarize
TO SUMMARIZE Record results for 2023, with net income of 4,192M NIS, and ROE of 15.7% . Responsible credit growth, with asset quality remaining solid – Credit growth of 7.6%, attributed to Corporates & Medium Enterprises, mainly during the firstmonth of the year 9. Higher credit loss expense: Conser
Slide 25: Agenda: Q&A
AGENDA Q&A Avi Levi, CEO Asaf Pasternak, CFO Yossi Beressi, Chief Accountant 25
Slide 26: Appendices
APPENDICES SBE, olgegghr
Slide 27: Israel Discount Bank: P&L and Selected Ratios
ISRAEL DISCOUNT BANK: P&L AND SELECTED RATIOS NIS m 4Q23 3Q23 4Q22 vs.3Q23 vs.4Q22 2023 2022 change Net interest income 2,555 2,707 2,540 )5.6%( 0.6% 10,936 8,693 25.8% Credit loss expenses 390 596 230 )34.6%( 69.6% 1,502 407 269.0% Non-interest financing income 295 312 248 )5.4%( 19.0% 1,218 417 19
Slide 28: Israel Discount Bank: Selected Balance Sheet Items
ISRAEL DISCOUNT BANK: SELECTED BALANCE SHEET ITEMS NIS m 31.12.23 30.09.23 31.12.22 Cash and deposits with banks 51,115 57,552 65,713 Securities 59,268 52,380 44,794 Securities borrowed or purchased under agreements to resell 851 1,150 857 Credit to the public 262,941 262,463 244,288 Provision for c
Slide 29: Israel Discount Bank: Adjustments to P&L
ISRAEL DISCOUNT BANK: ADJUSTMENTS TO P&L NIS m 2023 2022 2021 Reported net income 4,192 3,495 2,773 Profit from the sale of rights in Visa Europe - )20( - Realization of assets )239( )315( )38( Nonrecurring awards - - 155 Redemption of jubilee awards - - 19 Effect of settlement - 30 94 Provisions st
Slide 30: Mercantile: Financial Performance
MERCANTILE: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 4Q23 3Q23 4Q22 Vs. 3Q23 Vs. 4Q22 2023 2022 Change Net interest income 536 577 521 )7.1%( 2.9% 2,284 1,746 30.8% Non-interest income 209 104 97 101.0% 115.5% 533 376 41.8% Total income 745 681 618 9.4% 20.6
Slide 31: IDBBank: Financial Performance
IDBBANK: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios USD m 4Q23 3Q23 4Q22 Vs. 3Q23 Vs. 4Q22 2023 2022 Change Net Interest Income 80 82 92 )2.4%( )13.0%( 335 335 - Non-Interest Expenses )10( 21 12 N/A N/A 45 68 )33.8%( Total Income 70 103 104 )32.0%( )32.7%( 380 403 )
Slide 32: CAL: Financial Performance
CAL: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 4Q23 3Q23 4Q22 Vs. 3Q23 Vs. 4Q22 2023 2022 Change Income From Credit Card Transactions 401 480 428 )16.5%( )6.3%( 1,751 1,651 6.1% Credit Loss Expense 98 93 43 5.4% 127.9% 285 97 193.8% Non-Interest Financing Exp