Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — FY2016 Earnings Presentation
42 slides from Israel Discount Bank Limited Class A's earnings presentation, Mar 28, 2017
Slide 1: 2016 Financial Results Conference Call
2016 Financial Results Conference Call Israel Discount Bank March 28, 2017 2016 Financial Results Conference Call March 28, 2017 Israel Discount Bank I 2016 Financial results
Slide 2: Agenda
Agenda ◦ Opening Lilach Asher Topilsky, CEO ◦ In the midst of the 5-year strategic plan Uri Levin, CFO ◦ Our new 5-year strategic program Uri Levin, CFO ◦ Conclusion Lilach Asher Topilsky, CEO ◦ Q&A Lilach Asher Topilsky, CEO Uri Levin, CFO Yossi Beressi, Chief Accountant Ran Oz, Head of Financial M
Slide 3: 2½ Years Into Our 5-Year Strategic Program: Progress Summary
2½ Years Into Our 5-Year Strategic Program: Progress Summary Successful implementation of our 5-year strategic program - Strategic initiatives in line with plan & delivering significant value - Financials in line with original plan aimed at closing the gap with the industry - Organizational culture
Slide 4: We Have Developed Robust Platforms to Build Upon
We Have Developed Robust Platforms to Build Upon - Robust capital position - Robust liquidity position Financial platform - Increased profitability - Reduced uncertainty - Process automation and bankers desktop Technology platform - Closure of digital channels gap - Business enabling technology (CRM
Slide 5: It's a Different Bank, Set to Continue & Close the Gap
It’s a Different Bank, Set to Continue & Close the Gap… Cost Growth Productivity - Continuous cost restraint - Higher than market growth, - Continuous increase of focused on our own clients income per employee -2.1% 6.6% 13.7% 865 5.9 142.9 5.8 761 129.3 5.7 122.2 5.6 118.0 2013 2014 2015 2016 2013
Slide 6: Set to Offer Unique Value Proposition to Our Customers
… And Set to Offer Unique Value Proposition to Our Customers… Superior customer satisfaction by adjusting to customer expectations and needs Adjusting our value proposition to Understanding what customers want customer expectations and needs -Accessibility -Best in class, easy to use channels Quick
Slide 7: Set to Launch an Enhanced 5-Year Strategic Program
… And Set to Launch an Enhanced and Comprehensive 5-Year Strategic Program Superior customer satisfaction by adjusting to customer expectations and needs Closing Transforming Developing new the performance gap traditional banking banking models Israel Discount Bank I 2016 Financial results 7
Slide 8: Agenda
Agenda ◦ Opening Lilach Asher Topilsky, CEO ◦ In the midst of the 5-year strategic plan Uri Levin, CFO ◦ Our new 5-year strategic program Uri Levin, CFO ◦ Conclusion Lilach Asher Topilsky, CEO ◦ Q&A Lilach Asher Topilsky, CEO Uri Levin, CFO Yossi Beressi, Chief Accountant Ran Oz, Head of Financial M
Slide 9: 2016 Balance Sheet and Ratios
2016 Balance Sheet and Ratios Change 2014 2015 2016 compared to 2015 Credit to the public, net 120.1 127.2 140.7 10.6% Deposits from the public 153.4 157.9 172.3 9.1% Total equity 13.0 13.6 14.9 9.5% Total assets 207.2 205.3 219.6 7.0% CIR 87.0% 78.7% 72.6% CIR adjusted 78.6% 78.1% 72.8% ROE 4.2% 5.
Slide 10: 2016 Profit & Loss
2016 Profit & Loss Change compared 2014 2015 2016 to 2015 Interest income, net 4,218 4,225 4,569 8.1% Credit loss expenses 164 187 469 150.8% Net interest income after credit loss expenses 4,054 4,038 4,100 1.5% Non-interest financing income 549 363 754 107.7% Non-interest financing income adjusted
Slide 11: 2014-2016 Adjustments
2014-2016 Adjustments 2014 2015 2016 Net income as reported 505 750 905 ROE as reported 4.2% 5.8% 6.6% Cost-income ratio as reported 87.0% 78.7% 72.6% Gain from the sale of VISA rights (178) Impact of 2016 early retirement plan 90 Retirement plans 341 19 Loss from sale of subsidiaries (DBLA & IDB (S
Slide 12: Q4-16 Profit & Loss
Q4-16 Profit & Loss 2015 2016 Change compared to Q4 Q3 Q4 Q4-15 Q3 -16 Interest income, net 1,043 1,187 1,170 12.2% (1.4%) Credit loss expenses 98 141 224 128.6% 58.9% Non-interest financing income 46 51 179 289.1% 251.0% Commissions 649 675 653 0.6% (3.3%) Other income 1 5 6 500.0% 20.0% Total non-
Slide 13: Q4-16 Adjustments
Q4-16 Adjustments 2015 2016 Q4 Q3 Q4 Net income as reported 60 188 145 ROE as reported 1.8% 5.5% 4.1% Cost-income ratio as reported 83.6% 76.9% 72.7% Impact of 2016 early retirement plan 10 80 Loss from IDB (Swiss) Bank 33 Provision at CAL 28 Impact of change in tax rate 21 59 Net income excluding a
Slide 14: The Successful Results of the Plan Are Evident Across All Key Parameters
The Successful Results of the Plan Are Evident Across All Key Parameters - CT-1 of 9.8% ◦ Infrastructure - LCR of 146.5%, LR of 6.6% - Improved asset quality indicators - Adjusted total expenses declined by 2.1% CAGR (2013-2016) ◦ Cost - Adjusted salary cost declined by 3.4% CAGR (2013-2016) - Robus
Slide 15: Almost 25% Growth in Total Equity Since the Launch of the Plan
Almost 25% Growth in Total Equity Since the Launch of the Plan Infrastructure Total equity, in NIS bln Basel III CET-1 ratio 9.2% BOI threshold for Jan 2017 24.5% 10.0% 14.9 9.8% 13.6 9.4% 9.5% 13.0 12.0 8.9% 2013 2014 2015 2016 2013 2014 2015 2016 2019 Target Israel Discount Bank I 2016 Financial r
Slide 16: Robust Liquidity Position Based on the Highest Retail Funding in the Sector
Robust Liquidity Position Based on the Highest Retail Funding in the Sector Infrastructure LCR, Group Deposit mix, group Households & private banking Micro & small enterprises Large & medium enterprises Institutions 146.5% 133.9% 133.9% 128.0% 129.7% 7.7% 21.4% 54.8% 16.1% Q4-15 Q1-16 Q2-16 Q3-16 Q4
Slide 17: Slight Increase in Loan Loss Provision, Still Below Long-Term Average
Slight Increase in Loan Loss Provision, Still Below Long-Term Average Infrastructure Loan loss provision and loan loss provision ratio, by year Historic levels of loan loss provision ratio Loan loss provision LLP ratio 0.49% 0.34% 0.92% 0.14% 0.15% 0.78% 580 0.74% 0.65% 0.59% 0.61% 0.49% Avg. 0.35%
Slide 18: Asset Quality Remains Robust
Asset Quality Remains Robust Infrastructure Credit risk by classifications: Special Mention 7,743 Total Change: Substandard 6,803 in NIS in % Impaired 2,560 5,664 -2,079 -26.9% 5,085 3,037 1,015 1,846 1,519 -714 -27.9% 928 524 578 -437 -43.1% 4,168 -928 -22.3% 2,838 3,042 3,240 2013 2014 2015 2016 N
Slide 19: Continuous Cost Restraint
Continuous Cost Restraint Cost Total expenses, group: Salary & Related Maintenance & Depreciation Other NIS m As reported Adjusted -0.7% -2.1% 6,414 -2.1% 5,937 5,814 5,937 5,800 5,725 5,684 5,567 1,167 8.0% 1,146 5.1% 1,146 1,101 2.8% 1,171 1,331 1,154 1,246 1,161 -7.9% 1,182 1,182 1,161 1,158 1,06
Slide 20: Discount Bank Solo is Leading the Cost Reduction Effort
Discount Bank Solo is Leading the Cost Reduction Effort Cost Total expenses, Discount Bank solo: Salary & Related Maintenance & Depreciation Other NIS m As reported Adjusted -2.2% 3,951 -3.4% 3,629 391 3,629 3,395 3,436 447 3,295 3,295 3,270 447 -0.8% 818 481 2.5% 391 422 422 481 2.5% 14.0% 849 849
Slide 21: Headcount Has Been the Main Driver of Cost Reduction
Headcount Has Been the Main Driver of Cost Reduction… Cost Workforce, in terms of positions: 2013 2014 2015 2016 2021 F -1,489 -14.8% 10,047 9,3699,068 -1,047 8,558 ~8,000 -17.0% -144 6,173 5,530 -2,000 5,515 5,126 -4.7% -298 -20.0% 3,090 3,066 -38.0% 3,037 2,946 784 788 501 486 Total at the Group 2
Slide 22: Combined With Real Estate Space Downsize and Assets Sell
… Combined With Real Estate Space Downsize and Assets Sell Cost Reduction in real estate space, Discount bank Reduction in branches space Reduction in number of branches Ownership Lease -8.4% 172.3 166.6 -15.3% 159.6 157.8 -15.9% 145 56.6 54.2 138 50.5 50.2 80.3 132 74.1 122 71.3 115.7 112.4 109.1 6
Slide 23: Discount Group Demonstrated the Fastest Credit Growth in The Sector
Discount Group Demonstrated the Fastest Credit Growth in The Sector… Growth Credit to the public balances, gross, by segments Total credit Consumer credit Small & micro businesses 25.7 34.2 13.0% 10.6% 142.9 6.6% 22.8 129.3 30.9 122.2 119.7 118.0 2015 2016 2015 2016 10.5% Mortgages Large businesses
Slide 24: Translated Into Net Interest Income Growth
… Translated Into Net Interest Income Growth Growth Net interest income, group Net interest income, group 4.6 8.1% -0.8% 0.2% 4.3 4.2 4.2 2013 2014 2015 2016 NIS bln Net interest margin, group BOI avg. interest rate 2.15% 2.22% 2.13% 2.24% 1.38% 0.60% 0.12% 0.10% 2013 2014 2015 2016 Israel Discount
Slide 25: Robust and Continuous Credit Growth Also in Subsidiaries
Robust and Continuous Credit Growth Also in Subsidiaries Growth 8.5% 7.3% 5.7 22.0 21.4% 3.6 5.4 20.4 4.9 18.9 4.4 17.8 2.8 7.8% 4.9% 2.3 29.7% 2.0 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 Loans, net Credit to the public balances, net Consumer credit balances USD bln NIS bln NIS b
Slide 26: IDB NY
IDB NY USD m 2015 2016 Change Q3-16 Q4-16 Change Net interest income 170 190 12.0% 48 48 0.2% Loan loss provision 3 33 N/A 12 9 (27.5%) Non-interest income 57 63 11.7% 17 18 8.8% Operating & other expenses 141 142 1.1% 37 34 (7.4%) Income before tax 83 78 (6.1%) 16 23 48.6% Net income 60 60 0.1% 12
Slide 27: Mercantile
Mercantile NIS m 2015 2016 Change Q3-16 Q4-16 Change Net interest income 872 934 7.1% 238 238 0.0% Loan loss provision 67 36 (46.3%) 7 15 114.3% Non-interest income 380 349 (8.2%) 89 99 11.2% Operating & other expenses 841 910 8.2% 223 233 4.5% Income before tax 344 337 (2.0%) 97 89 (8.2%) Net incom
Slide 28: CAL
CAL NIS m 2015 2016 Change Q3-16 Q4-16 Change Credit card transactions 930 984 5.8% 262 246 (6.1%) Net interest income 290 362 24.8% 95 97 2.1% Non-interest financing income 20 276 N/A 4 3 (25.0%) Non-interest financing income adjusted 20 13 (35.0%) 4 3 (25.0%) Total income 1,240 1,622 30.8% 361 346
Slide 29: A Well Focused Bank
A Well Focused Bank Focus Divest - Sale of the entire FIBI stake - Sale of DBLA - Closure of the London branch A focused Israeli - Sale of IDB (Swiss) Bank - Closure of the provident funds operation universal bank with Expand a strong international - Merger of DCM underwriting with CLAL Finance Unde
Slide 30: Material Improvement of Organizational Culture
Material Improvement of Organizational Culture Organizational Culture Performance based Execution led culture Labor agreement culture Strong capabilities to Employees engagement lead strategic change Total income*/employee Total credit (gross) /employee (in NIS thousands) (in NIS m) 13.7% 865 37.0%
Slide 31: Agenda
Agenda ◦ Opening Lilach Asher Topilsky, CEO ◦ In the midst of the 5-year strategic plan Uri Levin, CFO ◦ Our new 5-year strategic program Uri Levin, CFO ◦ Conclusion Lilach Asher Topilsky, CEO ◦ Q&A Lilach Asher Topilsky, CEO Uri Levin, CFO Yossi Beressi, Chief Accountant Ran Oz, Head of Financial M
Slide 32: The Competitive Landscape is Expected to Transform Significantly
The Competitive Landscape is Expected to Transform Significantly Technological The Competitive changes and arena is changing Fintech players are hanging the rules of the game New Banking Regulation is pushing Change in customers’ for more transparency, behavior, needs and & competition expectations
Slide 33: Revised and Enhanced 5-Year Strategic Program to Address Future Challenges
Discount Bank Revised and Enhanced 5-Year Strategic Program to Address All Future Challenges Superior customer satisfaction by adjusting to customer expectations and needs Closing Transforming Developing new the performance gap traditional banking banking models Israel Discount Bank I 2016 Financial
Slide 34: We Continue to Implement The Original 5-Year Strategic Plan
We Continue to Implement The Original 5-Year Strategic Plan Continued restraint across all cost Cost drivers of all the entities Continued above market growth in Growth targeted segments Closing the performance gap Continued strengthening of Infrastructure supporting infrastructure Continued effort
Slide 35: We Continue to Transform Traditional Banking & Adjust Our Value Proposition
We Continue to Transform Traditional Banking & Adjust Our Value Proposition To Address Customer Expectations - Upgrade of existing channels (website, Top class mobile, mail) channels - Developing new easy-to-use channels (secured chat, bot, etc.) Unified - Upgraded service centers (branch, Service c
Slide 36: We Have Started to Develop New Innovative and Disruptive Banking Models
We Have Started to Develop New Innovative and Disruptive Banking Models New Developing disruptive banking banking models models Developing top-class products & Focused Developing new services to non-discount bank offensive customers banking models Fintech Innovation & focusing on thorough collaborat
Slide 37: Outcome of the Updated 5-Year Strategic Plan
Outcome of the Updated 5-Year Strategic Plan Closingthe Closing thegap gap with with ourour peers peers - Continuous cost restraint, reducing additional ~600 employees - Robust, higher than market growth, focused on untapped potential with our own clients - Targeting 10% ROE and 60% CIR by 2021 Crea
Slide 38: Agenda
Agenda ◦ Opening Lilach Asher Topilsky, CEO ◦ In the midst of the 5-year strategic plan Uri Levin, CFO ◦ Our new 5-year strategic program Uri Levin, CFO ◦ Conclusion Lilach Asher Topilsky, CEO ◦ Q&A Lilach Asher Topilsky, CEO Uri Levin, CFO Yossi Beressi, Chief Accountant Ran Oz, Head of Financial M
Slide 39: Discount Bank is on the Rise
Discount Bank is on the Rise Sustainable change in Robust change- performance enabling platform Closing the gap with Set for future the industry challenges Developing differentiated value Confident in our proposition planning & execution Achieving superior capabilities customer satisfaction Israel D
Slide 40: Agenda
Agenda ◦ Opening Lilach Asher Topilsky, CEO ◦ In the midst of the 5-year strategic plan Uri Levin, CFO ◦ Our new 5-year strategic program Uri Levin, CFO ◦ Conclusion Lilach Asher Topilsky, CEO ◦ Q&A Lilach Asher Topilsky, CEO Uri Levin, CFO Yossi Beressi, Chief Accountant Ran Oz, Head of Financial M
Slide 41: IR Contact
http://investors.discountbank.co.il Subscribe to receive email alerts. IR Contact: Tamar Koblenz Tamar.koblenz@dbank.co.il +972-3-5144496 Israel Discount Bank I 2016 Financial results
Slide 42: Disclaimer
This document has been prepared by Israel Discount Bank Ltd. (the “Bank”) solely for use by the Bank in its presentation of its 2016 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 not be