Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — FY2022 Earnings Presentation
29 slides from Israel Discount Bank Limited Class A's earnings presentation, Mar 13, 2023
Slide 1: 2022 Review: Financial & Strategic Highlights
2022 REVIEW Financial & Strategic Highlights Investor Relations March 13, 2023
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 2022 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: Opening Remarks
Opening Remarks Uri Levin, CEO 3
Slide 4: 2022 – Year of Record Results
2022 – YEAR OF RECORD RESULTS NET INCOME ROE EFFICIENCY RATIO 3,495M 15.1% 55.8% NII GROWTH TOTAL EQUITY CREDIT GROWTH +33% 25.5BN +13% 4
Slide 5: Reached 2025 Targets Through Accelerated Execution & Supportive Macro
REACHED 2025 TARGETS THROUGH ACCELERATED EXECUTION & SUPPORTIVE MACRO 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% WHERE WE ARE 2025 3,500m 12.5% 55.0% TARGETS Source: Company filings. Note: 2025 goals were set
Slide 6: Signs of Economic Slowdown, Yet Macro Fundamentals Are Still Solid
SIGNS OF ECONOMIC SLOWDOWN, YET MACRO FUNDAMENTALS ARE STILL SOLID Israel’s GDP Growth (%) to slowdown in 2023 Bank of Israel’s Rate reached 4.25% in February 2023 8.6 and expected to reach 5.0% by the end of 2023 ** 6.5 4.1 4.2 2.8 2018 2019 2020 2021 2022 2023F -1.9 Early signs of slowdown in labo
Slide 7: Financial and Strategic Review
Financial and Strategic Review Barak Nardi, CFO 7
Slide 8: 2022 Highlights
2022 HIGHLIGHTS Record profitability with net income of 3,495m and ROE of 15.1% in 2022, and net income of 939m and ROE of 15.4% in 4Q22, driven by increase in revenue from core banking activity. Strong positive impact of interest rate increase: In 2022 NII grew by 33% to 8,693 million. In 4Q22 NII
Slide 9: Responsible Credit Growth Under Challenging Macro Conditions
RESPONSIBLE CREDIT GROWTH UNDER CHALLENGING MACRO CONDITIONS Evolution of Credit Growth Well Balanced Loan Book With Mortgages Medium Enterprises in NIS bn; growth % in NIS bn; growth % Growing Share of Mortgages in NIS bn; growth % 21.0% 16.6% 13.0% 3.0% 1.4% 244.3 1.8% 62.7 64.6 17.0 17.2 240.0 14
Slide 10: Growth in Net Interest Income and in Fees Highlights Core Business Strength
GROWTH IN NET INTEREST INCOME AND IN FEES HIGHLIGHTS OUR CORE BUSINESS STRENGTH Total Income Financing Income From Current Operations (NIS m) 2022 ver. 2021 NIS m 23.4% Period end BOI rate 0.1% 0.1% 0.75% 2.00% 3.25% 12,944 Average BOI rate* 0.1% 0.1% 0.47% 1.53% 2.92% 50.9% 10,491 11.4% 8.9% 2,540
Slide 11: Cost Income Ratio Is Improving Due to Substantial Positive Jaws
COST INCOME RATIO IS IMPROVING DUE TO SUBSTANTIAL POSITIVE JAWS Total Expenses YoY 22 Cost Income Ratio Is Improving Due To Positive Jaws NIS m 5.2% 2022Jaws * 6,858 7,217 9.7% 18.2% 2417 2303 68.2% 65.2% 67.5% 65.4% 23.4% 1232 3.8% 1187 55.8% 3468 3568 2.9% 5.9% 5.2% 2.6% 2021 2022 2018 2019 2020 2
Slide 12: Credit Provision Reflects Robustness of Our Portfolio & Macro Potential Impact
CREDIT PROVISION REFLECTS ROBUSTNESS OF OUR PORTFOLIO & MACRO POTENTIAL IMPACT Increase in Group Basis Provision Drove the Overall Increase in Credit Loss Expenses (in NIS m and %) FY21 FY22 (0.34)% 0.18% Group Basis Specific Basis 12
Slide 13: Asset Quality Remains Strong with Appropriate Coverage
ASSET QUALITY REMAINS STRONG WITH APPROPRIATE COVERAGE Allowance for Loan Loss Provisions from Total Credit* NPL remain stable (NIS m) 1,863 1,537 1,536 1,573 1.31% 1.29% 1.31% 1.31% 1Q22 2Q22 3Q22 4Q22 1Q22 2Q22 3Q22 4Q22 NPL/Total Credit** remain relatively low NPLs Are Well Covered by Loan Loss P
Slide 14: CAL Separation Is Expected to Have Limited Impact on Discount Ongoing Profitability
CAL SEPARATION IS EXPECTED TO HAVE LIMITED IMPACT ON DISCOUNT ONGOING PROFITABILITY Record high results for CAL in 2022 - Net profit of 309 NIS million, ROE of14.3% and Credit growth of 13% In light of strong results for Discount Group, CAL attributes only 5.4% to the consolidated net profit The fut
Slide 15: Driving Value Through Our Ambitious Strategic Plan
DRIVING VALUE THROUGH OUR AMBITIOUS STRATEGIC PLAN ULTIMATE GOAL: TO BE THE BEST FINANCIAL INSTITUTION FOR ITS CUSTOMERS, DELIVERING SUPERIOR VALUE FOR SHAREHOLDERS, OVER TIME Key Strategic Pillars 1 2 3 Accelerated Evolution of Groundbreaking Maximizing Group Value Traditional Banking Innovation Fo
Slide 16: Driving Profitability & Winning Share Through Accelerated Execution
1 DRIVING PROFITABILITY & WINNING SHARE Traditional Banking THROUGH ACCELERATED EXECUTION Expanding credit focusing on Improving efficiency through Mortgages & Middle Markets higher productivity Credit Growth 2022 YoY 3 Year CAGR 2020 2021 2022 Total Credit 13.0% 10.1% Efficiency Ratio (%) 67.5% 65.
Slide 17: Generating Value Through Disruptive Innovation
2 Groundbreaking Innovation GENERATING VALUE THROUGH DISRUPTIVE INNOVATION Two years after PayBox spinout, Discount is launching greenlend, A FinTech company that offers digital credit facilities to clients of all banks 2021 2023 The key principals behind our disruptive initiatives • Separate and in
Slide 18: PayBox
2 PAYBOX Groundbreaking Innovation • Large and fast growing customer base reaching 1.27 million active accounts at the end of 2022 and a turnover of over 5B NIS • Substantial competitive advantage being the only local E-wallet with balance storing abilities • On a mission to become Israel’s leading
Slide 19: Green Lend
2 Groundbreaking Innovation Green Lend Discount (70%) and ezbob (30%) are founding greenlend, a finTech company for fast emedded digital credit solutions, that will offer credit to clients of all banks • Fully Digital • Based on top tier international platform • Distributed via 3rd party channels •
Slide 20: Delivering Outstanding Performance Across Our Subsidiaries
3 DELIVERING OUTSTANDING PERFORMANCE ACROSS OUR SUBSIDIARIES Maximizing Group Value 16.2% 15.7% 601 In NIS m 562 YoY growth in In NIS m 6.6% 13.2% Total credit YoY growth in 16.3% Credit card transactions ROE Cost income ROE Net income 211 49.5% ratio Net income YoY growth in as reported as reported
Slide 21: To Summarize
TO SUMMARIZE We delivered record 2022 results, with net income of 3.5BN NIS, ROE of 15.1% and Cost Income of 55.8%, and we reached our 2025 strategic targets. Substantial revenue increase from core banking activity – NII is growing by 33% in 2022, 51% in 4Q22 driven by credit growth & interest rate
Slide 22: Q&A
Q&A Barak Nardi, CFO Yossi Beressi, Chief Accountant 22
Slide 23: Appendices
APPENDICES space olgeoonT
Slide 24: Israel Discount Bank: P&L and Selected Ratios
ISRAEL DISCOUNT BANK: P&L AND SELECTED RATIOS NIS m 4Q22 3Q22 4Q21 vs.3Q22 vs.4Q21 2022 2021 Net interest income 2,540 2,280 1,683 11.4% 50.9% 8,693 6,529 Credit loss expenses (expenses release) 230 106 ) 10( 117.0% 407 ) 693( Non-interest financing income 248 151 180 64.2% 37.8% 417 765 Commissions
Slide 25: Israel Discount Bank: Selected Balance Sheet Items
ISRAEL DISCOUNT BANK: SELECTED BALANCE SHEET ITEMS NIS m 31.12.22 30.09.22 31.12.21 Cash and deposits with banks 65,713 71,510 59,638 Credit to the public 244,288 240,032 216,196 Provision for credit losses (3,209) (3,151) (3,040) Credit to the public, net 241,079 236,881 213,156 Credit to governmen
Slide 26: Israel Discount Bank: Adjustment to P&L
ISRAEL DISCOUNT BANK: Adjustment to P&L year ended at 31 December NIS m NIS m 2022 2021 2020 Income from the sale of Visa Inc. shares ) 20( ) 44( Realization of Assets ) 315( ) 38( Provisions for salary agreement 155 Early retirement in a subsidiary 15 Early redemption of long term benefits 19 Effec
Slide 27: Mercantile: Financial Performance
MERCANTILE: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 4Q22 3Q22 4Q21 Vs. 3Q22 Vs. 4Q21 2022 2021 change Net interest income 521 452 342 15.3% 52.3% 1,746 1,324 31.9% Non-interest income 97 101 94 (4.0%) 3.2% 376 469 (19.8%) Total income 618 553 436 11.8% 41.7
Slide 28: IDBBank: Financial Performance
IDBBANK: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios USD m 4Q22 3Q22 4Q21 Vs. 3Q22 Vs. 4Q21 2022 2021 change Net Interest Income 92 92 71 0.2% 29.9% 335 257 30.4% Non-Interest Income 12 17 22 (29.4%) (45.5%) 67 87 (23.0%) Total Income 104 109 93 (4.6%) 11.8% 402 344
Slide 29: CAL: Financial Performance
CAL: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 4Q22 3Q22 4Q21 Vs. 3Q22 Vs. 4Q21 2022 2021 Income From Credit Card Transactions 428 434 388 (1.4%) 10.3% 1,651 1,432 Credit Loss Expenses (Expenses Release) 43 28 9 53.6% 377.8% 97 (9) Non-Interest Financing Inco