Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — FY2015 Earnings Presentation
39 slides from Israel Discount Bank Limited Class A's earnings presentation, Feb 29, 2016
Slide 1: Israel Discount Bank 2015 Financial Results Conference Call
Israel Discount Bank 2015 Financial Results Conference Call February 29, 2016 1
Slide 2: Agenda
Agenda Lilach Asher Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky CEO Summary Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 2
Slide 3: Agenda
Agenda Lilach Asher Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky CEO Summary Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 3
Slide 4: Opening
Opening Discount is in the midst of its 5-year strategic plan Financial results have improved, but are still not good enough with ROE at 5.8% and CIR at 78.7% Q4 net income is especially low – reflecting the impact of our focusing effort (sale of FIBI and Swiss ops) Most importantly, the strat
Slide 5: Continuous Focus on Rigorous Execution of Our 5-Year Plan
Continuous Focus on Rigorous Execution of Our 5-Year Plan Relentless Execution Reduce & Grow Retail Simplify Costs Focus Change Culture 5 5
Slide 6: Agenda
Agenda Lilach Asher-Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky CEO Summary Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 6 6
Slide 7: 2015 Profit & Loss
2015 Profit & Loss (NIS m) P&L 2014 2015 Change Q3-15 Q4-15 Change Interest income, net 4,218 4,225 0.2% 1,067 1,043 (2.2%) Loan loss provision 164 187 14.0% 85 98 15.3% Non-interest financing income 549 363 (33.9%) 30 46 53.3% Commissions 2,586 2,611 1.0% 650 649 (0.2%) Other income 18 79 338.9% 42
Slide 8: 2015 Balance Sheet and Ratios
YTD P&L 2015 Balance Sheet and Ratios (NIS m) Balance Sheet and Ratios 2014 2015 Change Q3-15 Q4-15 Change Total assets 207,185 205,260 (0.9%) 206,914 205,260 (0.8%) Credit to the public, net 120,123 127,216 5.9% 123,592 127,216 2.9% Securities 37,353 38,935 4.2% 39,251 38,935 (0.8%) Deposits from t
Slide 9: 2015 Profitability Excluding Non-Recurring Items
2015 Profitability Excluding Non-Recurring Items (NIS m) Profitability Excluding Non-Recurring Items 2014 2015 Change Q3-15 Q4-15 Change Net income as reported 505 750 48.5% 168 60 (64.3%) ROE as reported 4.2% 5.8% - 5.2% 1.8% - CIR as reported 87.0% 78.7% - 79.4% 83.6% - Retirement plans 341 19 - -
Slide 10: Highlights of 2015
Highlights of 2015 Infrastructure o Strong capital and liquidity positions with 9.5% tier 1 ratio and 128% LCR o Robust asset quality Focus o Sold the entire FIBI stake o Acquired the minority stake in Diners o Sold the Swiss operation o Merged Discount Capital Markets with o Sold DBLA CLAL Finance
Slide 11: Strong Capital Position Ahead of BOI Threshold
Strong Capital Position Ahead of BOI Threshold Infrastructure Basel III CET-1 ratio Comparison of CET-1 ratio, Q3-15 Basel III CET-1 ratio Jan 2017 requirement by BOI 10.25% 10.2% 9.2% BOI Threshold for 10.0% Jan 2017 9.4% 9.5% 8.9% 9.8% 9.8% 9.6% 9.6% 9.5% 9.5% 9.3% 9.2% 2013 2014 2015 2019 Target
Slide 12: Robust Liquidity and Leverage Position
Robust Liquidity and Leverage Position Infrastructure Liquidity Coverage Ratio (LCR) Comparison of LCR, Q4-15 BOI Threshold 140.4% for Jan ‘18 131.5% 128.0% 128% 99% 104% 105% 100% 91% Q2-15 Q3-15 Q4-15 MZTF POLI FIBI LUMI DSCT Leverage Ratio (LR) Comparison of LR, Q4-15 BOI Threshold for Jan ‘17 7.
Slide 13: Robust Credit Quality
Robust Credit Quality Infrastructure (NIS m) Loan loss provision LLP ratio 0.83% 0.66% 0.65% 0.61% 998 0.49% 821 778 726 580 0.15% 0.14% 164 187 2009 2010 2011 2012 2013 2014 2015 2012 2013 2014 2015 Impaired 5,667 4,168 2,838 3,042 Substandard 612 1,015 928 524 Special Mention 2,763 2,560 3,037 1,6
Slide 14: Focus on Core Activities; Exit Non-Core Activities
Focus on Core Activities ; Exit Non-Core Activities Focus Core Non-Core Merger of DCM underwriting with CLAL Sale of the entire FIBI stake Sale of DBLA Finance Underwriting to create the Closure of the London branch leading investment banking and Sale of IDB (Swiss) Bank underwriting firm
Slide 15: Substantial Cost Reduction, Mainly Due to Salary Cost Restraint
Substantial Cost Reduction, Mainly Due to Salary Cost Restraint Cost (NIS m) Total Expenses, Group Salary & Related Expenses, Group 5,937 5,800 -2.0% 5,684 1,146 1,101 4.8% 1,154 1,182 1,161 3,609 3,538 -0.3% 1,158 -4.7% 3,372 1,128 1,160 -8.7% 1,059 3,609 3,538 -4.7% 3,372 2,481 2,378 -2.7% 2,313 2
Slide 16: Cost Reduction is Driven Primarily By Discount Bank (stand alone)
Cost Reduction is Driven Primarily By Discount Bank (stand alone) Cost (NIS m) Total Expenses, Discount Bank Salary & Related Expenses, Discount Bank 3,629 3,436 -4.1% 3,295 447 391 7.9% 422 849 818 -1.1% 809 2,333 2,227 -7.3% 2,064 775 785 -7.6% 725 2,333 2,227 -7.3% 2,064 -7.1% 1,558 1,442 1,339 2
Slide 17: Continued Headcount Reduction – Ahead of Plan
Continued Headcount Reduction – Ahead of Plan Cost Reduction in Workforce (in terms of FTE) – Plan vs. Actual Dec. Aug. Dec. Dec. Dec. 2013 2014 2014 2015 2019 ............... Planned -1,000 FTE net over the plan period Plan Launched Executed -508 FTE -301 FTE Workforce -6.7% -3.2% 10,047 9,369 9,06
Slide 18: Tight Control Over Workforce
Tight Control Over Workforce Cost Reduction in Workforce (FTE), Group -979 -301 10,047 9,369 9,068 -643 15 6,173 -53 5,515 5,530 -29 3,090 3,066 -283 3,037 -287 784 788 501 Total at the Group Bank only Local subsidiaries Total abroad 2013 2014 2015 Reduction in Workforce (Employees), Discount Bank 6
Slide 19: Real Estate Space Continues To Decline
Real Estate Space Continues To Decline Cost Reduction in real estate space Reduction in branches space Reduction in number of branches (In thousand sqm.) (In thousand sqm.) 3.3% 4.2% 172.3 166.6 159.6 4.8% 56.6 7.7% 145 54.2 50.5 3.7% 4.3% 115.7 80.3 74.1 138 112.4 109.1 71.3 132 2013 2014 2015 2013
Slide 20: Credit Growth in Targeted Segments
Credit Growth in Targeted Segments Growth (NIS bln) 5.9% 9.7% 127.2 6.7% 22.8 3.7% 6.8% 6.6% 15.2 120.1 20.8 14.3 115.9 19.4 13.4 Total Consumer credit SME 5.8% 5.1% 6.0% 7.4% 23.2 17.3% 41.4 41.2 21.6 22.0 1.9% 20.1 18.7 39.1 19.8 Mortgages Commercial Corporate 2013 2014 2015 Private banking balanc
Slide 21: Robust Performance of Subsidiaries
Robust Performance of Subsidiaries Subsidiaries (NIS m) (USD m) 10.4% 8.9%** 12.7% 12.6% 25.7% 210 167** 149 7.4%* 7.3% 147 139 7.2% 58* 2.4% 60 22 2014 2015 2014 2015 2014 2015 2014 Net income 2015 Net income ROE * Excluding a $ 17.3 m loss from TRUPS sale and a $ 18.9 m loss from the sale of DBLA.
Slide 22: IDB NY
IDB NY Subsidiaries (USD m) P&L and Balance Sheet 2014 2015 % change Q3-15 Q4-15 % change Net interest income 164 170 3.7% 42 45 7.1% Loan loss provision 5 3 (40.0%) 0 1 - Non-interest income 30 57 90.0% 13 16 23.1% Operating & other expenses 141 141 - 36 34 (5.6%) Net income 22 60 172.7% 15 18 20.0
Slide 23: Mercantile
Mercantile Subsidiaries (NIS m) P&L and Balance Sheet 2014 2015 Change Q3-15 Q4-15 Change Net interest income 800 872 9.0% 220 228 3.6% Loan loss provision 15 67 346.7% 20 57 185.0% Non-interest income 356 380 6.7% 96 82 (14.6%) Operating & other expenses 902 841 (6.8%) 225 208 (7.6%) Operating & ot
Slide 24: CAL
CAL Subsidiaries (NIS m) P&L and Balance Sheet 2014 2015 Change Q3-15 Q4-15 Change Credit card transactions 883 933 5.7% 241 233 (3.3%) Net interest income 253 290 14.6% 76 76 - Non-interest financing income 12 17 41.7% 3 5 66.7% Total income 1,148 1,240 8.0% 320 314 (1.9%) Total expenses 938 999 6.
Slide 25: Continuous Effort to Improve Organizational Culture
Continuous Effort to Improve Organizational Culture Culture Performance Execution Customer Management Approach Service BSC Focus on value creation and Strong focus on customer Aligned KPIs for all top impact service and customer management Quick wins satisfaction Targets and KPIs for all
Slide 26: Agenda
Agenda Lilach Asher Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky CEO Summary Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 26 26
Slide 27: Our 5-Year Strategy Continues to be Our Guideline with Focus Areas for 2016
Our 5-Year Strategy Continues to be Our Guideline with 5 Focus Areas for 2016 Accelerate cost 1 reduction plan Relentless Execution Enhance 2 retail growth Reduce & Grow Retail Simplify Build platform for Costs 3 future banking Focus Realize subsidiaries’ Change 4 potential Culture Strengthen organi
Slide 28: Accelerate Cost Reduction Program
1 Accelerate Cost Reduction Program YTD P&L Natural retirement by years Cost reduction $ 2,265 530 program is ahead HR cost 416 of plan BOI support to introduce more 253 aggressive plans 187 181 195 188 139 149 133 102 100 109 122 However, there is still High wave of natural retirement 75 95
Slide 29: Enhance Retail Growth - Improve Sales and Service Effectiveness
2 Enhance Retail Growth - Improve Sales and Service Effectiveness Full implementation of branches transformation program Significant Activities Results improvement of Expansion of back office to take Significant reduction of sales and service care of all non-customer-facing non-customer-facing act
Slide 30: Enhance Retail Growth - Build a Unique Value Proposition
2 Enhance Retail Growth - Build a Unique Value Proposition Introducing the next wave of transformation before year-end Need for improved Improved digital channels value proposition for customers With more proactive Multi-channel strategy bankers time and better managed day routines we can Best p
Slide 31: Continue to Develop Best-In-Class Digital Channels
2 Enhance Retail Growth – Continue to Develop Best-In-Class Digital Channels Forefront of digital innovation First in the market to New best-in-class Upgraded website introduce innovative mobile app features Discount Watch Discount Touch My Finance Widget 31
Slide 32: Build Platform for Future Banking
3 Build Platform for Future Banking The banking arena is changing rapidly Branch network & role of branches mainly due to the growing importance of the digital Next generation digital channels channels, and digital revolution, the Fintec Customer journeys competing models and other important facto
Slide 33: Realize Subsidiaries’ Potential
4 Realize Subsidiaries’ Potential Commercial banking growth Credit growth of households & SME Private banking $ Cost reduction $ Cost reduction Targeted segments Upgrade infrastructure Consumer credit growth Alternative investments $ Cost reduction Diners Become the leading investment bank in Israel
Slide 34: Strengthen Organizational Culture Change
5 Strengthen Organizational Culture Change YTD P&L Improve performance management culture Improve execution focus Improve internal service and customer service Finalize labor agreements 34
Slide 35: Agenda
Agenda Lilach Asher Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky Summary CEO Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 35
Slide 36: Summary
Summary 2015 results give us confidence that we are on the right path for a long term successful transformation of the Bank 2016 is all about continuous focus on rigorous execution of our 5 year plan Delivering results quarter by quarter Adjusting the original plan to address the changing business e
Slide 37: Agenda
Agenda Lilach Asher Topilsky Opening CEO Uri Levin 2015 results CFO Uri Levin 2016 strategic update CFO Lilach Asher Topilsky Summary CEO Lilach Asher Topilsky, CEO Uri Levin, CFO Q&A Yossi Beressi, Chief Accountant Ran Oz, Head of Financial Markets Division 37
Slide 38: Thank you. Stay Tuned.
Thank you. Stay Tuned. http://www.discountbank.co.il/IR Subscribe to receive email alerts. IR Contact: Tamar Koblenz Tamar.koblenz@dbank.co.il +972-3-5144496 38
Slide 39: 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 2015 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