Israel Discount Bank Limited Class A · TASE:DSCT
Israel Discount Bank Limited Class A — Q2 2022 Earnings Presentation
25 slides from Israel Discount Bank Limited Class A's earnings presentation, Aug 11, 2022
Slide 1: 2Q 22 Review
2Q 22 REVIEW Investor Relations August 11, 2022
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 1st quarter 2022 report, as well as in strategic updates referred to in the Bank’s reports. This presentation is not a substitute for the Bank’s 1st quarter fin
Slide 3: Opening Remarks and Financial Review
Opening Remarks and Financial Review Barak Nardi, CFO 3
Slide 4: Strong Underlying Performance Across the Key Indicators
STRONG UNDERLYING PERFORMANCE ACROSS THE KEY INDICATORS NET INCOME ROE 680M 11.8% YoY YoY MORTGAGE EFFICIENCY RATIO CREDIT GROWTH ORIGINATION GROWTH 16.4% 59.2% 47.5% 4
Slide 5: 2Q and 1H 2022 Highlights
2Q AND 1H 2022 HIGHLIGHTS Net income of 680m and ROE of 11.8% supported by increase in revenues from core banking activity, which outpace the growth in operating expenses, leading to improving cost income ratio of 59.2%. Leverage of NIS 1.4 billion equity raise into NIS 14.8 billion credit growth (6
Slide 6: We Expect to Benefit from Mixed Impact of Macro Environment
WE EXPECT TO BENEFIT FROM MIXED IMPACT OF MACRO ENVIRONMENT Israel Actual and Projected* GDP Growth Bank of Israel and Fed Rates Evolution “Narrow” Unemployment Rate Israel CPI Increase Annual Rate 6 * Bank of Israel projections
Slide 7: Leverage of NIS 1.4 bn Equity Raise to NIS 14.8 bn Credit Growth
LEVERAGE OF NIS 1.4 BN EQUITY RAISE TO RESPONSIBLE AND PROFITABLE NIS 14.8 BN CREDIT GROWTH Strong Credit Growth Mortgages Medium Enterprises in NIS bn; growth % in NIS bn; growth % in NIS bn; growth % 235.5 60.8 16.7 17.3 Well Balanced Loan Book 56.8 14.2 14.8 bn Dec ‘20 -22.2% 220.7 Dec ‘21 – 25.0
Slide 8: Growth in Net Interest Income and Fees Highlight Core Business Strength
GROWTH IN NET INTEREST INCOME AND IN FEES HIGHLIGHT THE STRENGTH OF OUR CORE BUSINESS Total Income Income from Regular Financing Activity NIS m vs. vs. NIS m 2Q21 1Q22 Period end BOI rate 0.1% 0.1% 0.75%*** 3,086 2,897 13.2% 8.5% * Average BOI rate** 0.1% 0.1% 0.47% 416 -27 2,560 45 1 2.63% 89 851 8
Slide 9: Disciplined Cost Management Improving Cost Income Ratio
DISCIPLINED COST MANAGEMENT AND INCREASE IN INCOME LED TO IMPROVING COST INCOME RATIO Total Expenses Cost Income Ratio NIS m vs. vs. 2Q21 1Q22 1,707 1,716 1,611 6.5% 0.5% 85 95 118 549 565 473 19.5% 2.9% 303 307 308 (0.3%) 1.3% 67.8% 63.7% 64.0% 770 749 62.2% 712 5.2% (2.7%) 57.2% 2Q21 1Q22 2Q22 1H1
Slide 10: High Quality Loans and Conservative Underwriting Produce Solid Credit Metrics
HIGH QUALITY LOANS AND CONSERVATIVE UNDERWRITING PRODUCE SOLID CREDIT METRICS Credit Loss Expenses (in NIS m and %) Allowance for NPL*/Gross Total Credit 1.14% LLP/Gross Total Credit 0.70% 0.42% 0.23% (0.02%) (0.11%) (0.30%) (0.25%) 1.29% 0.84% 532 (0.82%) 330 166 200 131 (10) (35) (147) (126) (60)
Slide 11: Mercantile: Robust Credit Growth Delivers Strong Net Income and ROE
MERCANTILE: ROBUST CREDIT GROWTH DELIVERS STRONG NET INCOME AND ROE Net Income and ROE Total Credit Mortgages Strong ROE of 15.5% and net income (NIS bn ) (NIS bn ) (NIS bn ) of NIS 144 million were driven by 10.4 9.7 credit growth and carefully 42.0 40.1 7.8 managed expenses. 7.6% 23.9% 35.7 201 4.
Slide 12: IDBBank: Higher Net Interest Margins and Negative LLP
IDBBANK: HIGHER NET INTEREST MARGINS AND NEGATIVE LLP LED TO SOLID RESULTS Net Income and ROE Credit Loss Expenses Total Credit IDBNY solid net income of $29.7 (USD m) (%, USD m) (USD m) million is driven by 26.7% increase in 9.7% 10.8% net interest income, 12.7% annual 8.7% credit growth, and relea
Slide 13: CAL: A Strong Quarter Across All Indicators
CAL: A STRONG QUARTER ACROSS ALL INDICATORS; CONTINUE LEADING INNOVATION Net Income and ROE Consumer Credit Transaction Turnover in NIS m in NIS m in NIS bn CAL produced robust net income of NIS 81 million and 14.6% ROE. 6.4 37.1 6.2 31.4 16.7% 14.3% 14.6% 5.3 3.2% 18.2% 79 80 81 The results were su
Slide 14: Our 5-Year Strategic Plan Enables Us to Achieve Ambitious Targets
OUR 5-YEAR STRATEGIC PLAN ENABLES US TO ACHIEVE AMBITIOUS TARGETS… OUR STRATEGIC GOAL IS TO BE THE BEST FINANCIAL INSTITUTION FOR OUR CUSTOMERS AND TO DELIVER SUPERIOR VALUE TO OUR SHAREHOLDERS Winning in Traditional Banking Generating value through Maximizing Group Value Disruptive Innovation 14
Slide 15: Increasing Rates Allow Us to Accelerate Towards 2025 Targets
… WHILE INCREASING RATES ALLOW US TO ACCELERATE THE PACE TOWARDS REACHING OUR 2025 TARGETS NET INCOME ROE Efficiency Ratio 3.5bn 12.5% 55.0% Israel Gov’t Bonds Yields US Gov’t Bonds Yields Bank of Israel and Fed Funds Rate 15
Slide 16: To Summarize
TO SUMMARIZE We delivered strong 2Q22 results, which reflect continuous execution of our strategic initiatives, while at this stage we only partially benefitted from rising interest rates. We leveraged NIS 1.4 billion equity raise to NIS 14.8 credit growth (6.7% QoQ), focusing on our targeted sector
Slide 17: Q&A
Q&A Barak Nardi, CFO Yossi Beressi, Chief Accountant 17
Slide 18: Appendices
APPENDICES 18
Slide 19: Israel Discount Bank: P&L and Selected Ratios
ISRAEL DISCOUNT BANK: P&L AND SELECTED RATIOS NIS m 2Q22 1Q22 2Q21 Vs. 1Q22 Vs. 2Q21 1H22 1H21 change Net interest income 2,073 1,800 1,685 15.2% 23.0% 3,873 3,189 21.4% Credit loss expenses (expenses release) 131 -60 -410 -- -- 71 -557 -- Non-interest financing income -27 45 89 -160.0% -130.3% 18 3
Slide 20: Israel Discount Bank: Adjusted P&L & Selected Ratios
ISRAEL DISCOUNT BANK: ADJUSTED P&L & SELECTED RATIOS NIS m 2Q22 1Q22 2Q21 Vs. 1Q22 Vs. 2Q21 1H22 1H21 change Net interest income 2,073 1,800 1,685 15.2% 23.0% 3,873 3,189 21.4% Credit loss expenses (expense release) 131 -60 -410 -- -- 71 -557 -- Non-interest financing income -27 45 89 -- -- 18 387 -
Slide 21: Israel Discount Bank: Adjustments to P&L
ISRAEL DISCOUNT BANK: ADJUSTMENTS TO P&L 2Q22 1Q22 2Q21 1H22 1H21 NIS m net icome attributable to shareholders 680 983 860 1663 1522 Income from real estate sale -315 -315 early redemption of long term benefits 5 81 Cost associated with IDBNY change of headquarters location 13 13 net income after ad
Slide 22: Israel Discount Bank: Selected Balance Sheet Items
ISRAEL DISCOUNT BANK: SELECTED BALANCE SHEET ITEMS NIS m 30.06.22 31.12.21 30.06.21 Cash and deposits with banks 63,449 59,638 47,405 Securities* 45,256 45,075 48,226 Credit to the public 235,510 216,196 202,258 Prov ision for credit losses -3,045 -3,040 -3,272 Credit to the public, net 232,465 213,
Slide 23: Mercantile: Financial Performance
MERCANTILE: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 2Q22 1Q22 2Q21 Vs. 1Q22 Vs. 2Q21 1H22 1H21 change Net interest income 414 359 335 15.3% 23.6% 773 641 20.6% Credit loss expenses (expenses release) 36 25 -73 44.0% -- 61 -82 -- Non-interest income 89 89 14
Slide 24: IDBBank: Financial Performance
IDBBANK: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios USD m 2Q22 1Q22 2Q21 Vs. 1Q22 Vs. 2Q21 1H22 1H21 change Net Interest Income 79 72 63 9.7% 25.4% 151 122 23.8% Credit Loss Expenses -2 -7 -8 -71.4% -75.0% -9 9 -200.0% Non-Interest Income 20 18 21 11.1% -4.8% 38 44
Slide 25: CAL: Financial Performance
CAL: FINANCIAL PERFORMANCE Main P&L and Balance Sheet metrics and selected ratios NIS m 2Q22 1Q22 2Q21 Vs. 1Q22 Vs. 2Q21 1H22 1H21 change Income From Credit Card Transactions 412 377 346 9.3% 19.1% 789 663 19.0% Net Interest Income 172 160 133 7.5% 29.3% 332 262 26.7% Credit Loss Expenses (Expenses