30/09/2011 Overview

The Israeli Economy

2

*FiBi’s Forecast

Growth Rate of GDP2006-2012*

3

4

Bank of Israel Interest Rate

Bank of Israel Interest Rate*and Rate of Inflation

Rate of Inflation

*Bank of Israel Interest.**Fibi’s Forecast

MOODY’SFITCHS&P

Long TermA1AA+

Short TermP1F1A1

OutlookStableStableStable

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Israel Credit Rating

FIBI Banking Group

Universal bank with strong niche position in capital markets, foreign exchange and foreign trade.

174 Branches in Israel (including subsidiaries).

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7

FIBI’s Strategic Road Map Focus on Retail and PB while Realizing Synergies

Mergers and Acquisitions

No. of branches

Realizing Synergies ,Restraining Expenses

Market share in private banking

increased

Number of retail

customers doubled

Integration of the banks IT systems

Group Branding

Cross selling products within the group

Merger of mortgage

banks

Group Structure

- Corporate + Middle Market Banking- Private + Affluent banking- Capital & Money Markets- 80 branches

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Affluent Banking

International

- Retail /Commercial- Branches: 48- Since 2006

- Retail- Branches: 19- Since 2008

- Retail/Commercial- Branches: 20- Since 1977

- Capital Markets,

Trust & Custody- Private + affluent banking-Since 2004

Retail Banking Cluster

- Private Banking- Since 1984

- Commercial / Corporate- Since 1982

FIBI’s Rating

Moody’s

Bank Deposits – foreign & domestic, long & short term

A3 prime-2

Financial Strength

BFSR D+

OutlookStable

Midrug (Israel)

MidrugAa1

Ma’a lot-S&P

IssuerAA / Stable

Subordinated NotesAA- / Stable

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Ownership Structure

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The Public FIBI Holding Company Ltd.

Israel Discount Bank

79.06%

53%

20.94%

20.02%

26.45%

100%75.89%51% 100% 100%100%

Bino-Liberman Group

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TheBino family

Mr. Zadik Bino is a highly reputable businessman with broad business interests in Israel. In a banking career spanning over 25 years, Mr. Zadik Bino filled senior positions in the local banking sector, which included CEO of Bank Leumi of Israel and Chairman of the Board of Directors and CEO of The First International Bank of Israel. Mr. Zadik Bino was also a member of the Advisers Committee and the Committee for Banking Matters of the Bank of Israel.

Since 1989, Mr. Bino has devoted himself to his family's private business interests in Israel and abroad. Through the years, the Bino Group has engaged in the execution, development and nurturing of various investments. Besides banking, the main investments of the Bino family is in Energy (through a 45.5% holding in Paz oil Company Ltd. - a listed company which is Israel’s largest supplier of refined petroleum products, and which owns the Ashdod Refinery).

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Shareholders

The Liberman family has enjoyed sustained success in both Australia and Israel for over 50 years. Jack Liberman, an astute Australian businessman and entrepreneur, along with his children, built a large and diversified investment company (JGL Investments PTY Ltd.). The family, together with the Bino Group, in a long-term partnership, hold a controlling interest in both FIBI Holdings and Paz Oil Company Ltd. (“Paz”), Israel’s leading petrol player.

TheLiberman family

Financial Reports30/09/2011

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נתונים מצטברים

Net Operating Earnings and ROENIS Millions

10.5%-

7.3%

7.5%

8.6%

1.5%

The deepening of the crisis in the financial markets has had a substantial effect on the results of the third quarter and the first nine months of 2011

NIS Millions (Net)1-9/2011III 2011/

Fair value of ALM derivatives : the effect of the gap between measuring the results of the derivative instruments on a fair value basis in comparison with measuring results in balance sheet financial activities on an accrual basis

)33()40(

Provisions for impairments in securities portfolio)17()62(

Effect of the losses on severance pay funding)16()10(

Total effect of the crisis on profits and losses)66()112(

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Statements of income 01-09/2011– 01-09/2010 NIS Millions

01-09/201101-09/2010Net change

Net interest income before provision for doubtful debts15831636(34)

Of which: Recovery of loan lossesN.A58

Provision for doubtful debts (59)(73)

Operating commissions1,0581,063(3)

Income from investment in shares (& dividend)(44)9(35)

Other income622(16)

Operating & other expenses2,0772,080(2)

Operating earnings before tax467577(110)

taxation190250

Operating earnings after tax277327(50)

The banks net equity in operating results of investee companies

46406

Exterior share holders & extraordinary income(16)(24)8

Net earnings307343(36)

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5959 1515

1-9/20111-9/2010Change

Net interest income before provision for doubtful debts

1,5831,578*)5(

excluding: Hedging of volatility in provision for taxes

)16(6)22(

Net interest income before provision for doubtful debts

)excluding: Hedging of volatility in provision for taxes(

1,5991,57227

excluding: fair value of ALM derivatives)51()75(24Net interest income before provision for doubtful debts

)excluding: Hedging of volatility in provision for taxes and fair value of ALM derivatives(

1,6501,6473

excluding: Gains/losses from sale and writedown of available for sale 76188)112(

1,5741,459115

Excluding interest income charged on problem loans *16

Net interest income before provision

for doubtful debts 1-9/2011 – 1-9/2010 NIS Millions

Statements of income III/2011– III/2010 NIS Millions

III/2011III/2010Net change

Net interest income before provision for doubtful debts465545(80)

Of which: Recovery of loan losses-19(19)

Provision for doubtful debts(59)(30)(29)

Operating commissions3443413

Income from investment in shares (& dividend)(81)9(90)

Other income-8(8)

Operating & other expenses651657(6)

Operating earnings before tax360368(8)

taxation1151114

Operating earnings after tax11127(116)

The banks net equity in operating results of investee companies

1697

Exterior share holders & extraordinary income(6)(7)1

Net earnings21129(108)

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Total Income

Credit to the public

50% of the revenues are from the private and the personal segments

small business

2%

Deposits from the

Public

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Income & Assets according to segments

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30/9Trands20112010NIS Millions %

Total credit to the public

64,08161,8502,2313.6%

Of: Corporate credit

21,71025,154(2,444)(10.1%)

Commercial credit

13,51711,8521,66514.0%

Consumer credit

14,23312,9491,2849.9%

Mortgages14,62112,8951,72613.4%

Trends in credit to the public NIS Millions

Conservative credit policy: __% of the period performanceare are in

LTV below.%__

Efficiency Ratio: Operating Expenses to Total Income

76.2% 79.8%

78.0%83.4%

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Operating Expenses to Total Income

Operating Expenses

Total Income

%Operating Expenses /

Total Income%

Adjusted Operating Expenses / Total Income*

*Expenses excluding severance pay fund effects, special provisions ; Net interest income excluding gains/losses from sale and writedown of available for sale bonds, hedging of volatility in provision for taxes , interest income charged on problem loans and effect of reconciliations to fair value of ALM derivatives ; Operating income excluding dividend, realization or decline in value of shares and severance pay fund gains;

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Operating & Other Expenses (NIS Millions)

1-9/2010 1-9/2011

Total Operating & Other Expenses

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Deposits from the Public78.9 NIS Billion

Deposits to Credit Ratio

Liquid Assets to Deposits Ratio

Capital Adequacy Basel II

Tier 1 Capital Adequacy

Credit tothe Public64.1 NIS Billion

Gov. & Bank Deposits1.5 NIS Billion

8.20%

123.1%

32.9%

43.8%Of capital available for Investments

State of Israel Bonds: 8.0 NIS Billion

Deposits-Bank of Israel:14.2 NIS Billion

Sovereigns Bonds: 0.7 NIS Billion

Deposits in Banks: 3.1 NIS Billion

Banks Bonds: 1.3 NIS Billion

NIS+foreign Corporate Bonds:0.8 NIS BillionStructure Products, Hedge Funds & Stocks:0.8 NIS Billion

Market Risks in VAR Terms: (0.07) NIS Billion

Capital Notes5.0 NIS Billion

Capital available for Investments3.9 NIS Billion

12.71%

12.1% backed with cash, deposits & state of Israel bonds

FIBI Strategic Assets & liabilities structure NIS Millions

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Total Assets, Deposits & Credit NIS Billions

Credit to the public

Public Deposits

EquityAssets

NIS Billions $Billions

26.5

21.3

17.3

1.54

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Composition of Total Proprietary Trading Book

volume30.9.11

volume31.12.10

Composition 30.9.11

Composition 31.12.10

Government bonds & Secured by Government bonds

8,72010,61677%67%

Commercial Banks bonds1,2952,69511%17%

Shares5909475%6%

Other 8111,5447%10%

Of which: Fx Corporate Bonds

548690

Of which: NIS Corporate Bonds

296854

Total11,41615,802100%100%

PIIGS Exposure

NIS Millions

NIS Millions

NIS Millions

Government bonds & Secured by Government bonds

77%

TotalSovereigns

Portugal00

Italy1033

Greece00

Spain13115

Irekand80

NIS Millions

Key Risk Indicators

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14.30%14.57%

13.42%

Capital Adequacy Ratio Basel II

Tier 2 FIBICore Tier 1 4 top Banks in Israel

*

*

*

***

**

Balance for dateChange

30/09/201131/12/2010

Defective credit risk1,1241,242(118)

Inferior credit risk384511)127(

Credit risk subject to special supervision9921,034)42(

Off-balance sheet credit risk* 353353-

Total Doubtful debts 2,8533,140)287(

Doubtful debts according to the new B.O.I Regulation (NIS millions)

*After accounting deductions and before credit lost provision

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Provision for Doubtful Debts to Credit to the Public Ratio

Other 4 Leading Banks FIBI

Main Subsidiaries Performance

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Changes in Net Profit - Subsidiaries NIS Millions

01-09/201101-09/2010ChangeROE

62.528.6118.5%9.9%

34.138.0)10.3%(11.1%

31.724.827.8%14.3%

26.225.62.3%10.0%

PAGI, in which FIBI has a 100% equity holding, is a retail bank with 19 branches. the majority of its clients belong to the ultra-orthodox and orthodox sectors. PAGI maintains a unique positioning as Israel’s only orthodox oriented bank and its share in its target is significant. PAGI’s strategy is to aggressively grow its client base, while focusing on target segments in personal, business, and institutional banking.

UBANK - FIBI acquired 100% of share capital of UBANK (formerly Investec Bank (Israel) Ltd.) in December 2004. The acquisition of UBANK significantly bolstered FIBI’s competitive position in private banking, capital markets and foreign currency trading.In 2007 UBANK launched an innovation in Israeli banking - dedicated branches for affluent clients. This premium service (above retail and bellow classic private banking) comprises distinctive branch design and hours of operation, along with many other attractive features.

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Banking Subsidiaries in Israel

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OTSAR HAHAYAL - FIBI acquired the majority share of Otsar Hahayal in August, 2006, it now hold 75.89% of the bank. Bank Otsar Hahayal specializes in retail and small to medium-sized businesses (SMEs) and has a high proportion of current and former military and defense industry personnel within its client base.The inclusion of Bank Otsar Hahayal’s operations creates a banking group with a comprehensive and diverse range of activities and earnings. FIBI has completed the process of integrating Otsar Hahayal’s IT systems and is in the process of implementing a shared services model across headquarter functions.

Banking Subsidiaries in Israel

MASSAD - FIBI acquired 51% of the share capital of Massad in May 2008. Massad, is a sectorial bank, specializes in teaching personnel. FIBI completed the process of integrating Massad’s IT System and is currently implementing a shared services model across headquarter support functions. Massad's identity as the “teachers' bank” also places it in an advantageous position in the Arab sector, and explains its success in this sector despite rising competition.

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