30/06/2012 Overview

Q2 Highlights

2

Continued improvement in earnings from financing operations from core banking activity

Continued growth of the credit portfolio, mainly in consumer credit and mortgages, as well as commercial and corporate credit - leading to a decrease in concentration indices and improved distribution; FIBI’s market share (local market): 9.2%

Core capital ratio: 9%, the highest in the industry

In Q2, capital market commissions stabilized after declines due to slowing in market activity; FIBI maintained its market share throughout

Decreased expenses (operating and other) due to fiscal restraint

3

Net Earnings and ROE NIS Millions

281 NIS Millions

285 NIS Millions

Note: The ROE assuming average capital industry ratio of (8.3%) in the first half of 2012 stands on 10.5%

Statements of income 1-6/2012- 1-6/2011 NIS Millions

1-6/20121-6/2011Gross change

Net interest income1,107 1,084 23

Expenses (income) for credit losses (0.16% provision rate)52052

Net interest income after expenses for credit losses1,055 1,084 (29)

Total non-interest income758 797 (39)

Of which: income (expenses) non-interest73 36 37

Commissions (decrease stems mainly from decreses in customers activity in the capital markets) 680 743 (63)

Other Income 5 18 (13)

Total operating and other expenses1,3961,434 (38)

Of which: salaries and related expenses (including losses appointed time compensation)826 847 ((21

Holding and depreciation on buildings and equipment 220 221 ((1

Amortization and impairment of intangible assets84 79 5

Other expenses266 287 (21)

Profit before tax417 447 (30)

Provision for taxes on income147 187  

Bank’s share of profit of associates25 30 (5)

Net earnings285 281 4

ROE9.8%10.4%

Core (Tier 1) capital ratio (end of period)9.0%8.36%4

Statements of income 4-6/2012- 1-3/2012 NIS Millions

4-6/20121-3/2012Gross change

Net interest income57253537

Expenses (income) for credit losses (0.13% provision rate)2131(10)

Net interest income after expenses for credit losses55150447

Total non-interest income355403(48)

Commissions3423384

Of which: income (expenses) non-interest1365(52)

Of which: reconciliations to fair value of derivatives19((43(62)

Total operating and other expenses696700(4)

Of which: salaries and related expenses (including losses appointed time compensation)40841810))

Holding and depreciation on buildings and equipment 109111(2)

Amortization and impairment of intangible assets43412

Other expenses1361306

Profit before tax210207

Provision for taxes on income74731

Bank’s share of profit of associates1213(1)

Net earnings1431421

ROE9.8%9.9%

Core (Tier 1) capital ratio (end of period)9.0%8.81%

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6

The Ratio of Total Income to Total Risk Assets (Return of Income on Risk Assets)

1-6/20121-6/2011

Operating & Other Expenses

NIS Millions

21-

5+21-

38-

7

Efficiency Ratio: Total Income to Operating Expenses

8

Total Income%Total Income / Operating Expenses

1-6/2011

Operating Expenses

Ratio of Total Income to Operating Expenses

Credit to the Public NIS Millions

9

Credit to the Public by Operating Segments

  30.06.1231.12.1130.06.11

Change in % Compared to

30.06.11Total Private Clients

30,19728,91228,2406.9%

Of which: Mortgage15,34514,70214,2727.5%

Commercial + Small Business

13,41213,38713,0233.0%

Corporate23,21222,67922,5912.7%Total Credit to the Public

66,82164,97863,8544.65%

Ratio of Provision for problematic Debts to Credit to the Public

Other 4 Leading Banks FIBI

10* Beginning in 2011, all collection on problematic debts is shown as Expenses for credit losses instead of earnings

from financing operations **The ratio of provision for credit losses to credit to public in the first half of 2012 is 0.16%.

New measurement according to new B.O.I problematic Debts Regulation*

Deposits from the Public

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Deposits by Segments Activity

30.06.1231.12.1130.06.11Change in % Compared to

30.06.11

Private Banking

23,74223,57121,57810.0%

Household27,13726,36524,65310.1%

Total Private Deposits

50,87949,93646,23110.1%

Commercial + Small Business

10,63711,13810,690((0.5%

Corporate21,51220,31322,164(2.9%)

Total 83,02881,38779,0855.0%

NIS Millions

Composition of Total Proprietary Trading Book

Volume30.06.12

Volume31.03.12

Composition 30.06.12

Composition 31.03.12

Government bonds & Secured by Government bonds

8,5309,26574%75%

State of Israel bonds90%92%

Commercial Banks bonds1,7091,65915%14%

Shares4655424%4%

Other 8798818%7%

Of which: Fx Corporate Bonds

145180

Of which: NIS Corporate Bonds

735701

Total11,58312,347100%100%

NIS Millions

NIS Millions

Government bonds & Secured by Government bonds

74%

Total

Spain84*

Italy78*

Portugal0

Greece0

Ireland0

NIS Millions

12

PIIGS proprietary trading book exposure

*No significant change in the quarter

Deposits from the Public83.0 NIS Billion

Deposits to Credit Ratio

Liquid Assets to Deposits Ratio

Capital Adequacy Basel II

Tier 1 Capital Adequacy :Of which

Corporate and Commercial 36.315.2Consumer

15.3 Mortgage

Credit tothe Public66.8 NIS Billion

Gov. & Bank Deposits1. 5 NIS Billion

9.0%

124.3%

32.3%

39.3%Of capital available for Investments

State of Israel Bonds: 7.6 NIS Billion

Deposits-Bank of Israel:16.4 NIS Billion

Sovereigns Bonds: 0.9 NIS Billion

Deposits in Banks: 2.4 NIS Billion

Banks Bonds: 1.7 NIS Billion

NIS+foreign Corporate Bonds:0.9 NIS BillionStructure Products, Hedge Funds & Stocks:0.7 NIS Billion

Market Risks in VAR Terms: (0.03) NIS Billion

Capital Notes5.4 NIS Billion

Capital available for Investments4.1 NIS Billion

13.82%

11.07% Credit against liquid assets

FIBI Strategic Assets & Liabilities Structure NIS Millions

13

14.30%14.57%

13.42%

Core Capital (Tier 1) Ratio 30.06.12- Basel II

*

*

*

***

**

-1.3

-1.7 -1.71

0.97-

1.62-

0.75-

%

14

-0.7

Key Concentration Indicators

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The share of credit to borrowers whose liability greater than 40 million NIS out of Total ***credit

Gini index of distribution of credit

by borrower size**

Herfindahl index (H) of sector concentration of commercial credit portfolio*

Year5 BANKING GROUPSFIBI BANK5 BANKING

GROUPSFIBI BANK

5 BANKING

GROUPSFIBI BANK

200744.541.00.8970.8970.1740.190

200843.133.70.8960.8370.1720.172

200941.430.80.8970.8540.1770.177

201041.633.30.9020.8550.1810.177

201140.629.30.9030.8460.1820.168

*The index range moves from 0 ( full distribution) to 1 (full concentration))Maximally inequality in the share of credit ( 1 to(equality **The index range moves from 0 (full

***The index range moves from 0% (no credit meets the criterion) to 100% (all of the credit is over 40 million NIS)

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RAROC Index

Bank of Israel’s RAROC index measures the risk adjusted return in the 5 leading bank’s. The index evaluates what is the excess return that shows each bank relative to riskless assets

Bank of Israel RAROC Index

Changes in Net Profit - Subsidiaries NIS Millions

H1/2012

Percent Change

Relative to H1/2011

ROECore (Tier 1)

Capital Ratio

50.221%11.1%8.76%

23.8(16.2%)11.9%15.0%

22.45.2%13.1%11.4%

20.121.8%10.7%13.71%

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