1

Financial Statements

31 December 2008

Financial StatementsSeptember 2017

2

Disclaimer

•This document has been prepared by Mizrahi-Tefahot Bank Ltd (UMTB) solely for use at the company's presentation.

The information contained in this document constitutes information from the bank's 2017 quarterly reports and/ or immediate

reports, as well as the periodic, quarterly and annual reports and/or immediate reports published by the bank in previous

years.

•Accordingly, the information contained in this document is only partial, is not exhaustive and does not include the full details

regarding the bank and its operations or regarding the risk factors involved in its activity and certainly does not replace the

information included in the periodic, quarterly or immediate reports published by the bank. In order to receive the full picture

regarding the bank's 2017 quarterly reports, the aforesaid reports should be perused fully, as published to the public.

•None of the company, or any of their employees or representatives shall have any liability whatsoever (in negligence or

otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection

with this document.

•The bank's results in practice may be significantly different from those included in the forecasting information, as a result of

a large number of factors, including, inter alia, changes in the domestic and global equity markets, macro-economic changes,

geo-political changes, legislation and regulation changes, and other changes that are not under the bank's control, which

may lead to the estimations not realizing and/or to changes in the business plans.

•The forecasting information may change subject to risks and uncertainty, due to being based on the management's

estimations regarding future events, which include, inter alia: global and local economic development forecasts, particularly

regarding the economic situation in the market, including the effect of macro-economic and geo-political conditions;

expectations for changes and developments in the currency and equity markets; forecasts related to other various factors

affecting exposure to financial risks; forecasts with respect to changes to borrowers' financial strength, public preferences,

changes in legislation and the provisions of regulators, competitors' behavior, the status of the bank's perception,

technological developments and human resources developments.

•This document does not constitute an offer to sell, or a solicitation of an offer to buy, or a recommendation of any kind

regarding any security or any interest in security.

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Facing new challenges and opportunities:

- Possible acquisition and merger of Union Bank into Mizrahi

Tefahot

- A new collective agreement 2016 - 2021

4

“Mizrahi Tefahot Bank’s acquisition of Union Bank would be

credit positive”*

* Moody’s Investors Service, Credit Outlook, Issuer Comment August 7, 2017

“Union Bank is significantly weaker than Mizrahi as a brand and in terms

of profitability and efficiency. The bank was loss making in 2016 and had

a cost-to-income ratio (adjusted for one-offs) of around 85% during

2016, much weaker than Mizrahi’s cost-to-income ratio of 59%, the best

among rated Israeli banks.

Integrating Union bank’s employees with Mizrahi’s staff, which has a

high-quality-of-service focus, will likely be difficult. Mizrahi ranks first in

terms of customer satisfaction among Israeli banks. However, Mizrahi’s

successful track record of merging banks into its business, such as the

merger of Tefahot bank and the acquisition of a 50% stake in Bank Yahavfrom Bank Hapoalim, suggests the bank will likely be successful.”*

5

The acquisition received the support of the supervisor of

banks

* Bloomberg, August 9, 2017

** TheMarker, August 14, 2017

“Israel bank regulator signals support for Mizrahi – Union deal

- Merger would boost competition in Israel’s banking sector

- Mizrahi hopes to take on Israel’s leaders in corporate landing”*

“We are for a merger between Mizrahi and Union. It will create abank that will challenge Leumi and Hapoalim”**

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• Synchronizing the agreement with the strategic plan – including

industrial peace until end of 2021

• Full support for M&A’s of banks in Israel

• For the first time in the Israeli banking system – part of the

remuneration of all employees is linked to ROE goals

• For the first time in the bank – creating “second generation”:

with regards to veterancy - compensation of 3% (rather than 4%)

and expanding the transitional period to 7 years (rather than 5)

• Additional understandings creating even higher managerial

flexibility

MOU regarding a new collective agreement

7

“It is all about

G R O W T H”

8

Continuous loan growth

Average annual growth rate 7.2%

218,617

411,317

049,215

697,514

658,513

1,65821

icblto the puedit Cr

NIS mil

20172017Q3Q320162015201420132012

9

Continuous loan growth

218,617337,117

683,017

411,317

208,616155,516

732,016049,215

967,915

172,315940,615

icblto the puedit Cr

3Q

2

2Q

20

1Q

20

4Q

20

3Q

20

2Q

20

1Q

20

4Q

20

3Q

20

2Q

2

00

1Q

20

17

17

17

16

16

16

16

15

15

15

15

ilNIS m

10

Credit growth in most segments

Loans to the public (NIS mil)

30.9.2017 30.9.2016 %of change

Housing loans 118,685 112,273 5.7%

Households and Private banking

19,511 18,241 7.0%

Small and micro businesses

16,114 14,764 9.1%

Medium businesses 5,642 4,887 15.4%

Large businesses and Institutional investors

15,448 15,068 2.5%

Overseas operations 3,221 3,387 (4.9%)

Total 178,621 168,620 5.9%

Double digit growth in small businesses and medium businesses in accordance with the strategic plane

10.7%

11

Continuous deposit growth

214,218

528,217

802,316

792,315

441,214

1,08821

icble pu from thsitspoDe

20173Q20162015201420132012

NIS mil

2017Q3

Average annual growth rate 8 %

12

Continuous deposit growth

1,22481

800,618220,718

528,217

8,74371219,616

015,016802,316

078,115363,715

023,015

clibue pm th frositsopDe

3Q

2

2Q

2

00

1Q

20

4Q

20

3Q

20

2Q

20

1Q

20

4Q

20

3Q

20

2Q

20

1Q

20

17

17

17

16

16

16

16

15

15

15

15

NIS mil

13

Financing revenues from current operations continue

to grow (NIS m)

1,105

1,071

1,047

1,018

990

946

922

909898

854849

3Q

20

2Q

20

1Q

2

4Q

20

3Q

20

2Q

20

1Q

20

4Q

20

3Q

20

2Q

20

1Q

2

00

17

17

17

16

16

16

16

15

15

15

15

14

Financing revenues from current operations continue

to grow (NIS m)

233,2

582,8

from enuesvreg nancinFinstioperaent ocurr

12.8%

7019/2-16019/2-1

051,1

990

from enuesvreg nancinFinstioperaent ocurr

11.6%

7013Q26013Q2

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Growth in financing revenues in all main business

segments

Financing revenues (NIS m)

1-9/2017 1-9/2016 % of change

Housing loans 956 811 17.9%

Households 844 746 13.1%

Private banking 43 37 16.2%

Small and micro businesses

654 594 10.1%

Medium businesses 153 138 10.9%

Large businesses and institutional investors

428 413 3.6%

Overseas operations 122 123 (0.8%)

Double digit growth in financing revenues in most of the business segments

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“And taking market share in relevant segments”

17* According to supervisory operating segments, % out of 5 major banking groups

** Source: financial reports of the 5 banking groups *** In accordance with UMTB’s strategic plan for 2016-2021

Market share in Israel* in business credit and deposit –

growth** and targets***

sessnebusito medium Credit

sessneicro busim and smallom frits ospeDsessnebusiicro m andl almto sCredit

sessneium busidemom frits ospeD

(₪ יארדיליבמ)צעת ו ממרהית

141

121111109

108

105

102100

3Q

17

2Q

17

1Q

17

4Q

16

3Q

16

2Q

16

1Q

16

4Q

15

275262249

244

(₪ ירדיליאבמ) תצעוממתרה י

235215

ce analb taloT

)lib S,Ie)(Nerag(av

etn es,uenevr estterni taloT

)lmi S,I(N

284

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Mortgages –balance and revenues*

* Operating segments in conformity with management approach.

Note 12 to quarterly reports, Note 29 to annual reports

19

Net profit analysis (NIS mil)

40

104

261

713Q20613Q20

י נקוחור שכר הת הסכםשפעה

373

יילשל דדהשפעת מ etivcellCo

tceffe ntmeegreat ne

itprof etivNegatceff eCPI

Reported

104

982

7019/2-16019/2-1

י נקוחור

011,0

שכר הת הסכםשפעהReported

itrofnet p etivcellCo

tceffe ntmeegrea

The effect of negative CPI and collective agreement

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ROE analysis

The effect of negative CPI and collective agreement

%1.3

%3.3

%8.0

73Q20163Q201

ר השככםהס תעפשה להוןשואהת

12.4%

ליליש דד מתעפשה etivcellCo

tceffe ntmeegrea

etivNegatecff ePIC

Reported OER

%1.1

%.110

7019/2-16019/2-1 להוןשואהת

11%

ר השככםהס תעפשה etivcellCo

teceff ntemeagreOER Reported

ROE

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Efficiency ratio analysis

The effect of negative CPI and collective agreement

%2.4

%.011

73Q20163Q201

תלועי ייחס ר השככםהס תעפשה

67.2%

55.2%

ליליש דד מתע etivcellCo

tceffe ntmeegrea השפ

%.63

7019/2-16019/2-1תלועי ייחס

60.7%57.8%

ר השככםהס תעפשה etivcellCo

tceffe ntmeegreaNegative CPI effect

22

Increasing equity base

Average annual growth rate 10.4%

Core tier 1 as of Q3/2017 – 10.16%

13,39971412,

471,81

79710,

819,68,730

017,6

710Q23201620152014201320122011 2017Q3

23

Double digit ROE despite dramatic increase in equity

and extremely low interest rate

In black – Bank of Israel interest rate at the end of the period

13,399 16%

12,714 000, 13

%13.114%1,847 1

000, 12%1.8112%

%10.1%10.6 %10.2%10.0

000, 11%01

10,797 9,681 8%000, 10

8,730 6% 9,000

4%

8,0002%

7,0000%201720162015201420132012

2%

1%

0.25%0.1%0.1%

yquitEil) mS I(NROE

0.1%

2017p eS

24

Dividend distribution –dividend payout of 30% of net

profit

mil)(NIS periodant levthe refor onutiibstrdiend idDiv295

190

122120

75

9/2017-12016201520142013201220112010

25

Financial results

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Net profit (NIS mil)

2016

400373

340321

288261265

Q3Q2Q1Q4Q3Q2Q1

2017

27

Net profit (NIS mil)

9821,001

2017/9-12016/9-1

28

Return on equity

1.0110.1

9/2016-1 9/2017-1

29

Equity (NIS bil)

.413.812

30.9.2016 30.9.2017

30

Loans to the public (NIS bil)

178.6171.3

159.2

147.6

138.6

17.9.203016.20.123115.20.123114.20.123113.20.1231

31

Deposits from the public (NIS bil)

184.2.2178

162.4

152.4

141.2

17.9.203016.20.123115.20.123114.20.123113.20.1231

32

Financing Revenues (NIS mil)

f ote Ra2016/9-12017/9-1

echang

2,83013,21tens, eunerev restteIn

17681seunerev cingninaf resteint-Non

9.53,0063,292seunerev gncininafl taoT

ss:eL

)19(22sitionopI CPtoct esp reithwls tianreefifd eginkaL

3333tbe dledbutro no resteint fo nctioellco romfs euneRev

7441res tunebed romfin Ga

iraft as etivavried fot netmatre gtinnuccoa foct effE60)27(rsetho dna lueav

14869snratioepot nerrcu nathr ethocts effel taoT

12.82,8583,223snratioepot nerrcu romfs eunerev gncininafl taoT

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Provisions / loans to the public

4Q3Q2Q1Q

0.01%

0.14% 0.14%0.19%

0.12% 0.09% 0.09%

Q1 Q2 Q3

2016 2017

34CPI etivagen eth dnat nemreega ectivellco ethct effe eth ingcludxE(1)

2016 2017

67.2

59.060.8 58.557.8 56.355.2

(1)53.8

Q3Q2Q1Q4Q3Q2Q1

Cost / income ratio

35

Capital adequacy

tioRaotal T

Iier T

17.9.203016.20.123116.9.2030

9.85% 10.10% 10.16%

13.52% 13.80%13.48%