First International Bank of Israel Ltd

First International Bank of Israel Ltd. - FIBI 30. 06. 2009 First International Bank of Israel Ltd. 30. 06. 2009 1 1 3/19/2018

2 2

GDP Rate of Growth (%) * ** * Yearly Terms ** Forecast First International Bank of Israel Ltd. 30. 06. 2009 3 3 3/19/2018

Bank of Israel Interest Rate (%) * and the Rate of Inflation (%) ** Bank of Israel Interest Rate of Inflation * Bank of Israel Interest rate for the last month of the Year / Period ** Forecast First International Bank of Israel Ltd. 30. 06. 2009 4 4 3/19/2018

Country Ratings First International Bank of Israel Ltd. 30. 06. 2009 5 5 3/19/2018

Israeli Investments Abroad - Private (Non Banking) Sector Only (US$ Millions) Foreign Investments in Israel Private (Non Banking) Sector Only (US$ Millions) In 2006: Acquisition by “Teva” In 2006: Acquisition of “Iscar” by Berkshire - Hathaway First International Bank of Israel Ltd. 30. 06. 2009 6 6 3/19/2018

Ownership Structure Bino – Liberman Group E – 20. 93 V – 20. 93 The Public E – 19. 22 V – 14. 01 Otsar Hahayal PAGI-Poaley Agudat Israel Bank Ltd. E – % Share in Equity 7 V – % Voting Right FIBI Holding Company Ltd. FIBI Investment House Ltd. E – 0 V – 0 (Stocks Dormant) E – 26. 45 V – 11. 09 The First International Bank of Israel Ltd. E – 68. 7 V – 68. 7 The First Int’l & Co. Underwriting and Investments Ltd. E – 100 V – 100 E – 54. 33 V – 74. 9 E – 68 V – 66 E – 75 V – 25 E – 79. 07 V – 79. 07 E – 51 V – 51 Bank Massad E – 100 V – 100 Modus-Selective Investments Management & Advice Ltd. E – 100 V – 100 UBank Ltd. E – 100 V – 100 International Leasing Ltd. Israel Discount Bank E – 100 V – 100 FIBI Bank (UK) Plc. E – 28. 2 V – 21 Israel Credit Cards Ltd. E – 100 V – 100 FIBI Bank (Suisse) Ltd. E – 100 V – 100 First International Issues Ltd. 7

First International Bank Group First International Bank Retail Bank Cluster • Corporate + middle market banking • Private + affluent banking • Capital & Finance Markets • 81 branches International • Capital, Trust & Custody Markets • Private + affluent banking • 6 branches • Since 2004 FIBI Bank (UK) • Business Banking • Private Banking • Since 1982 Focus: Retail Branches: 17 Since: 2008 8 Key Audience: Teachers Retail/Commercial 46 20 2006 1977 Military Ultra Orthodox FIBI Bank (Suisse) • Private Banking • Since 1984 8

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. 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 General Manager 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. First International Bank of Israel Ltd. 30. 06. 2009 9 9

Shareholders (continued) 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 42. 6% 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). Since acquiring the controlling interest in FIBI and the Bank in 2003, both Mr. Zadik Bino and his son, Mr. Gil Bino, serve as members of the Board of Directors of FIBI, as well as of the Bank's. The controlling interest in FIBI and in the Bank is held by the Bino Family (Mr. Zadik Bino and his three Children). First International Bank of Israel Ltd. 30. 06. 2009 10 10

First International Bank of Israel - FIBI • Universal bank with strong niche position in capital markets, foreign exchange and foreign trade • Domestic subsidiaries target focused audiences: affluent banking (UBank), defense sector - retail banking (Otsar Hahayal), ultra-orthodox Jews (PAGI), and teachers (Massad) • Foreign subsidiaries in London (commercial banking) and Zurich (private banking) • Branches: 170 in Israel (including subsidiaries) • Equity: NIS 5, 895 Million (US$ 1, 504 Million *) • 5 th largest banking group in Israel * $/NIS = 3. 919 as of June 30, 2009 First International Bank of Israel Ltd. 30. 06. 2009 11 11

Bank Ratings First International Bank of Israel Ltd. 30. 06. 2009 12 12

Strategy - Main Focus Risk Profile • Conservative capitalization levels: capital adequacy ratio of 13. 95% (industry average: 12. 62%); 1 st tier adequacy ratio of 9. 53% (industry average: 7. 97%); deposit/credit ratio of 136. 0% (industry average: 115. 5%) • Improved credit mix: steps taken to diversify portfolio through increased penetration of middle market and more consumer credit • Conservatively managed foreign proprietary trading book • Upgraded scoring model and processes in anticipation of Basel II, including development of advanced credit-scoring models for risk-based pricing Core Capabilities • Top class reputation in private banking services, especially dealing room, specialized investment advice center and TASE futures and operations index, where FIBI is a market leader • Distinctive professional standards in: global capital markets, currency exchange, structured products and foreign trade • Strong traditional position in corporate banking First International Bank of Israel Ltd. 30. 06. 2009 13 13

Strategy - Main Focus Client-centric vs. product-oriented banking • Corporate finance: decrease concentration of credit portfolio, increase penetration of middle market • Private banking: increase wallet share through advisory services; extend presence in affluent segment • Retail banking: broaden overall footprint (e. g. , acquired Bank Otsar Hahayal and Massad) New Products State-of-the-art pension-planning advice offering Other • Measures taken to increase group efficiency, including implementation of a • shared-services model Decision taken to withdraw from computer infrastructure outsourcing agreement First International Bank of Israel Ltd. 30. 06. 2009 14 14

Group Consolidation Objective: to realize synergies from three bank acquisitions • Implement shared-services model, including IT systems (UBank IT systems converted in 2008, Massad and Otsar Hahayal planned for 2009 -2010; HQ units unified: logistics, severance pay fund operations, regulatory units and parts of training and human resources operations, process to be accelerated in 2009 -2010) • Cross-sell products (mortgages, structured products, advisory services, pension planning, trust, factoring) • Create streamlined and effective branch network to meet growing competition in retail and private banking markets • Oversee management: FIBI executive board members chair the new subsidiaries and serve on their boards First International Bank of Israel Ltd. 30. 06. 2009 15 15

Net Operating Earnings and ROE – Quarterly 8. 8% NIS Millions 6. 8% 9. 9% 8. 0% 7. 0% 89 First International Bank of Israel Ltd. 30. 06. 2009 16 16

Ratio of Provision for Doubtful Debts to Credit to the Public 4 Other Leading Banks First International Bank of Israel Ltd. 30. 06. 2009 17 17 FIBI

Total Credit Risk in Respect of Problematic Debts (NIS millions) First International Bank of Israel Ltd. 30. 06. 2009 18 18

Composition of Total Proprietary Trading Book (NIS Millions) for 30. 06. 2009 62% Composition 3, 411 20% 827 5% Other 2, 122 13% Total 19 62% Shares 19 10, 410 Bonds of Commercial Banks First International Bank of Israel Ltd. 30. 06. 2009 % Governments bonds & Secured by Governments bonds 53% Amount 16, 770 100%

Composition of Foreign Currency Proprietary Trading Book (NIS Millions) for 30. 06. 2009 46% Composition 558 8. 2% 546 8. 1% 432 6. 4% Commercial Banks bonds 3, 128 46% MBS (PRIME+ALTA) 298 4% Shares 84 1% Other 20 14. 1% Due: MBS (GNMA+Agencies) 20 958 Due: Secured by Governments bonds First International Bank of Israel Ltd. 30. 06. 2009 36. 8% Due: Foreign Governments bonds Single issuer exposure up to 3% of portfolio. Average Duration: 3 years 2, 494 Due: State of Israel bonds 14% % Governments bonds & Secured by Governments 37% Amount 771 12% Total 6, 773 100%

Operating Commissions – Group (NIS Millions) 254 236 216 209 40 39 1 -6/08 Massad 1 -6/09 1 -6/08 Total Operating Commissions 691 620 Without Massad 647 599 First International Bank of Israel Ltd. 30. 06. 2009 21 21

Operating & Other Expenses (NIS Millions) 1, 241 1, 206 669 652 339 319 218 250 1 -6/09 1 -6/08 Total Operating & Other Expenses Massad First International Bank of Israel Ltd. 30. 06. 2009 22 1, 328 1, 264 Without Massad 1 -6/09 1 -6/08 1, 241 1, 206 22 457

Operating Income and Expenses Operating Income & Expenses 50. 3% 1 -6/08 Operating Income Adjusted* Operating Income & Expenses 52. 6% 50. 8% 58. 4% 1 -6/09 1 -6/08 Cost/Income Ratio Operating Expenses 1 -6/09 Adjusted Cost/ Income Ratio * Income excluding dividends, provisions for decline in value of proprietary trading book and severance pay fund gains; expenses excluding severance pay fund effects First International Bank of Israel Ltd. 30. 06. 2009 23 23

Capital Adequacy Ratio 8, 414 7, 163 Capital Adequacy First Tier Capital Adequacy * Second Tier First International Bank of Israel Ltd. 30. 06. 2009 24 FIBI 4 Bank Groups 24 8, 779

Changes in Assets, Deposits and Credit to the Public (NIS Billions) 100. 6 Ratio of Deposits to Credit 136% * Total assets Deposits from the Public Credit to the Public Shareholders Equity * The average deposits/credit ratio in the five leading banking groups (as of June 30 2009) : 115. 5% First International Bank of Israel Ltd. 30. 06. 2009 25 25

Changes in Net Profit - Subsidiaries 1 -6 / 09 1 -6 / 08 % change 15. 7 18. 1 (2. 4) 38. 1 32. 2 5. 9 35. 8 32. 5 3. 3 20. 2 12. 6 * 7. 6 FIBI Bank (UK) (GBP K) 1, 038 605 433 FIBI Bank (Switzerland) (CHF K) 1, 946 1, 749 197 * Excluding the Sale Grant First International Bank of Israel Ltd. 30. 06. 2009 26 26 3/19/2018

Capital Adequacy 13. 95% First Tier 9. 53% Credit to the Public Deposits from the Public NIS 58. 9 Billion NIS 80 Billion 12. 6% is secured under liquid Assets (Deposits / State Bonds) Deposits / Credit Ratio 136% Liquid Assets Bonds – State of Israel NIS 9. 4 Billion Cash/Deposits-Bank of Israel NIS 13. 4 Billion (37. 6% Deposits from the Public) Bonds-foreign states* NIS 1. 52 B Deposits in Banks NIS 5. 7 B Capital Notes NIS 5. 0 B Bonds – Banks NIS 3. 4 B Gov. & Bank Deposits NIS 2. 7 M FOREX Corporate Bonds NIS Capital Investments 80% of capital available for Investments 770 M NIS Corporate Bonds , NIS 1 B MBS Prime+Alt. A NIS 299 M Capital available for Investments** NIS 4. 1 B First International Bank of Israel Ltd. 30. 06. 2009 Structure Products NIS 204 M Hedge Funds & Stocks NIS 157 M 27 BEZEQ+HOT NIS 670 M Credit Risks in VAR Terms NIS 130 M 27 of this MBS GNMA & Agencies NIS 431 M and bonds secured by foreign governments NIS 546 M ** Equity less Liquid Assets 27

Banking Subsidiaries in Israel PAGI, in which FIBI has a 68% equity holding is a commercial bank with 20 PAGI branches, and 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 segment has grown significantly. PAGI’s strategy is to aggressively grow its client base, while focusing on target segments with intensive financial activity in personal, business, and institutional banking. UBANK - FIBI acquired 100% of share capital of UBANK (formerly Investec UBANK Bank (Israel) Ltd. ) in December 2004. It is maintained as an independent subsidiary. 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. First International Bank of Israel Ltd. 30. 06. 2009 28 28

OTSAR HAHAYAL - FIBI acquired 68% of the share capital of Otsar Hahayal HAHAYAL in August, 2006. Bank Otsar Hahayal specializes in retail and small to mediumsized businesses (SMEs) and has a high proportion of current and former Defence 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 activity and earning base. FIBI is currently in the process of integrating Otsar Hahayal’s IT systems and coordinating across headquarters support functions. MASSAD - FIBI acquired 51% of the share capital of Massad in May MASSAD 2008. Massad, as a sectorial bank, specializes in teaching personnel as its client base. FIBI is currently in the process of integrating Massad’s IT System and coordinating 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. First International Bank of Israel Ltd. 30. 06. 2009 29 29

First International Bank of Israel Ltd — FIBI