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Bank Hapoalim Q/± Bank Hapoalim Condensed Financial Statement as at March 31, 2010 Mr. Yair Seroussi, Chairman of the Board Investor Presentation TASE - Israel Opportunity Conference London Bank Hapoalim Condensed Financial Statement as at March 31, 2010 July 2010 Bank Hapoalim B.M. Head Office 50 Rothschild Blvd. Tel Aviv 66883, Israel Tel. 972 3 5673333 Fax. 972 3 5607028 www.bankhapoalim.com TASE: POLI LSE: BKHD ADR: BKHYY Safe Harbor Statement This document has been prepared by Bank Hapoalim solely for use at the company’s presentation of first quarter 2010 results and a strategic update. The information contained in this document has not been independently verified. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. 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. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. The distribution of this document may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this report you agree to be bound by the foregoing instructions. Forward looking statements for the company’s business, financial condition and results of operations, are subject to risks and uncertainties, that could cause actual results to differ materially from those contemplated. Such forward looking statements, include but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the company’s accounting policies. As well as certain other risk factors which are detailed from time to time in the company’s filings with the securities authorities. TASE: POLI LSE: BKHD ADR: BKHYY 2 A Strong Investment Case for Israel Israel: a vibrant and modern economy • Impressive economic performance with GDP growth of above 4% per annum • Among the first to show a turning point back to economic growth •Strong external position and large FX reserves • Public debt to GDP is under control and declining •A strong and well-supervised banking system •No need for any government bailouts or stimulus programs TASE: POLI LSE: BKHD ADR: BKHYY 3 A Strong Investment Case for Bank Hapoalim Bank Hapoalim: Israel’s leading bank •About 1/3 of the banking sector • Active in all areas of universal banking • Dynamic management team •Strong capital base: Capital Adequacy Ratio: 13.9% (Q1) • Balancing low risk with stable return: ROE 9.2% (Q1) TASE: POLI LSE: BKHD ADR: BKHYY 4 Bank Hapoalim has the Pre-Eminent Banking Franchise in Israel… Retail Customers 33% Corporate Lending 21% Commercial Loans (SME’s) Mortgages Credit Cards 48% Custody Services 38% 26% 45% Foreign Institutional Investors Market Share in Israel (2009) TASE: POLI LSE: BKHD ADR: BKHYY 5 Bank Hapoalim - Overview Israel’s Leading Financial Institution • Ninety years of banking strength • Dominant position, with over one third of the banking sector in Israel • Among the most actively traded stocks on Tel Aviv Stock Exchange • Branches, subsidiaries and representative offices in North and Latin America, Europe, Turkey, Far East, Australia Current Ownership Structure 06.01.2010 35% 16% Financial Highlights As at 31 March 2010 in USD Total Assets Shareholder equity CAR Net Profit (1Q10) Branch Network ROE $80.8 billion $5.7 billion 13.9% $124 million over 270 9.2% TASE: POLI Domestic Financial Institutions* Foreign Financial Institutions* Unavailable data 23% (individual investors, money managers, hedge funds) 26% Arison Holdings (+Salt Industries) * Based on public data LSE: BKHD ADR: BKHYY 6 Main Centers of International Activity PAM U.K subsidiary focused on asset management Bank Hapoalim London Corporate and Private Banking Bank Hapoalim Switzerland Private Banking - Branches in Zurich, Geneva, Luxembourg and Singapore Bank Hapoalim NY Corporate Banking and syndications Bank Pozitif (Turkey) Retail and Corporate Bank Hapoalim Israel Israel’s leading bank Banks and subsidiaries Branches: New York, Miami, London, Zurich, Geneva, Luxembourg, Singapore, Colonia, Montevideo, Punta Del Este Rep offices: Toronto, Montreal, Paris, Frankfurt, Budapest, Sydney, Mexico City, Santiago, Panama City, Buenos Aires, Caracas, Moscow, Hong Kong TASE: POLI LSE: BKHD ADR: BKHYY 7 Established Global Presence - Bank Hapoalim Group PAM Bank Hapoalim Switzerland U.K subsidiary focused on asset management Bank Hapoalim NY Corporate Banking and syndications Hapoalim Securities Broker dealer BHI Miami Bank Hapoalim London Corporate and Private Banking Private Banking - Branches in Zurich, Geneva, Luxembourg and Singapore Bank Pozitiv (Kazakhstan) BHI Jersey Ltd. Retail and Corporate Opened Sept. 2008 Bank Pozitif (Turkey) Bank Hapoalim Luxembourg Retail and Corporate Mainly syndication activity Bank Hapoalim Israel Private Banking focused Israel’s leading bank Uruguay Private Banking focused Banks and subsidiaries Branches: New York, Miami, London, Rep Zurich, Geneva, offices: Luxembourg, Singapore, Colonia, Montevideo, Punta Del Este TASE: POLI LSE: BKHD Toronto, Montreal, Paris, Frankfurt, Budapest, Sydney, Mexico City, Santiago, Panama City, Buenos Aires, Caracas, Moscow, Hong Kong ADR: BKHYY 8 Multi Year Strategic Plan approved by the Board on January 21, 2010 “Back to Basics” • On track for projected trajectory of growing revenues and improving in profitability in 2010 • Balance risk and return considerations • Maintain the bank’s level of capital adequacy, above the regulatory requirement • Achieve long term ROE in the low to mid-teens TASE: POLI LSE: BKHD ADR: BKHYY 9 Five main themes in the Bank’s Strategic Plan for the next 3-5 years Maximize value for stakeholders Excess return on risk-adjusted Capital ➥ ➥ Growth of activity ‹ ‹ Customer-focused Leadership in Israel Operational Excellence and Efficiency Increase savings and investments activity and revenues from non-credit products Create a platform for future growth in International Activity Strengthen Global Risk and Capital Management capabilities Cultivate and Manage Human Resources Act in line with the Bank’s values and the principles of Sustainability TASE: POLI LSE: BKHD ADR: BKHYY 10 A Strong Balance Sheet with Loyal Clientele DEPOSITS - As of March 31st, 2010 CREDIT - As of March 31st, 2010 Retail accounts for 61% of Deposits Corporate accounts for 45% of Loan Book Financial Mngt Households 3% Corporate 23% Households 13% 45% SME 4% Small Business 8% 26% Corporate 10% 48% 9% Private Banking 10% 0% Financial Mngt Private Banking Small Business SME Conservative Loan to Deposit Ratio 95.5% TASE: POLI LSE: BKHD ADR: BKHYY 11 Net Profit and ROE - Quarterly NIS millions 8.3% 382 2 0.9% 42 425 8.8% 3 9.4% 467 462 9.2% 2 1 380 422 465 461 2Q09 3Q09 4Q09 1Q10 21 21 1Q09 ■ ROE ■ Profit from extraordinary transactions ■ Net Operating Profit TASE: POLI LSE: BKHD ADR: BKHYY 12 Committed to a Strong Capital Base Shareholder’s Equity and Capital Adequacy Ratio NIS millions and % 20,598 18,233 18,778 18,795 13.67% 21,195 13.87% 16,237 Total CAR 10.47% 10.53% 10.26% 10.92% 8.78% 8.52% Tier I 6.92% 12/05 7.41% 12/06 As reported TASE: POLI 7.50% 12/07 7.44% 12/08 ■ According to Basel I LSE: BKHD 12/09 03/10 ■ According to Basel Il ADR: BKHYY 13 Focused on Growth - Top Banking Franchise in a Strong Israeli Economy Continuous Income Generation: • Increasing Net Interest Income: • Improving Margins • Quality asset base growing • Growing Operating Income: • Leadership position in key fee-generating segments • Growing transaction fees from capital market and credit cards Reducing Costs: • • Lower Provisions for doubtful debts • Problematic Debt on the decline Emphasis on Operational Efficiency: • Lean Banking • Centralized Back Office • Robust use of direct channels • Maintaining expenses Growth in the Israeli economy will enhance the Bank’s results TASE: POLI LSE: BKHD ADR: BKHYY 14 Key Takeaways • Strong Israeli economy • Bank Hapoalim: Israel’s leading bank • Dynamic management team • Strategic plan focused on growth while balancing risk/return • Among the most actively traded stocks on the TASE and dedicated to our relations with investors TASE: POLI LSE: BKHD ADR: BKHYY 15 THANK YOU