Leumi Profile 2013

BANK LEUMI
FINANCIAL STATEMENTS
2013
Leumi
at a Glance
Established in London in 1902, the Leumi Group today operates
274 branches throughout Israel, in addition to branches and offices
located in key financial centers across the globe.
The Leumi Group provides a wide spectrum of high quality banking
services to all types of customers, starting with households, through
small and middle-market businesses, and up to large corporations.
These services are provided through specialized business lines
suited to all customer segments and are backed up by the highest
standards and uncompromised professionalism. The Bank provides
additional services through its subsidiaries: "Leumi Card", the Bank's
credit card company, the "Arab-Israel Bank" and "Leumi Partners",
the Group's investment banking arm.
During the past decade, Leumi has invested extensive resources in
developing and enhancing its technological capabilities in order to
provide customers with accessible and advanced banking services.
Today, "Leumi Digital" leads the digital banking field in Israel, with
a wide variety of innovative on-line banking services which are
carried out through various platforms, including the internet, social
media, smartphones, tablets, "Leumi Digital" stations and ATM's.
The Leumi
Group
Leumi is Israel's oldest banking corporation
and one of the largest corporations in the
Middle East. In 2013, total assets under
management of the Group reached NIS
1,086 billion and the Group's total assets
amounted to NIS 374.4 billion.
As of December 31, 2013, the Group's
credit portfolio amounted to NIS 240.9
billion and deposits of the public amounted
to NIS 286.0 billion. The Group's net profit
in 2013 amounted to NIS 1,947 million,
and the net return on equity reached 7.6%
Corporate
Banking
This business line provides comprehensive
financial ser vices to Israel 's largest
businesses and multinational corporations,
including construction and contracting
companies involved in large scale real
estate and infrastructure projects. Among
others, the Corporate Banking deals with
customers who have structured business
operations, global operations or whose
business operations are managed in the
bank's overseas subsidiaries. The objective
of the Corporate Banking is to provide
customers with a full range of financial
services and products tailored to their
needs, while initiating involvement of the
Group's different units in Israel and abroad,
as much as needed.
Private
Banking
This business line provides customized
financial services to high-net-worth
individuals through unique Private Banking
centers in Israel which are designated for
Israeli and foreign residents, and through
the Bank's subsidiaries in Switzerland and
in Luxembourg.
International
Banking
This business line provides commercial
banking services to individuals and to
Israeli companies operating in international
markets. This includes Leumi USA, Leumi UK,
Leumi Romania and Leumi's representative
office in Shanghai, China.
Commercial
Banking
This business line specializes in providing
banking and financial services to middlemarket companies through 24 commercial
branches across the country and the central
branch in Tel Aviv. The organizational structure
of this business line is unique in the banking
system and enables the Bank to provide a
comprehensive "one-stop shop" to its clients.
Retail
Banking
This business line provides full banking
services to private customers and small
businesses through some 240 branches
located across the country, including branches
of the "Arab-Israel Bank". The business line
also manages Leumi's innovative digital
services - "Leumi Digital" - which include the
Bank's direct banking channels: the website,
the "Leumi Call Center", applications for
smartphones and tablets, Leumi's "Total Digital
Account" and the digital stations located at
bank branches.
Leumi and
the Community
Ever since its establishment and alongside
its business activities, Leumi has always
been an active partner in the society and
community in which it operates. In recent
years, this legacy is manifested in the Bank's
activities in promoting education, culture
and the arts among the future generation.
In the centenary of the Bank's establishment,
Leumi founded "Leumi Tomorrow - The
Centennial Fund for the Young Generation".
The fund supports educational projects and
works to reduce social gaps and provide
equal opportunities amongst youths from
the periphery. In 2013, more than 20,000
youths throughout Israel participated
in various educational and enrichment
programs which the fund supports. Leumi
also supports the "Young Entrepreneurs"
Project, ever since its establishment in 1989.
In preparation for 2014, the Bank's
management decided to allocate
most of its resources towards
initiating and supporting projects in
the field of financial empowerment.
This includes leveraging the assets,
tools and knowledge obtained by the
Bank in order to provide a real added
value to the Bank's customers and to
different sectors of society. Within this
framework, the Bank has most recently
initiated projects which will be carried
out during the coming year, all in the
area of promoting financial education.
Capital
Markets
This business line offers financial services to
institutional customers and foreign banks,
manages Leumi's dealing rooms (Israeli
Securities, Foreign Securities, Forex and
Derivatives) and provides capital market
services to the Bank's customers.
Leumi
Mortgage
This business line offers loans for purchasing
a residence, collateral loans and loans to
purchasing groups through 110 representative
offices located throughout the country. "Leumi
Mortgage" offers a full range of services,
including mortgage planning, accompanying
the customer through the mortgage process
and recycling existing mortgages.
NET RETURN
ON EQUITY
NET PROFIT
76%
.
1.947
MILLION NIS
CREDIT LOSS
EXPENSES OUT
OF NET CREDIT
TO THE PUBLIC
0 11%
.
CORE
CAPITAL
RATIO
9 43%
.
CAPITAL
ADEQUACY
RATIO
14 82%
.
Financial Results
2013
TOTAL ASSETS
374 4
.
BILLION NIS
CREDIT TO
THE PUBLIC
240 9
.
BILLION NIS
DEPOSITS OF
THE PUBLIC
286 0
.
BILLION NIS
EQUITY
26 4
.
BILLION NIS
TOTAL MANAGED
ASSETS
1.086
BILLION NIS
Rakefet Russak-Aminoach
President & CEO
The Leumi Group is concluding 2013 with a net profit
of NIS 1,947 million and a net return on equity of 7.6%.
These results reflect a significant improvement in the
Group's activities in 2013, relative to the previous year,
resulting first and foremost from an improvement in
the core banking activity of the Group.
In recent years, we have experienced dramatic changes
in the business and social environment and witnessed
rapid development in technology. Against the backdrop
of these changes, the Bank's senior management together with the managers and employees of the
Group - has led an organization-wide process, at the
end of which we have formulated a new vision for
Leumi: "To conduct proactive and innovative banking
for our customers".
As reflected in the vision, the renewed business plan
is based on the principles of initiative and innovation
while striving for appropriate profitability, safeguarding
the stability of the Bank and creating a balance with
the needs of employees and shareholders.
Over the last year, we have expanded and upgraded
the streamlining program which we announced some
two years ago. The results of this process are reflected
in this year's financial statements, and for the first
time in many years there can be seen a decrease in
the Bank's workforce and a halt in the growing trend
of salary expenses. We consider the streamlining
process an important step in strengthening the Bank
towards the future, and we intend to continue its
implementation in the coming years.
There is no doubt that we have come a long way in
2013 and our financial results reflect this. However,
the path to full realization of our vision is still long and
challenging. We are determined to continuously strive
to realize the Group's vision and conduct proactive
and innovative banking for our customers.
David Brodet
Chairman of the Board
The growth reported in most of the business parameters
of the Group in 2013 is the result of internal, proactive
and in-depth strategic processes that the Leumi Group
has been leading for some time. The principal changes
are evident in the efficiency ratio reported by the Group, a
subject we have been addressing with determination and
sensitivity for some two years. Alongside this major issue,
we are working in a consistent and focused manner on the
implementation of a strategic plan that includes reducing
Leumi's offices worldwide, expansion into new markets in
East Asia, changes in the structure of non-financial holdings
and focusing on the retail customer. The direction of the
Group in the years ahead is evident. We are aware of the
difficulties and our path is clear to achieving our vision
and business goals. I have no doubt that the momentum of
2013 will continue well into 2014 and the years beyond.
The Leumi Group has accompanied its customers and the
Zionist enterprise for 112 years, as a partner in building
and developing the country. The Group's stability, size and
strength allow us to continue accompanying our full range
of customers and help them realize their aspirations. With
over a trillion Shekels of assets under management, total
assets amounting to NIS 374.4 billion and equity amounting
to NIS 26.4 billion, the Group is able to provide credit for
the development of large and significant infrastructure
projects and provide professional and proficient support
to the development of Israeli industry, agriculture, tourism
and various service industries. We have recently decided
to expand our involvement also in the Israeli hi-tech
industry in order to help this developing industry realize
its full potential.
The year 2014 is fraught with complex difficulties. We are
in a challenging macro-economic environment and there
is strong competition for the customer's attention. The
challenges are many and obvious, but I am confident that
with the professional leadership of the Group's management,
and with the participation of all our employees, we will
achieve our objectives, continue to improve our performance
and realize our vision of "Conducting proactive and
innovative banking for our customers."
Leumi's Vision
The evolving business, economic and social environment
have led the Leumi Group to review and restate its vision
and its core values, in a manner that will reflect the change
the Group has gone through in recent years. In a crossorganizational process - with the participation of managers
and employees - the Group’s vision was rephrased into one
sentence: Conducting proactive and innovative banking
for our customers.
This vision reflects the new approach of the Group: the
desire to design a dynamic business environment - which
combines the values of the Bank with technological
innovation - an environment in which our customers can
find the best and most suitable solution to their financial
needs, while at the same time striving for appropriate
profitability, safeguarding the stability of the Bank, creating
a balance with the needs of employees and being commited
to the community as a social and moral anchor.
Leumi's Core
Values
04
PERSONAL EXAMPLE
Each and every one of us is a role
model for somebody. We must
strive that our business activity
embodies the supreme value of
“personal example”.
03 05
PARTNERSHIP
EXCELLENCE
We live in a reality that puts the value
of “partnership” at center stage. To
produce a force multiplier, we need
to promote cooperation between and
within units - with each of us thinking
"Leumi" - and thus we will ensure the
achievement of our goals. In addition,
we will be open-minded and share our
opinions, our thoughts and our ideas.
The challenges and the changing
reality require us to constantly strive
for improvement and achievement
of better results. As employees
of the Bank, “excellence” for us
is the knowledge that our work
has contributed to our customers
and has created a value for the
organization.
01 02
THE CUSTOMERS ARE
AT THE HEART OF OUR
BUSINESS
They expect professional, quality,
courteous and efficient service, and that
at the moment of truth we will be there
for them - attentively - with suitable and
useful value propositions.
"YES WE CAN"
An outlook which enables new ideas
to expand and to be realized. This
perception respects those who face
challenges, focuses on taking action,
but also allows for potential errors by
recognizing that only he who dares, wins.
FROM VISION
TO STRATEGY
UPGRADING THE
SERVICE MODEL AND
VALUE PROPOSITIONS
ASSIMILATING A
CUSTOMER-FOCUSED
CORPORATE CULTURE
Focusing on selected retail
sectors, small and medium
businesses, and high-tech
Focusing on the training of of
the organization in line with
the Group’s vision and values
ADAPTING THE OPERATING
MODEL OF THE CORPORATE
AND REAL ESTATE
BUSINESS LINES
IMPROVING EFFICIENCY
AND FLEXIBILITY
Focusing on the utilization of Leumi’s
competitive advantages in the
evolving environment (non-banking
and banking)
CREATING A HIGH
QUALITY AND INNOVATIVE
TECHNOLOGICAL
ENVIRONMENT
Focusing on the improvement of
business performance and on the
Bank’s ability to react quickly to
constant changes in the operating
environment
Focusing on human resources,
information technology and
procurement
Dan Cohen
Head of Human
Resources Division
Ron Fainaro, CPA
Head of Economics
and Finance
Division
Shlomo Goldfarb, CPA
Head of Accounting
Division
Naomi Sandhaus, Adv.
Head of Legal
Division
Tamar Yassur
Head of Retail
Banking Division
Dan Yerushalmi
Head of
Technologies
Division
SENIOR EXECUTIVES
Prof. Daniel Tsiddon
Deputy CEO
Head of Capital Markets,
Private Banking &
Strategy
Itai Ben-Zeev
Head of Capital
Markets Division
Dr. Hedva Ber
Head of Risk
Management
Division
Koby Haber
Head of Corporate
and Commercial
Division
Yoel Mintz
Head of International
Credit and Real
Estate Division
Sasson Mordechay
Head of Internal
Audit Division