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Bank Hapoalim Annual Report 2012 Worldreginfo - F5fe760c-Cdf6-43Cc-95F4-Ba6e66f9c662 the Bank Hapoalim Group Major Subsidiaries & Affiliates

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Bank Hapoalim Annual Report 2012 Worldreginfo - F5fe760c-Cdf6-43Cc-95F4-Ba6e66f9c662 the Bank Hapoalim Group Major Subsidiaries & Affiliates 2012 Bank Hapoalim Annual Report 2012 WorldReginfo - f5fe760c-cdf6-43cc-95f4-ba6e66f9c662 The Bank Hapoalim Group Major Subsidiaries & Affiliates Commercial Banks Asset Management Bank Hapoalim B.M. Poalim Sahar Ltd. Bank Hapoalim (Switzerland) Ltd. PAM - Poalim Asset Management (UK) Ltd. Bank Hapoalim (Luxembourg) S.A. Poalim Asset Management (Ireland) Ltd. Hapoalim (Latin America) S.A. Bank Hapoalim (Cayman) Ltd. Financial Companies Bank Pozitif Kredi Ve Kalkinma Bankasi a.s. Isracard Ltd. JSC Bank Pozitiv Kazakhstan(1) Poalim Express Ltd. Investment House (1) 100% owned by Bank Pozitif Poalim Capital Markets - Investment House Ltd. Trust Companies Poalim Trust Services Ltd. Underwriting Companies Poalim I.B.I. Managing and Underwriting Ltd. Portfolio Management Peilim – Portfolio Management Company Ltd. Hapoalim Securities USA, Inc. Consolidated Financial Highlights 2012 2011 2012 2011 NIS millions USD millions* Total Assets 376,399 356,662 100,830 95,543 Net Profit 2,543 2,746 681 736 Credit to the Public 249,182 246,495 66,751 66,031 Deposits from the Public 271,411 256,417 72,706 68,689 Shareholders' Equity 26,755 23,819 7,167 6,381 * US dollar figures have been converted at the representative exchange rate prevailing on December 31, 2012, NIS 3.733 = USD 1.00 2 Bank Hapoalim B.M. and its Consolidated Subsidiaries WorldReginfo - f5fe760c-cdf6-43cc-95f4-ba6e66f9c662 Group Profile Israel’s leading financial institution Since its founding in 1921, Bank Hapoalim has played Internationally, Bank Hapoalim operates through a a pivotal role in the rapid growth of Israel’s economy. network of subsidiaries, branches and representative Today Hapoalim continues to be the leading financial offices in the United States, Europe, South America institution in Israel. The bank maintains a global presence, and Asia. The Bank’s thriving Global Private Banking operating in 44 locations throughout the world. services, led by Bank Hapoalim (Switzerland), serves high net-worth clients from around the world, with offices in Bank Hapoalim is a universal bank in structure Zurich, Geneva, Luxembourg, Tel Aviv, Miami and Hong and operations. Kong. In this competitive market, clients are attracted to The bank boasts a very strong retail banking business the Bank’s very extensive wealth management expertise, with the largest distribution network in the country. stellar reputation and global spread. Global Private Banking Through a wide range of banking offerings it caters to activities are supported by PAM, a fully-owned subsidiary consumers, SMEs and corporations across Israel. in London, which provides investment products through the world’s leading investment firms. Bank Hapoalim is the lender of choice to Israel’s largest corporations and is active in financing industrial Building on its experience in structuring complex and commercial enterprises, as well as major trade packages, the Bank is promoting its overseas infrastructure projects. corporate services, primarily targeting Israeli companies establishing or strengthening their presence in established The bank runs a thriving foreign trade, foreign and growth markets. exchange, and brokerage & custody business and maintains a global private banking arm serving private The Bank Hapoalim Group includes Isracard Ltd, clients across the globe. Israel's leading credit card company, as well as financial companies involved in investment banking, trust services In Israel, Bank Hapoalim operates 280 full-service and portfolio management. branches, focusing on households, private (affluent) banking & small businesses. The Bank plays an active role in the community, The bank offers a deep shelf of banking and payments contributing generously to educational, social and cultural products, capital market and foreign trade facilities and a projects, and encouraging personal volunteering among full gamut of financial planning advisory services including its employees. pension and retirement planning. Bank Hapoalim is one of the most actively traded stocks Through its celebrated direct banking platform and on the Tel Aviv Stock Exchange. In addition, a Level-1 state-of-the-art 24/7 call centers; the Bank promotes ADR is traded "over-the -counter" in New York, under convenient, interpersonal interaction, providing customers ticker BKHYY. the ability to bank through whichever technological The Bank is rated by Moody's, S&P and Fitch. channel they choose. Commercial and corporate clients are professionally served through eight regional business centers, business branches and specialized industry desks for major corporate clients. The Bank, which has long been the favored financial address for Israel’s leading corporations, is now strengthening its middle market activities. A network of 22 business branches makes services more convenient and diversified, as this sector plays an expanding role in the domestic economy. 3 Bank Hapoalim B.M. and its Consolidated Subsidiaries WorldReginfo - f5fe760c-cdf6-43cc-95f4-ba6e66f9c662 Letter from the Chairman of the Board and the CEO Dear Stakeholders, Euromoney and Global Finance, who selected Bank Hapoalim as the Best Bank in Israel for 2012. In 2012, the Bank continued to yield a double-digit return for its shareholders. On behalf of the Board of Directors Return on equity stood at 10.1% and net profit and the Board of Management, we totaled NIS 2,543 million in 2012. These results are proud to present the annual reflect the Bank's deep commitment to produce a suitable return to stockholders in line with the financial statements of the Bank Bank's risk appetite as well as the macro–economic Hapoalim Group for 2012. During conditions inside and outside of Israel. the year, Bank Hapoalim completed the implementation of its three-year The Global Economy strategic plan, recording impressive In 2012, the debt crisis in the developed countries business achievements and yielding a continued to affect the level of risk in the global economy. Towards the second half of the year, after double-digit return on shareholders' a clear political recognition of the importance of equity, in line with our stated goals. European Union leaders saving the Union framework, and after the publication of the plan for purchases of bonds of distressed countries by the European Central Bank, the level of risk in the markets decreased. Completion of the Three-Year Strategic Plan It is our belief that the shock waves of the deep In 2012, Bank Hapoalim successfully completed economic crisis of 2008 continue to influence the global the implementation of the strategic plan that we economy, which is struggling with uneven growth as presented to the market in late 2009. We are well as contraction in some international economies. proud to report that Bank Hapoalim achieved Overall, according to estimates by the International the goals that we set for ourselves, including: Monetary Fund, the world economic output slowed to • Positioning Bank Hapoalim as Israel's an annual growth rate of 3.2% in 2012. The developed leading financial institution; economies grew at a moderate rate of 1.3%, as • Stabilizing the Bank on a path of growth; and the bulk of the contribution to growth was derived • Achieving suitable returns for shareholders. from the emerging markets, which grew by 5.1%. Our determined and accurate implementation of Central banks worldwide worked to stimulate growth, the Strategic Plan served as the foundation of the maintaining expansionary monetary policies, which Bank's success in 2012. During the year, management were also made possible by relatively low rates of worked to strengthen its key revenue drivers across all inflation. In our opinion, the use of low-interest rates business divisions. At the same time, we conducted a for prolonged periods of time can potentially exhaust significant streamlining process in order to enhance the certain countries ability to spur their economies Bank's competitive edge and adjust to the increasing and contributes to asset price imbalances. level of competition in the banking industry. Growth in the United States accelerated slightly It is noteworthy to mention the recognition over the last year, mainly due to improvements in Bank Hapoalim received as the leading financial private consumption and a rebound in the real-estate institution in Israel. Especially from prestigious market. Growth in the United States totaled 2.3% industry publications such as The Banker, in 2012. Although the unemployment rate in the 4 Bank Hapoalim B.M. and its Consolidated Subsidiaries WorldReginfo - f5fe760c-cdf6-43cc-95f4-ba6e66f9c662 United States fell from 8.5% at the end of 2011 to 3.5% increase in the number of employed persons. 7.8% by the end of 2012, the American economy During the year, we learned about the development still needs to recover approximately 4 million jobs in of a significant Israeli governmental budget deficit. order to return to pre-crisis employment levels. The new government will have to deal with the Eurozone economic output experienced a 0.4% need for deep budget cuts, in an environment contraction in 2012, and the average unemployment rate where economic growth remains challenging. in the Eurozone countries reached a high of 11.8% in November. Decisions made in the Eurozone over the year indicated a desire to keep the economic and monetary Growth and Stability union intact. Greece, the Eurozone’s weakest link, received When we entered our role three years ago we set a two aid packages, following the implementation of a strategic direction for the
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