Reporting to the Banking Supervision Department Directives

Bank of Israel Banking Supervision Department Policy

Fax: 02-6524590 Tel: 02-6552475 780 D.T., Jerusalem 91007

11 Iyar 5773, Jerusalem April 21, 2013

Circular No. 06-2374

To: Banking Institutions and Credit Card Companies

Subject: Reporting to the Banking Supervision Department Directives

Introduction

1. Pursuant to Circular No. 2338 dated February 15, 2013, which amended Directive No. 205 "Measurement of Capital and Solvency" effective from that date.

2. The following guidelines regarding "Additional Disclosure" (Circular No. 809) on "Housing Mortgages" and "Real Estate" (Circular No. 838 - Part D - Large Credit Exposures (810D), Credit and Counterparty Credit Risk (810E), and Credit Risk Exposures (810A)) are hereby amended, as well as updated.

Amendments to the Directives

Additional Disclosure – Directive No. 809

3. The following paragraph was added to the Additional Disclosure:

"Paragraph 02 in Table 3: Additional information on certain sectors due to sectoral concentration.

Instead of 'Banking Guarantees for Housing Delivery' in line 04, insert '10%'; instead of '20%', insert '50%'"

Large Credit Exposures – Directive No. 810D

4. The following changes shall apply to "Quarterly Report on Large Credit Exposures" Table 01:

a. In Note 4, Part B: Instead of "20%", insert "10%". b. In line 51: Instead of "20% rate", insert "10% rate".

Borrowers with Credit and Counterparty Credit Risk – Directive No. 810A

Credit Risk Exposures – Directive No. 810E

5. References to Note 4, Part B in these directives shall henceforth be references to Note 4, Part A.

Explanatory Notes

To adapt the reporting directives to the public.

Quarterly Report on Measurement of Capital and Solvency – Directive No. 838

6. The following changes:

a. "Exposure Classification Process" Appendix A - Change in risk weight from 50% to 35% for mortgages, and from 45% to 60% when the LTV ratio is above 60%.

b. "Credit Risk Exposures of Corporates" Table 05: New line added after line 10 (line 11): "Conversion coefficient for off-balance sheet exposures intended for guarantees under the Sales Law: 10%"

Lines 11-12 (old numbering) shall henceforth be lines 20-21 (new numbering) in the case of housing delivery.

c. "Credit Risk Exposures for Housing Mortgages" Table 09: New line added after line 13 (line 14): "Risk weight of 50% for loans where the LTV ratio is above 45% and up to 60%."

Lines 15-18 (old numbering) shall henceforth be lines 17-18 (new numbering).

d. "Credit Risk Exposures" Table 10: New column added before "Total Exposure" (column 01): "Provisions for Credit Risk Exposures" (columns 08-13 became columns 18-23, and columns 24-27 became columns 24-27).

Loans for Housing – Directive No. 876

7. Section 26, Note 4, Part B: Instead of "Note 4, Part B", insert "Note 4".

Explanatory Notes

To adapt the reporting directives to the public.

Effective Date

8. The amendments to this directive shall take effect as of the report dated March 31, 2013.

Questions and Clarifications

9. Questions or clarifications regarding the tables in the Reporting to the Banking Supervision Department Directive No. 803 should be directed to the Reporting Supervision Department.

Update Files

10. The following pages of the "Reporting to the Banking Supervision Department" directive file should be updated by the banks:

Page to Insert | Page to Remove *(8/12) [10] 809-3 | (8/12) [10] 809-3 (4/13) [13] 809-4 | (2/13) [12] 809-4 (4/13) [8] 810A-1 | (4/12) [7] 810A-1 (4/13) [6] 810A-2 | (1/11) [5] 810A-2 (4/13) [6] 810A-5 | (1/11) [5] 810A-5 *(1/11) [5] 810A-6 | (1/11) [5] 810A-6 (4/13) [7] 810D-7 | (12/11) [6] 810D-7

Page to Insert | Page to Remove *(12/11) [6] 810D-8 | (12/11) [6] 810D-8 *(12/11) [6] 810D-13 | (12/11) [6] 810D-13 (4/13) [7] 810D-14 | (12/11) [6] 810D-14 (4/13) [8] 810D-15 | (2/12) [7] 810D-15 (12/11) [6] 810D-16 | (12/11) [6] 810D-16 ( 1/11) [3] 810E-3 | (1/11) [3] 810E-3 (4/13) [5] 810E-4 | (2/12) [4] 810E-4 (4/13) [2] 838-7 | (6/10) [1] 838-7 (4/13) [3] 838-12 | (1/11) [2] 838-12 (1/11) [2] 838-13 | (1/11) [2] 838-13 (4/13) [3] 838-16 | (1/11) [2] 838-16 (4/13) [3] 838-17 | (1/11) [2] 838-17 ( 11/12) [10] 876-5 | (11/12) [10] 876-5 (4/13) [11] 876-6 | (11/12) [10] 876-6 (4/13) [3] 897-53 | (3/13) [2] 897-53

• Pages marked with an asterisk were reprinted but not updated, due to side printing.

With respect,

Omer Soffer Deputy Superintendent of Banks

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Reporting to the Banking Supervision Department Directives Page 4 of 809 Additional Disclosure

Table 02

Additional Disclosure: Additional information on certain sectors due to sectoral concentration

Sector	Total Liabilities to the Public
01 Construction Sector
02 Other Sectors
03 Total Sectoral Liabilities

1. Credit Risk Exposures on the Balance Sheet:

Description	Amount
01 Banking Guarantees for Housing Delivery (before delivery)
02 (Paragraph 1(b))
03 Banking Guarantees for Housing Delivery (after delivery)
04 10%
05 Deductions: State Guarantees (Paragraph 2(a))
06 Other Bank Mortgages (not covered by bank liability) and additions: 20%
07 Deductions: Excess Capital (Section 3(d), Paragraph 4(a))
08 Deductions: Deductions per Directive No. 315 (Paragraph 4(b))
09 Deductions: Added/Deducted Rent Amount (Paragraph 4(c))
10 Deductions: Real Estate Acquisition Outside Israel (Paragraph 4(d))
11 Total
12 Total after Deductions and Additions

13. Liabilities in the "Civil Engineering Works" Sector:
14. Sectoral Liability Percentage
15. Excess Liability (corresponding to Column 03, Line 13, Column 01 in Table 01)
16. Remaining Additional Disclosure due to Concentration (corresponding to Column 03, Line 13, Column 02 in Table 01)

Data shall be reported after multiplying by 10% or 50%, respectively.

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Reporting to the Banking Supervision Department Directives Page 1 of 810A Borrowers with Credit and Counterparty Credit Risk

Quarterly Report on Borrowers with Credit and Counterparty Credit Risk

Application

1. This directive applies to all banking institutions, excluding financial institutions and companies, excluding joint service companies.

Submission Deadline

2. The report must be submitted within 30 days from the end of the fourth quarter.

Report Composition

3. The report consists of two parts:
   • Quarterly Report on Credit and Counterparty Credit Risk and Collaterals: Table 01.
   • Report on Borrowers for Two Years: Table 02.

Reporting Method

4. Reporting shall be conducted via secure internet computer communication. The reporting format is attached to the Bank of Israel.

General Guidelines and Definitions

5. The report is filled on a consolidated basis (not on a bank-by-bank basis).

6. NIS-denominated amounts include ILS-denominated amounts.

7. Borrower: A person or entity that has received or granted credit risk exposure at the bank, including in Note 4.g. a. Excluding financial institutions:

   1. Housing loans as defined in Directive No. 451 ("Housing Loan").
   2. Credit to jewelers. There is a requirement to report on borrowers as a group, not only on individual borrowers.

8. Last Collateral Obligation Report: If the customer's situation is discussed in the Credit Committee as described, but there is a credit line/credit renewal for the purpose of granting a credit line/credit, the most recent data available to the bank shall be used if the Credit Committee did not convene prior to the last discussion.

Selection of Borrower Population

9. The bank shall report on the largest borrowers located in the upper tiers of the credit risk hierarchy, representing 50% of the total credit and counterparty credit risk in NIS. "Public Credit" refers to "Credit and Counterparty Credit Risk on the Balance Sheet" as defined in Note 4.g. Excluding commitments to grant credit to the public. For the purpose of this section, non-borrower credits shall be deducted from the numerator relative to the denominator in the definition.

Special Supervision Credit Risk, Subordinated Credit Risk, and Non-Performing Credit Risk

10. These terms are defined as in the Reporting to the Banking Supervision Department Directives.

Impairment Provisions on a Collective and Individual Basis

11. Impairment provisions on a collective and individual basis are defined as in the Reporting to the Banking Supervision Department Directives.

Guidelines for Table 01

12. The data shall be net of accounting write-offs, before deduction of impairment provisions. The allowable deductions for collateral and borrower group liabilities shall be deducted before credit risk exposure.

13. a. Credit and Counterparty Credit Risk: Lines 9-26. b. Forward transactions between currencies other than NIS: Line 21. c. "Impairment Provision Balance on Collective Basis in NIS": Line 32. The amount of impairment provisions on collective basis credit risk shall be recorded in this line, corresponding to the liability reported in line 26. d. Options: Line 15. The bank shall report options purchased (CALL) by the bank's customers. Options where the exercise price does not exceed 10% above the spot price on the reporting date shall also be reported in line 16. e. Forward transactions (other than options) of the type "Buy NIS / Sell ILS" taken into account as hedging transactions by the reporting banking institution against exchange rate risks: Line 17. Transactions taken into account by the reporting banking institution as hedging transactions against exchange rate risks for the purpose of managing credit and counterparty credit risk granted to the same banking institution customer shall also be reported in line 18.

14. a. Options purchased (CALL) of the type "Buy NIS / Sell ILS": Line 33. These must meet the following conditions:

    1. The amount is 100% of the stated value, and the exercise price does not exceed 5% above the SPOT price on the reporting day.
    2. The transactions were taken into account by the reporting banking institution as hedging transactions.
    3. They are against exchange rate risks for "Buy ILS / Sell NIS" in the context of managing credit and counterparty credit risk granted to the same banking institution customer.

b. Collaterals deductible per Section 5 of Directive No. 313 shall be presented in lines 34 and 36, provided they are valid and conditional on the reporting day.

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Page 5-6 of 810A Borrowers with Credit and Counterparty Credit Risk

Reported Amounts in Thousands of NIS (Including NIS-Denominated)

Quarterly Report on Borrowers with Credit and Counterparty Credit Risk

Table 01: Quarterly Report on Credit and Counterparty Credit Risk and Collaterals

Line	Description	NIS	ILS
01	Borrower Name
02	Borrower ID Number
03	Borrower Classification
04	Address
05	Economic Sector
06	Branch Number
07	File Number
08	Report Number
09	Credit Risk Exposure Before Impairment Provisions (Note 4.a)
10	Index-Linked ILS
11	NIS
12	Commitments to Grant Credit
13	NIS
14	Forward Transactions: Options Written (PUT) Liability in NIS
15	Options Purchased (CALL) Liability in NIS
16	Options Purchased Where Exercise Price is Equal to or Below SPOT Price - 10%
17	Forward Transactions (Other than Options): Buy NIS / Sell ILS
18	"Hedging"
19	Buy ILS / Sell NIS
20	Other Transactions: NIS
21	Other Commitments (Not included in Sections 1, 2 above): NIS
22	Other Commitments: ILS
23	Liability Definition per Sections 3, 5, 7 of Directive No. 313: NIS
24	Total Credit Risk Exposure Before Impairment Provisions (Sum of 9+10+12+14+17+20+22): ILS
25	Total Credit Risk Exposure Before Impairment Provisions (Sum of 11+13+15+19+21+23): NIS
26	Total Credit Risk Exposure Before Impairment Provisions (NIS + ILS) (Note 4.b)
27	Special Supervision Credit Risk
28	Subordinated Credit Risk
29	Non-Performing Credit Risk
30	Impairment Provision Balance on Individual Basis
31	Total Credit Risk Exposure After Impairment Provisions (NIS + ILS) (31=26-30)
32	Impairment Provision Balance on Collective Basis (NIS + ILS)
33	Hedging: Options Purchased (CALL) Buy ILS / Sell NIS Within 5% of 100% Stated Value
34	Collaterals Deductible per Directive No. 313
35	Other Collaterals

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Page 7 of 810D Large Credit Exposures

Audited quarterly financial statements prepared by the auditor must be reported from the financial report.

Line 16: "Attributed Equity Capital to Shareholders per Financial Report". Record the balance of attributed equity capital to shareholders per the last audited annual financial report. If the borrower's quarterly financial statements are prepared by the auditor, take the data from the last audited quarterly financial report.

Line 17: "Attributed Annual Net Profit to Shareholders per Financial Report". Record the attributed annual net profit to shareholders per the last audited annual financial report, from continuing operations, after tax.

Line 18: "Attributed Annual Operating Profit to Shareholders per Financial Report". Record the attributed annual operating profit to shareholders per the last audited annual financial report, from continuing operations, before tax and financing expenses.

Line 19: "Financial Report Date for Data Reported in Lines 14-16". Record the financial report date for the data reported in lines 14-16.

Line 20: "Tier Number per Reporting to the Banking Supervision Department Directives Note 4.b". The borrower's tier number appears in "Public Credit" according to "Credit and Counterparty Credit Risk on the Balance Sheet" Note 4.b. Record the balance sheet credit risk exposure amount of the borrower's credit risk, net of accounting write-offs, after impairment provisions, as presented in lines 26-41 below, in the corresponding tier.

If the borrower is classified in the public financial reports, indicate the tier number in which the borrower is classified. Record the tier number in two digits per Reporting to the Banking Supervision Department Directives Page 24-669.

If all borrowers reported in a certain tier are included, write the digit "1" before the tier number of one of the borrowers. If no borrowers are included in a certain tier, mark "109" for Tier 9, "906" for Tier 6, "14" for Tier 14, and "914" for Tier 914. For borrower groups, fill in the tier number as if the borrower group were classified according to Note 4.b. For non-borrowers included in the definition of "Public Credit" (e.g., credit to non-OECD countries), fill in the tier number as if the non-borrower were theoretically classified into the tier described. For non-borrowers included in the definition of "Public Credit" that were not required to be included in borrower groups according to Note 4.b, write the digit "4" before the tier number.

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Page 14 of 810D Large Credit Exposures

Reported Amounts in Thousands of NIS Quarterly Report on Large Credit Exposures - Table 01

Line	Description	Data from Borrower's Financial Reports
1	Borrower Name
2	Borrower ID Number
3	Borrower Group Name
4	Borrower Group ID Number
5	Reason for Borrower Inclusion in Group (per Appendix B)
6	Economic Sector
7	Branch Number
8	File Number
9	Report Number
10	Borrower Classification (per Appendix C)
11	Borrowers with Liabilities Exceeding 10% of Capital
12	Related Person
13	Credit Rating
14	Total Credit from Banks per Financial Report
15	Total Balance Sheet per Financial Report
16	Attributed Equity Capital to Shareholders per Financial Report
17	Attributed Annual Net Profit to Shareholders per Financial Report
18	Attributed Annual Operating Profit to Shareholders per Financial Report
19	Financial Report Date for Data Reported in Lines 14-16
20	Tier Number per Reporting to the Banking Supervision Department Directives Note 4.b
21	Total Credit in Customer Accounts (Before Accounting Write-offs)
22	Liability Definition: Value of Borrower's Investment Securities (Paragraph 2)
23	Liability Definition: Borrower Commitment in OTC Derivative Transaction (Paragraph 4(a))
24	Total Credit Risk on Balance Sheet (Net of Accounting Write-offs, Before Impairment Provisions)
25	Net of Accounting Write-offs
26	Total Credit Risk on Balance Sheet (After Accounting Write-offs, Net of Impairment Provisions) (24-25=26)
27	Special Supervision Credit Risk on Balance Sheet
28	Subordinated Credit Risk on Balance Sheet
29	Non-Performing Credit Risk on Balance Sheet
30	Impairment Provision Balance on Individual Basis
31	Total Credit Risk on Balance Sheet (After Accounting Write-offs, Net of Impairment Provisions on Individual Basis) (26-30=31)
32	Index-Linked Credit Risk on Balance Sheet
33	Index-Linked Credit Risk on Balance Sheet
34	NIS-Denominated and NIS-Denominated Credit Risk on Balance Sheet
35	Credit Risk on Balance Sheet in Reporting Institution Only
36	Credit Without Recourse to Borrower
37	Impairment Provision Balance on Collective Basis Attributed to Balance Sheet Credit Risk
38	Additional Provision Balance

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Page 15 of 810D Large Credit Exposures (Continued)

Reported Amounts in Thousands of NIS Quarterly Report on Large Credit Exposures - Table 01

Line	Description	Amount
39	Total Off-Balance Sheet Credit Risk (Before Accounting Write-offs)
40	Net of Accounting Write-offs
41	Total Off-Balance Sheet Credit Risk (After Accounting Write-offs, Net of Impairment Provisions) (39-40=41)
42	Special Supervision Off-Balance Sheet Credit Risk
43	Subordinated Off-Balance Sheet Credit Risk
44	Non-Performing Off-Balance Sheet Credit Risk
45	Impairment Provision Balance on Individual Basis Attributed to Off-Balance Sheet Credit Risk
46	Total Off-Balance Sheet Credit Risk (After Accounting Write-offs, Net of Impairment Provisions on Individual Basis) (41-45=46)
47	OTC Derivative Transactions
48	Commitments of the Reporting Banking Institution's Clearing House (Liability Definition Paragraph 5)
49	Options Written by Borrower (Amounts Not Included in Line 48)
50	Guarantees Weighted at 50% per Sales Law
51	Weighted at 10%
52	ILS for Guaranteeing Guarantees
53	NIS Credit
54	ILS Credit Certificates
55	Other NIS Guarantees
56	Commitments to Grant Credit (Including Conditional) (Liability Definition Paragraph 6)
57	Impairment Provision Balance on Collective Basis Attributed to Off-Balance Sheet Credit Risk
58	Additional Provision Balance
59	Total Credit Risk on Balance Sheet and Off-Balance Sheet (Net of Accounting Write-offs, Net of Impairment Provisions on Individual Basis) (31+46=59)
60	Third-Party Guarantees (Liability Definition Paragraph 8)
61	Additions for Partnerships
62	Credit to Finance Acquisition of Control Means in Borrower Without Recourse (Directive No. 313 Section 1(a)(7))
63	Gross Liability (59+60+61+62=63)
64	Deductions
65	Clearing House Commitments:
66	Other Derivatives and Instruments: Options
67	Net Liability (63-64=67)
68	Net Liability in Reporting Institution Only
69	Credit to Finance Acquisition of Control Means in Borrower With Recourse

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Page 4 of 810E Credit Risk Exposures

Reported Amounts in Thousands of NIS Quarterly Report on Credit Risk Exposures - Table 01

Line	Description	Amount
1	Borrower Name
2	Borrower ID Number
3	Borrower Group Name
4	Borrower Group ID Number
5	Reason for Borrower Inclusion in Group
6	Economic Sector
7	Branch Number
8	File Number
9	Report Number
10	Borrower Classification
12	Related Person
13	Credit Rating
20	Tier Number per Reporting to the Banking Supervision Department Directives Note 4.b
21	Total Credit in Customer Accounts (Before Accounting Write-offs, Net of Impairment Provisions)
22	Liability Definition: Value of Borrower's Investment Securities (Paragraph 2)
23	Liability Definition: Borrower Commitment in OTC Derivative Transaction (Paragraph 4(a))
24	Total Credit Risk on Balance Sheet (Net of Accounting Write-offs, Before Impairment Provisions)
25	Net of Accounting Write-offs
26	Total Credit Risk on Balance Sheet (After Accounting Write-offs, Net of Impairment Provisions)
27	Special Supervision Credit Risk on Balance Sheet
28	Subordinated Credit Risk on Balance Sheet
29	Non-Performing Credit Risk on Balance Sheet
30	Impairment Provision Balance on Individual Basis
31	Total Credit Risk on Balance Sheet (After Accounting Write-offs, Net of Impairment Provisions on Individual Basis)
35	Credit Risk on Balance Sheet in Reporting Institution Only
37	Impairment Provision Balance on Collective Basis
38	Additional Provision Balance

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Notes:

1. In calculating the aggregate retail exposure threshold of 75% risk weight, including exposures secured by residential property, the eligibility criteria in Section 70 shall be considered for determining the risk weight, including the 203 Directive No. 78-75.
2. A risk weight of 150% shall be allocated to loans in arrears.
3. This diagram is for clarification purposes only and is not intended to add or subtract from any other provisions of the directive or guidelines.

Classification of Loans to Small Businesses:

• Small Business Loans: 75% Risk Weight.
• (Supervised Retail Portfolio 2)
• Does the exposure meet the eligibility criteria in Section 70?

Classification of Mortgages:

• Mortgage Loans: Housing.
• (Supervised Retail Portfolio 2) 75% Risk Weight.

Classification of Individual Exposures:

• Individual Exposures: 100% Risk Weight.
• (Consolidated as Corporate 2)

Classification of Individual Exposures:

• Individual Exposures: 75% Risk Weight.
• (Supervised Retail Portfolio 2)
• Does the exposure meet the eligibility criteria in Section 70 in all four aspects?
• Is the exposure "Individual" as per Section 231?

Classification of Loans to Small Businesses:

• Small Business Loans: 100% Risk Weight.
• (Consolidated as Corporate 2)
• Was the borrower previously classified as a corporate entity due to non-compliance with the threshold?

Exposure Classification Process - Appendix A:

Classification of Mortgages:

• Mortgage Loans: Housing.
• 100% Risk Weight (Consolidated as Corporate 2).

Classification of Corporate Debt:

• Corporates: 100% Risk Weight (or 100% per Rating 2).
• Does the exposure meet the eligibility criteria in Section 72?
• Does the exposure meet the conditions in Section 231 (including 231-v) 1,3 bullet points (231)?
• Does the exposure meet the conditions in Section 231 (including 231-v) 1,3 bullet points (231) (Retail Management Limit M 5)?
• Does the exposure meet the conditions in Section 231 (including 231-v) 1,3 bullet points (231) (Two Bullet Points)?
• Does the exposure meet the bank's established underwriting standards?
• Is the exposure an exception to the threshold of non-typical current activity of the borrower?

Classification of Mortgages:

• Mortgage Loans: Housing.
• 35% Risk Weight when LTV is up to 45%.
• 50% Risk Weight when LTV ratio is above 45% and up to 60%.

Page 7 of 838 (4/13) [2]

According to the nature of the exposure, additional consideration shall be given to Sections 53-67, 74-89 per Directive No. 203 "Measurement of Capital and Solvency".

Table 05 (Thousands of NIS) Credit Risk Exposures of Corporates

Line	Description	(+) Added Amounts	(-) Deducted Amounts	Total
01	Total Exposure Amounts			11
02	Credit			02
03	NIS			03
04	Balance Sheet Total			04
05	Financial Derivative Transactions			05
06	Credit Lines			06
07	Other			07
08	Off-Balance Sheet Total			08
09	Conversion Coefficient 0%:			09
10	Conversion Coefficient 10%:			10
11	Conversion Coefficient 20%:			11
12	Conversion Coefficient 50%:			12
13	Conversion Coefficient 100%:			13
14	20%			14
15	50%			15
16	100%			16
17	In Arrears:			17
18	Without External Credit Assessment			18
19	150%			19
20	In Arrears:			20

Page 12 of 838 Quarterly Report on Measurement of Capital and Solvency Part A: Credit Risk

Collateral Split

Exposure Type

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Simple Approach

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Comprehensive Approach

Risk Weight Split

Exposure Amount

Before Impairment Provisions (Converted to Credit)

Adjusted Value of Financial Collateral (-)

Volatility Adjustment (He)

Required Capital Pillar 1 (8%)

Risk-Weighted Assets (RWA)

Exposure Amount After Conversion

Converted to Credit

After CRM Reduction

Before Conversion (Converted to Credit)

Balance Sheet Exposures

Off-Balance Sheet Exposures

Total Exposure Amounts

Page 3 of 838 (4/13) [3]

Quarterly Report on Measurement of Capital and Solvency

Exposure Amount After Netting Effect of Replacement Before CRM Conversion Coefficients

Adjusted Value of Financial Collateral (-)

Volatility Adjustment (He)

Required Capital Pillar 1 (8%)

Risk-Weighted Assets (RWA)

Exposure Amount After Conversion

Converted to Credit

After CRM Reduction

Before Conversion (Converted to Credit)

Collateral

Page 16 of 838 Quarterly Report on Measurement of Capital and Solvency Part A: Credit Risk

Collateral Split

Exposure Type

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Simple Approach

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Comprehensive Approach

Risk Weight Split

Exposure Amount

Before Impairment Provisions (Converted to Credit)

Adjusted Value of Financial Collateral (-)

Volatility Adjustment (He)

Required Capital Pillar 1 (8%)

Risk-Weighted Assets (RWA)

Exposure Amount After Conversion

Converted to Credit

After CRM Reduction

Before Conversion (Converted to Credit)

Collateral

Page 3 of 838 (4/13) [3]

Quarterly Report on Measurement of Capital and Solvency

Table 09 (Thousands of NIS) Credit Risk Exposures for Housing Mortgages

Line	Description	(+) Added Amounts	(-) Deducted Amounts	Total
01	Total Exposure Amounts			11
02	Credit			02
03	NIS			03
04	Balance Sheet Total			04
05	Financial Derivative Transactions			05
06	Credit Lines			06
07	Other			07
08	Off-Balance Sheet Total			08
09	Conversion Coefficient 0%:			09
10	Conversion Coefficient 20%:			10
11	Conversion Coefficient 50%:			11
12	Conversion Coefficient 100%:			12
13	35%			13
14	50%			14
15	75%			15
16	100%			16
17	In Arrears:			17
18	150% In Arrears			18

Page 16 of 838 Quarterly Report on Measurement of Capital and Solvency Part A: Credit Risk

Collateral Split

Exposure Type

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Simple Approach

Impact of Exposure Replacement with Credit Risk Reduction (CRM) - Comprehensive Approach

Risk Weight Split

Exposure Amount

Before Impairment Provisions (Converted to Credit)

Adjusted Value of Financial Collateral (-)

Volatility Adjustment (He)

Required Capital Pillar 1 (8%)

Risk-Weighted Assets (RWA)

Exposure Amount After Conversion

Converted to Credit

After CRM Reduction

Before Conversion (Converted to Credit)

Collateral

Page 3 of 838 (4/13) [3]

Quarterly Report on Measurement of Capital and Solvency

Exposure Amount After Netting Effect of Replacement Before CRM Conversion Coefficients

Adjusted Value of Financial Collateral (-)

Volatility Adjustment (He)

Required Capital Pillar 1 (8%)

Risk-Weighted Assets (RWA)

Exposure Amount After Conversion

Converted to Credit

After CRM Reduction

Before Conversion (Converted to Credit)

Collateral

10 Annex (Synthetic Credit Risk Hedging)

Comprehensive Approach

	(-) Exposure Adjustment	(+) Added Amounts	(-) Deducted Amounts
10	09	08	07
01 Total Amounts of Exposures
02 Senior
03 Subordinated
04 First Loss
05 Total
06 Off-Balance Sheet Exposures and Derivatives
07 Total
08 Balance Sheet Exposures
09 Off-Balance Sheet Exposures and Derivatives
10 Total
11 Senior
12 Subordinated
13 First Loss
14 Total
15 Off-Balance Sheet Exposures and Derivatives
16 Early Repayment
17 Total
18 20%
19 50%
20 100%
21 350%
22 Deduction from Capital
23 Risk-Weighted Assets Calculated by the Bank
24 40%
25 100%
26 225%
27 650%
28 Deduction from Capital
29 Risk-Weighted Assets Calculated by the Bank

Hedging Exposures

Splitting of Exposures According to Hedging

a. Bank's Corporate Banking Balance Sheet Exposures of Investments:

b. Bank's Corporate Banking Financing:

c. Bank-Initiated Corporate Banking Balance Sheet Exposures:

Credit Risk Mitigation (CRM)

Total Exposures After Hedging

Provisions for Credit Losses

Total Exposures Before Hedging

Provisions for Credit Losses

Simple Approach

Guarantees and Credit Derivatives

Credit Protection for Exposures

(-) Hedged Exposure Value After Deduction Before Credit Risk Conversion (to Credit)

(4/13) [3] Reporting Instructions to the Superintendent of Banks:

Part A - Credit Risk

Quarterly Report on Capital Adequacy and Risk-Weighted Assets (RWA)

(8% of Tier 1 Capital)

(4/13) [11] Reporting Instructions to the Superintendent of Banks:

Page 6-876 - Residential Loans

:04 Annex "Grace Period Loan".20 Loans with a grace period for repayment of the loan are those where, upon expiration of the grace period, the loan is paid in full. The grace period may be a "partial grace" (only deferral of principal repayment) or a "full grace" (deferral of both principal and interest repayment).

:03 and 04 Annexes "Balloon Loan".21 A loan is considered a balloon loan if the principal balance is repaid in full at the end of the period, while interest is paid throughout the period, or vice versa.

:04 Annex "Balance Sheet Credit Line".22 Report as "Off-Balance Sheet" in accordance with "Financial Off-Balance Sheet Instruments" in Note 18 to the public report.

:04 Annex "Credit Line with Interest Rate Cap".23 A commitment to provide a loan, including an interest rate cap, as defined in the banking practice, under Section 451(g).

:05 Annex "Delinquent for More Than 90 Days".24 Report on the "Total Delinquent Loan Balance" (net of provisions for credit losses) only for the "Delinquent Amount".

:05 Annex "Insured Loan Amount".25 Report on this line only the balance of residential loans insured through an insurance company, despite the fact that this insurance does not reduce the risk-weighting factor for the purpose of calculating risk-weighted assets.

The term "Loans with Provisions for Credit Losses Due to Delinquency" in Annex 06 shall have the meaning as defined in Reporting Instructions Note 4.

:08 Annex "Monthly Prepayments of Residential Loans".27

27.1 "Planned Monthly Charges" in Row 01: Include all planned charges for principal and interest. However, do not include the Bank's estimate of early repayment adjustment differences. Include the early repayment fee in "Total Actual Monthly Prepayments" in Row 02. Disclose early repayments in Note 05.

:08 Annex "Actual Monthly Prepayments".28 Include "Prepayments" for which payments were received. However, do not include "Returns", such as payments received for returns.