Total Credit Risk Distribution Report by Principle Industries (quarterly)

Bank of Israel Supervision of Banks Department Policy

P.O.B. 780, Jerusalem 91007 Tel: 02-6552475 Fax: 02-6524590

Jerusalem, 9th Shevat 5773 January 27, 2013

Circular No. 06-2367

To: Banking Institutions, Credit Card Companies

Subject: Quarterly Report on Total Credit Risk Distribution by Economic Sector

(Instruction No. 831 on Reporting to the Supervision of Banks)

Introduction

1. Further to Circular No. 2331 dated March 25, 2012, which replaced the reporting format with "Overview," this Instruction amends the "Quarterly Report on Total Credit Risk Distribution by Economic Sector" (Instruction No. 831) for reporting to the public.

Amendments to the Instructions

2. The name of the Instruction shall henceforth be: "Quarterly Report on Total Credit Risk Distribution by Economic Sector."

3. The main changes are as follows: a. The report has been adapted to the "Overview" addendum and the Public Reporting Instructions. b. Tables 01 and 04 will include information on credit to banks and governments in Israel, as well as commercial credit. c. The following changes will apply to Tables 01 and 02:

   1. A separate column will be presented for "Credit to the Public" (reflecting exposures acquired or assumed under repurchase agreements).
   2. Two columns will be added: "Total Credit Risk" and "Off-Balance Sheet Credit Risk."
   3. The annual report on "Credit not subject to bank liability" is cancelled.
   4. A column will be added for "Credit Quality Rating" as of the reporting date. d. Tables 01 and 04 will include two columns for "Total Maturities" and "Linked Maturities" for "Credit Risk" and "Off-Balance Sheet Credit Risk." e. Table 04 will include three columns for "Off-Balance Sheet Credit Risk" (excluding derivatives), "On-Balance Sheet Credit Risk," and "Impairment Provisions" for "Activity in Israel" and "Off-Balance Sheet Activity." f. The old numbering (05-09) for reporting banks on a consolidated basis will be cancelled. The report on Total Credit Risk Distribution by Individual Persons will be reported on a consolidated basis. From now on, the reporting bank will report on a consolidated basis, and its number will be "Consolidated" (new numbering).

4. The amendments to this Instruction shall take effect as of December 31, 2012.

5. The reporting on Credit Quality Rating for Tables 01 and 02 (columns 10 and 12, respectively) shall take effect as of December 31, 2014.

Questions and Clarifications

6. For questions and clarifications regarding the tables in Instruction No. 803 on Reporting to the Supervision of Banks, please contact the Reporting Department at the Supervision of Banks.

Updating the File

7. The following pages are to be inserted into the "Reporting to the Supervision of Banks" file to update the Instructions:

Insert Page	Remove Page
(1/13) [20] 831-1-8	831-1-12
*(8/12) [4] 897-51	(8/12) [4] 897-51
(1/13) [6] 897-52	(1/13) [5] 897-52

Respectfully,

Orr Sofer Deputy Supervisor of Banks

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks 831-1 'A Distribution of Total Credit Risk by Economic Sector

1. (a) This Instruction applies to banks other than banking banks. (b) The report is on a consolidated basis.

2. The quarterly report must be submitted no later than four business days from the date of publication of the financial report, whether annual or quarterly.

3. The report consists of three parts: (a) Part A: Total credit risk balances by economic sector (Tables 01, 02). (b) Part B: Quarterly expenses for credit losses due to quarterly accounting write-offs, impairment provisions, and balances of impaired, problematic, and total credit risk (Tables 03, 04). (c) Part C: Total credit risk balances for individual persons by credit size (Table 05).

4. Reporting shall be conducted via secure internet computer communication technology using the reporting format attached hereto.

5. Part A shall present the distribution by two sectors according to the location of the borrower's activity: within Israel or outside Israel.

6. The term "Overview" in this Instruction shall have the same meaning as defined in the "Overview" Instructions.

7. The sector classification shall be carried out according to the rules set forth in the "Overview" Instructions, based on the definitions of the "Uniform Classification of Economic Sectors" (1993). With this, the number of "separately classified" sectors in the Uniform Classification shall reflect the number of sectors that have been combined. Nevertheless, the same risk subjects shall be presented separately as specified in the attached classification table.

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Instructions for Reporting to the Supervisor of Banks 831-2 'A Distribution of Total Credit Risk by Economic Sector

8. Credit to borrowers in the sector of "Construction" (excluding "Civil Engineering Works") shall be classified as follows: Due to the high scope of construction costs and the long duration of construction, projects defined as infrastructure (e.g., road paving, tunnel excavation) shall be classified in the "Construction" sector until the main construction process is completed. If the project begins to receive significant revenues from operation, it shall be classified in the economic sector to which it belongs according to the Uniform Classification definition. If the project does not belong to the aforementioned sector, credit to the borrower whose main activity is in another sector shall not be subject to the above. (Example: The main activity is the establishment of a power station (Electricity Company)).

9. Each borrower marked in at least two books of the "Main Sectors" as defined in the Uniform Classification shall be reported separately, unless the total number of main sectors is summarized. Example: A company engaged in the production of "Drones" (sub-sector 3550) shall be reported as belonging to "Industrial Transport Equipment" (Main Sector 35), even if it also belongs to "Electrical and Electronic Machinery Industries," constituting a summary of Main Sectors 35-29.

10. This part of the report shall be classified according to the total credit and deposits granted to individual persons.

11. The credit grades for this part of the report are adapted to those specified in Explanation 4. "Annual Financial Report" (Page 24-669).

---

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Instructions for Reporting to the Supervisor of Banks 831-3 'A

Correspondence of Main Sector Components to Main Sector Codes

A Order Agriculture B Order Industry Includes sub-sector 5135 C Order Electricity and Water D Order Construction and Real Estate Includes acquisition groups: E Order Commerce Includes sub-sector 5135 F Order Hotels, Restaurants and Services G Order Transportation and Storage H Order Financial Services I Order Other Business Services

Main Sector Components:

• B Order Industry:
  • Machinery, equipment, electrical and electronic:
  • Metals and products:
  • Building products:
  • Rubber and plastics:
  • Mining, chemical and petroleum industries:
  • Paper, publishing and printing:
  • Wood and products:
  • Textiles, clothing and leather:
  • Food, beverages and tobacco:
  • Diamonds: Including trade in diamonds 37, 5135 **Diamonds
• D Order Construction and Real Estate:
  • Construction (excluding Civil Engineering Works):
  • Real Estate Activities:
  • Construction and Real Estate Total:
• E Order Commerce:
  • Trade in building materials:
• F Order Hotels, Restaurants and Services:
  • Hotels, restaurants, catering:
  • Transportation and storage:
  • Computer and communication services:
• H Order Financial Services:
  • Other business services:
  • Community, social and public services:
• Internal Code:
  • Not defined in Uniform Classification definitions
  • Not defined in Uniform Classification definitions
  • Local authorities: 78

The local authorities and movements included in the various economic sectors listed above are classified according to the attached Economic Sector Classification Appendix.

(1/13) [20]

Appendix Economic Sector Classification

Instructions for Reporting to the Supervisor of Banks Distribution of Total Credit Risk by Economic Sector

As defined in Instruction 876

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks Distribution of Total Credit Risk by Economic Sector

Table 01 (Thousands of NIS) - Activity of Borrowers in Israel

	Total Credit Risk
1	12 11 10 09 08 07 06 05 04 03 02 01
01	Agriculture
02	Industry
03	Machinery, equipment, electrical and electronic:
04	Metals and products
05	Building products
06	Rubber and plastics
07	Mining, chemical and petroleum industries
08	Paper, publishing and printing
09	Wood and products
10	Textiles, clothing and leather
11	Food, beverages and tobacco
12	Diamonds
13	Construction
14	Real Estate: Includes acquisition groups
15	Civil Engineering Works: (excluding Building Construction)
16	Real Estate Activities
17	Total
18	Electricity and Water
19	Commerce
20	Trade in building materials:
21	Hotels, restaurants, catering
22	Transportation and storage
23	Computer and communication services
24	Financial Services
25	Other business services
26	Community, social and public services
27	Total Commercial
28	Housing Loans - Individual Persons
29	Other - Individual Persons
30	Total Public - Activity in Israel
31	Banks in Israel
32
33
34
35	Corporations under their control:
36	Movements of Settlement

1. Presented before the effect of impairment provisions for credit losses and before the effect of permitted securities for the purpose of liability to the borrower. Off-Balance Sheet Credit Risk On-Balance Sheet Credit Risk
2. Credit to the public, governments, deposits in banks, and other debts, excluding "Other" and "G" under repurchase agreements.
3. Credit risk in off-balance sheet financial instruments calculated as per liability limits to the borrower.
4. Credit risk that matches the credit rating of the report at the time of the new credit in accordance with the bank's policy.

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Instructions for Reporting to the Supervisor of Banks 831-4 'A

Local Authorities	On-Balance Sheet
Sector Name	Assets
Government of Israel	Instruments
Derivatives	Total
2 G Debts

Movements of Settlement, kibbutzim, moshavim, regional and national organizations, and corporations under their control, including their activity in "Off-Balance Sheet."

5. Reporting Amounts

Assumed under	Acquired under	Repurchase Agreements	Guarantees and Other Commitments	Customer Accounts	Instruments Derivatives
Total	Linked Maturities	Maturities
Off-Balance Sheet
Credit Quality Rating - M	Credit
12/2014
Total	Linked Maturities
Maturities

Quarterly Report on Distribution of Total Credit Risk by Economic Sector Total Sum Part A - Consolidated Total Activity in Israel

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Instructions for Reporting to the Supervisor of Banks 831-5 'A Distribution of Total Credit Risk by Economic Sector

Table 02 (Thousands of NIS) - Activity of Borrowers Off-Balance Sheet

	Total Sum
10 09 08 07 06 05 04 03 02 01
01	Agriculture
02	Industry
03	Machinery, equipment, electrical and electronic:
04	Metals and products
05	Building products
06	Rubber and plastics
07	Mining, chemical and petroleum industries
08	Paper, publishing and printing
09	Wood and products
10	Textiles, clothing and leather
11	Food, beverages and tobacco
12	Diamonds
13	Construction
14	Real Estate: Includes acquisition groups
15	Civil Engineering Works: (excluding Building Construction)
16	Real Estate Activities
17	Total
18	Electricity and Water
19	Commerce
20	Trade in building materials:
21	Hotels, restaurants, catering
22	Transportation and storage
23	Computer and communication services
24	Financial Services
25	Other business services
26	Community, social and public services
27	Total Commercial
28	Housing Loans - Individual Persons
29	Other - Individual Persons
30	Total Public - Off-Balance Sheet Activity
31	Banks Off-Balance Sheet
32
33
34
35	Corporations under their control:

1. Presented before the effect of impairment provisions for credit losses and before the effect of permitted securities for the purpose of liability to the borrower. Off-Balance Sheet Credit Risk On-Balance Sheet Credit Risk
2. Credit to the public, governments, deposits in banks, and other debts, excluding "Other" and "G" under repurchase agreements.
3. Credit risk in off-balance sheet financial instruments calculated as per liability limits to the borrower.
4. Credit risk that matches the credit rating of the report at the time of the new credit in accordance with the bank's policy.

3

Off-Balance Sheet	On-Balance Sheet
Assets	Instruments
Derivatives	Total

Quarterly Report on Distribution of Total Credit Risk by Economic Sector G Sector Name

Instruments Derivatives	Reporting Amounts
Credit Quality Rating - M	Credit
12/2014
Part A - Consolidated
1	Total Credit Risk
Total	Guarantees and Other Commitments
Customer Accounts
Assumed under	Acquired under
Repurchase Agreements
Local Authorities
Total Off-Balance Sheet Activity
Governments Off-Balance Sheet
2 Debts

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks

Table 03 Quarterly Expenses for Credit Losses Due to Quarterly Accounting Write-offs and Impairment Provisions

06 05 04 03 02 01
01	Agriculture
02	Industry
03	Machinery, equipment, electrical and electronic:
04	Metals and products
05	Building products
06	Rubber and plastics
07	Mining, chemical and petroleum industries
08	Paper, publishing and printing
09	Wood and products
10	Textiles, clothing and leather
11	Food, beverages and tobacco
12	Diamonds
13	Construction
14	Real Estate: Includes acquisition groups
15	Civil Engineering Works: (excluding Building Construction)
16	Real Estate Activities
17	Total
18	Electricity and Water
19	Commerce
20	Trade in building materials:
21	Hotels, restaurants, catering
22	Transportation and storage
23	Computer and communication services
24	Financial Services
25	Other business services
26	Community, social and public services
27	Total Commercial
28	Housing Loans - Individual Persons
29	Other - Individual Persons
30	Total Public
31	Banks
32
33
34	Local Authorities
35	Corporations under their control:
36	2 Movements of Settlement

2. Movements of Settlement, kibbutzim, moshavim, regional and national organizations, and corporations under their control.

Total Sum
1 Including Off-Balance Sheet Financial Instruments

Activity in Israel	Off-Balance Sheet Activity
Quarterly Accounting Write-offs Net
Governments
Off-Balance Sheet Activity	Activity in Israel
Credit Risk On-Balance Sheet	Credit Risk On-Balance Sheet
Quarterly Expenses for Credit Losses
Credit Risk Off-Balance Sheet	Credit Risk Off-Balance Sheet
Sector Name

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks

Quarterly Report on Distribution of Total Credit Risk by Economic Sector

Distribution of Total Credit Risk by Economic Sector

Part B - Consolidated

831-6 'A

Reporting Amounts

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks

831-7 'A

Table 04

By Basis:

	Group Total
12 11 10 09 08 07 06 05 04 03 02 01
01	Agriculture
02	Industry
03	Machinery, equipment, electrical and electronic:
04	Metals and products
05	Building products
06	Rubber and plastics
07	Mining, chemical and petroleum industries
08	Paper, publishing and printing
09	Wood and products
10	Textiles, clothing and leather
11	Food, beverages and tobacco
12	Diamonds
13	Construction
14	Real Estate: Includes acquisition groups
15	Civil Engineering Works: (excluding Building Construction)
16	Real Estate Activities
17	Total
18
19	Commerce
20	Trade in building materials:
21	Hotels, restaurants, catering
22	Transportation and storage
23	Computer and communication services
24	Financial Services
25	Other business services
26	Community, social and public services
27	Total Commercial
28	Housing Loans - Individual Persons
29	Other - Individual Persons
30	Total Public
31	Banks
32
33
34
35	Corporations under their control:
36	6 Movements of Settlement

1. Off-Balance Sheet Credit Risk and On-Balance Sheet Credit Risk, including debts, instruments, and derivatives, including acquired or assumed under repurchase agreements, "G," and other debts. Credit risk in off-balance sheet financial instruments calculated as per liability limits to the borrower, including instruments and derivatives.
2. Off-Balance Sheet Credit Risk and On-Balance Sheet Credit Risk, including impaired, problematic, and total credit risk, including housing loans due to existing impairment based on depth of delinquency, including special supervision or substandard, and housing loans and other loans not subject to existing impairment based on depth of delinquency or delinquency of more than 90 days.
3. Credit to the public, governments, deposits in banks, and other debts, excluding "Other" and "G" under repurchase agreements.
4. Credit risk in off-balance sheet financial instruments calculated as per liability limits to the borrower, excluding derivatives.
5. Presented in the balance sheet under other commitments.
6. Movements of Settlement, kibbutzim, moshavim, regional and national organizations, and corporations under their control.

Quarterly Report on Distribution of Total Credit Risk by Economic Sector

(Thousands of NIS) Impairment Provisions for Credit Losses by Sector, Balance of Impaired, Problematic, and Total Credit Risk

Impairment Provisions for Credit Losses	Balance
Reporting Amounts
Part B - Consolidated
1	Total Credit Risk
2	Problematic
3	Off-Balance Sheet Credit Risk (excluding derivatives)
4	Debts
Impaired	Problematic

(1/13) [20]

Instructions for Reporting to the Supervisor of Banks

Distribution of Total Credit Risk by Economic Sector

Off-Balance Sheet Activity	Activity in Israel
Off-Balance Sheet	Activity in Israel
Credit Risk Off-Balance Sheet	Credit Risk On-Balance Sheet
Off-Balance Sheet Activity	Activity in Israel
Credit Risk Off-Balance Sheet	Credit Risk On-Balance Sheet
Total Sum
Local Authorities
Governments
Activity
Off-Balance Sheet
Activity in Israel
Electricity and Water
Total
Sector Name
3 Debts: Includes

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Instructions for Reporting to the Supervisor of Banks

831-8 'A Distribution of Total Credit Risk by Economic Sector

Table 05

Total Credit Risk Balances for Individual Persons

(Thousands of NIS)

Total Credit Risk by Size of Individual Persons
02 01 (Thousands of NIS)
01 10 and below
02 10 to 20
03 20 to 40
04 40 to 80
05 80 to 150
06 150 to 300
07 300 to 600
08 600 to 1,200
09 1,200 to 2,000
10 2,000 to 4,000
11 4,000 and above
12 Total

Total Credit Risk for Individual Persons, presented before deduction of impairment provisions for credit losses and before the effect of permitted securities for the purpose of liability to the borrower.

Total Credit Risk Balances for Individual Persons by Credit Size

(Thousands of NIS) (Activity of Borrowers in Israel)

Quarterly Report on Distribution of Total Credit Risk by Economic Sector

Reporting Amounts

Part C - Consolidated

(1/13) [6]

Instructions for Reporting to the Supervisor of Banks

897-52 'A

Appendix G - Update Key

Page to Insert	Page to Remove	Subject	Instruction	Circular	Date
*(9/11) [11] 877-6-7	(9/11) [11] 877-6-7	Reporting Instructions	2345		30.08.2012
(8/12) [12] 877-8	(9/11) [11] 877-8	(Continuation) Supervision
--------------------		Various Versions	887-1-5
(8/12) [4] 897-51	(5/12) [3] 897-51
(8/12) [1] 897-52	--------------------
(11/12) [10] 876-1	(8/12) [9] 876-1	Housing Loans	876	2350	27.11.2012
*(8/12) [9] 876-2	(8/12) [9] 876-2
*(8/12) [9] 876-3	(8/12) [9] 876-3
(11/12) [10] 876-4-6	(8/12) [9] 876-4-6
*(8/12) [9] 876-13	(8/12) [9] 876-13
(11/12) [1] 876-14	--------------------
*(8/12) [4] 897-51	(8/12) [4] 897-51
(11/12) [2] 897-52	(8/12) [1] 897-52
(1/13) [74] 803-1	(8/12) [73] 803-1	Exposure to Countries	834	2360	02.01.2013
(1/13) [77] 803-2	(8/12) [76] 803-2	Foreign
(1/13) [5] 803-3	(8/12) [4] 803-3
(1/13) [3] 834-1	(12/10) [2] 834-1
(1/13) [4] 834-2	(9/11) [3] 834-2
*(8/12) [4] 897-51	(8/12) [4] 897-51
(1/13) [3] 897-52	(11/12) [2] 897-52
(1/13) [3] 827-1-13	Various Versions	827-1-8	Report on Risk	827	2364
(1/13) [23] 896-1	(9/11) [22] 896-1	Liquidity
--------------------	(12/09) [16] 896-2
*(8/12) [4] 897-51	(8/12) [4] 897-51
(1/13) [4] 897-52	(8/12) [3] 897-52
(1/13) [8] 822-1-2	Various Versions	822-1-6	Effective Cost	822	2366
*(8/12) [4] 897-51	(8/12) [4] 897-51
(1/13) [5] 897-52	(1/13) [4] 897-52
(1/13) [20] 831-1-8	Various Versions	831-1-12	Credit Risk Distribution	831	2367
*(8/12) [4] 897-51	(8/12) [4] 897-51	By Economic Sector Total
(1/13) [6] 897-52	(1/13) [5] 897-52

• This page has been updated but reprinted due to the transition to double-sided printing.