Transitional Directive for 2012 — BOI — IL

Bank of Israel
Supervision and Regulation Department Policy
Fax: 03-5661110 Tel: 03-5640520
528 P.O.B, Tel-Aviv 61004

"G" Shevat 6, 2013
February 6
Circular No. 06-2368

To:
Banking Corporations

Subject: Transitional Directive for 2012
(Reporting to the Public)

Introduction

After consultation with the Advisory Committee on Matters Relating to Banking Business with the Accountants' Association in Israel and with the Supervisor of Banks, I have established the following Transitional Directive for 2012.
The Transitional Directive for 2012 has been updated, as detailed below, in pages 15-1-15672.
A banking corporation having difficulty implementing the Transitional Directive should contact Mr. Eido Galil, Manager, Reporting Unit, for specific guidance.

Explanation of Changes

The following updates to the Transitional Directive were included without reference to the Transitional Directive for 2011.

Disclosure regarding the approval process of financial statements
A new provision was added to the Transitional Directive stating that a banking corporation shall not issue in its 2012 report disclosure required by the current directive regarding the approval process of financial statements, if it includes in its periodic report for 2012 disclosure in accordance with the Guidance on Disclosure of the Securities Authority dated 12.9.12 regarding the Corporate Governance Questionnaire.
Measurement and disclosure of credit risk, impaired debts, and loan loss provisions
5.1. It was clarified that within the framework of the Transitional Directive for 2011, reference was made to relevant data for the year 2010, including the relevant data in the 2011 Board of Directors' report as of 31.12.2010.
5.2. The Transitional Directive was not included in the Transitional Directive for 2012, as it is not relevant for financial years 2012 and thereafter.
Update on disclosure regarding the quality of debts and loan loss provisions
A new provision was added to the Transitional Directive for 2012 regarding disclosure on the quality of debts and loan loss provisions, as detailed in the directive.
Measurement and disclosure of credit risk, impaired debts, and loan loss provisions
7.1. It was clarified that within the framework of the Transitional Directive for 2011, how to implement the directive was explained, specifically how to present as of 1.1.2011 the movement in loan loss provisions and the changes in own equity, as well as reference to the comparative figures for the year 2010.
7.2. The Transitional Directive was not included in the Transitional Directive for 2012, as it was not required to be implemented from 2011 reports. Therefore, there is no need to include it in the Transitional Directive for 2012.
Section 19 - Fair Value Measurements - Reporting to the Public
The Transitional Directive regarding Section 19 of the Reporting to the Public directive was updated, as detailed in the directive.

Explanation:
The Transitional Directive relating to counterparty credit risk calculation was also updated and extended, requiring banking corporations to prepare for full implementation on quarterly and annual financial reports in 2013 and 2014, effective from 1.1.2014. The Transitional Directive regarding the implementation of this section for the first time was included in the Transitional Directive for 2011, and since it was not required to be implemented from 2011 reports, and the Transitional Directive for 2012 was not included, there is no need to include it in the Transitional Directive for 2012.

Section 20 - Alternative Fair Value Measurement for Financial Assets and Liabilities
9.1. It was clarified that within the framework of the Transitional Directive for 2011, this section does not apply from 1.1.2011 and thereafter, and there is no need to implement it retroactively.
9.2. The Transitional Directive was not included in the Transitional Directive for 2012, as it was not required to be implemented from 2011 reports. Therefore, there is no need to include it in the Transitional Directive for 2012.
International Financial Reporting Standards (IFRS)
10.1. The reference to the Transitional Directive regarding the initial implementation of certain IFRS was removed. Since these were required to be implemented for the first time in 2011, there is no need to include it in the Transitional Directive for 2012.
10.2. A reference was added regarding the determination of the currency of operations of branches operating "abroad" in accordance with the amendment to "Guidance on the Form of the Income Statement of Banking Corporations". Regarding the effects of changes in foreign exchange rates, refer to International Accounting Standard 21.
Guidance on the Form of the Income Statement of Banking Corporations
The Transitional Directive regarding the presentation of the Income Statement for 2011 was not included, as it is not relevant for reports from 2012 and thereafter.
Related Parties
The Transitional Directive for 2011 regarding related parties was not included, as it is not more relevant for 2012.
File Update
Attached to this are updated pages of the Reporting to the Public directive to update the directives below.

Page to Insert	Page to Remove
[ ] 1 672-1 (1/12)	[ ] 2 671-1-19
[ ] 1 672-2-15 (2/13)	-----
[ ] 1 699-103 (1/13)	[ ] 1 699-103 (1/13)
[ ] 1 699-104 (2/13)	-----

*This page was reprinted following the Transitional Directive, side-by-side printing. This update is identical to the existing text.

With respect,
David Zaken
Supervisor of Banks

(2/13) [ ]2 Reporting to the Public directive: Supervisor of Banks 672 - p. 1) 2012 (Transitional Directive)

Transitional Directive for 2012

Regarding the Board of Directors' Report, Management Review, Declaration Regarding Disclosure, and the Annual Report of Banking Corporations and Credit Card Companies ("A")

With the recommendation to implement the fixed format of the directives issued, the following were established for the Annual Report of Banking Corporations and Credit Card Companies from 2009 and thereafter.

The Transitional Directive includes the current directive regarding the implementation of the disclosure requirements specified in Part III of Basel 3 (pages 21-1-496).
Regarding the Board of Directors' Report, when data required in the Board of Directors' report is published, these provisions also apply to the publication of such data in the Management Review or Financial Reports.
The current directive regarding the description of the banking corporation's business in the Board of Directors' report (pages 15-1-696) was added. In any case where it is required according to Guidance 3, the Supervisor of Banks should be contacted in advance to provide disclosure in the public report for the benefit of the client.
A banking corporation shall not issue disclosure required by the current directive (pages 4-1-796A) regarding the approval process of financial statements in a banking corporation.
A banking corporation shall not issue in its 2012 report disclosure required by the current directive regarding the approval process of financial statements, if it includes in its periodic report for 2012 disclosure in accordance with the Guidance on Disclosure of the Securities Authority dated 12.9.12 regarding the Corporate Governance Questionnaire.

Management Review

A banking corporation shall not be required to classify a financial instrument as a complex financial instrument if it is able to reflect its interest rate exposure through disclosure of the remaining maturity periods of the cash flows, for example, a financial instrument with embedded components that are not required to be classified as a complex financial instrument. If the entity is not required to separate significant embedded option derivatives according to Part 1 of the Reporting to the Public directive, and if it is able to reflect the interest rate exposure of such an instrument through this separation, the bank shall handle the option component of these instruments as separate instruments in the case mentioned above, and provide separate disclosure as if the separated option and the host instrument were standing alone.

If these instruments were treated as mentioned above, and if the effect was material, the entity shall indicate the treatment of these instruments on the "Effective" line in the Fair Value section.

Regarding the Board of Directors' Report, Declaration Regarding Disclosure, and Internal Control over Financial Reporting, when the Supervisor of Banks has established specific transitional directives for a banking corporation regarding the implementation of directive 305, the corporation should contact the Supervisor of Banks for "Qualified Bank Accountant" guidance regarding the declaration and disclosure regarding internal control over financial reporting.

Financial Reports

Update on disclosure regarding the quality of debts and loan loss provisions
A banking corporation shall provide disclosure in its public report for 2012 and thereafter, for the first time, regarding balance sheet data required according to Section 30g.1.8. It is clarified that this provision requires disclosure in the public report for 2012. Disclosure required according to Sections 12 and 30g.1.3 shall be provided from the public report dated 31.3.2013 and thereafter. This provision.

Despite the above, the requirement for separate disclosure of credit risk performance ratings in the addendum shall apply only to reports from 2014 and thereafter, recommending early implementation by banking corporations not providing credit risk disclosure. The disclosure format shall be more suitable for earlier reports on credit performance ratings.

A banking corporation is not required to include comparative figures for prior years regarding disclosure required for the first time. This provision requires reclassification of data included in prior reports as much as possible to suit the format. This provision requires demonstration in the appendix "Mitzvah" of the disclosure format from the addendum. In the Management Review 'V' and the Board of Directors' Report 'D', regarding loan loss provisions and credit risk explanation for public credit, for the year 2012.

Impairment of Assets
When a banking corporation recognizes an impairment loss on a specific asset prior to 1.7.07, it is appropriate to continue classifying and updating the provision under the section "Profit from Unusual Operations" in the Income Statement.
Section 19 - Fair Value Measurements
A banking corporation presenting financial instruments measured at fair value using a swap rate in its 2012 and 2013 quarterly and annual reports may continue to present assets and liabilities measured at fair value using a swap rate. The swap rate shall be considered a Level 1 input.
Counterparty Credit Risk in Fair Value Calculation of Derivative Instruments
A banking corporation presenting quarterly and annual financial reports for 2012 and 2013 may perform the required adjustments in the fair value calculation of derivative instruments for counterparty credit risk as follows:

a. When existing liquid collateral provides specific protection for the exposure, the entity is not required to make adjustments for the quality of credit regarding the derivative instrument, given the high legal certainty of the counterparty.

b. When the exposure to counterparty credit risk is material on a consolidated basis, the banking corporation shall make reasonable efforts to find indications of credit quality in active market transactions for the counterparty (distinguish from transactions with similar counterparties). For example, prices of debt instruments of the counterparty traded in active markets, if available, and the credit quality of the counterparty is based on them. The banking corporation may calculate adjustments based on such indications, such as estimates of expected loss rates, credit loss rates, etc. (internal ratings).

c. The banking corporation may perform the adjustment calculation for other counterparties on a group basis, using a credit quality index for similar counterparties, for example, based on internal ratings.

d. The banking corporation is required to check the reasonableness of the results obtained according to this section and perform the adjustments accordingly, at market intervals.

e. For this purpose, exposure exceeding 1% of the banking corporation's own equity shall be considered material on a consolidated basis.

Models to be Used in Fair Value Calculation of Derivative Instruments
A banking corporation presenting quarterly and annual financial reports for 2012 and 2013 is not required to use complex models including various scenarios of potential exposure to measure the credit risk component included in the fair value of derivative instruments.
International Financial Reporting Standards (IFRS)
International Accounting Standard 21 - The Effects of Changes in Foreign Exchange Rates
A banking corporation shall examine the criteria set forth in Section 13 of the Reporting to the Public directive as of 1.1.2012 regarding the treatment of "branches operating abroad" to ensure the accounting treatment is appropriate. If, as of 1.1.2012, it is appropriate to change the currency of operations of a banking branch, the banking corporation shall maintain detailed documentation regarding the examination of the criteria and the reasons for its decision, and provide disclosure in the first financial quarter of 2012.
International Accounting Standard 28 - Investments in Associates
Despite the aforementioned International Accounting Standard 28 regarding "Investments in Associates," a banking corporation may, for practical reasons, not perform accounting policy alignments for the years 2011, 2012, and 2013, in order for the accounting policies of the associate to be consistent with those of the banking corporation. The banking corporation shall provide disclosure according to this section.
It is clarified regarding Section 16:

a. This section applies only to an associate whose financial statements are prepared in accordance with standards.

b. Regarding issues in the core banking business - issues not yet adopted in the International Financial Reporting Standards.

Guidance on the Form of the Income Statement of Banking Corporations and Adoption of US Banking Accounting Standards
The provisions set forth in the circular regarding the Form of the Income Statement of Banking Corporations and Adoption of US Banking Accounting Standards, relating to the measurement of interest income, shall apply retroactively from the first quarter of 2012 and thereafter. Regarding the adoption of US Banking Accounting Standards relating to the measurement of interest income, they shall apply from 1.1.2014 and thereafter.
Regarding the implementation of the directive "Measurement and Disclosure of Credit Risk, Impaired Debts, and Loan Loss Provisions," a banking corporation shall cancel, from 1.1.12 and thereafter, the indexing of accumulated adjustments to the principal, provided that from 1.1.12 and thereafter, debts classified as impaired shall not include debts that were paid but not yet classified as impaired.
Transfers of Financial Assets and Liabilities and Services
(See Section 6.2.2 of the "Chaimovitz Committee" Report) (Securitization) When a banking corporation implements these provisions and transferred financial assets in a securitization transaction recognized as a sale, and recognized these rights for the first time after recognition, it shall handle these deferred rights retained at the time of transfer as follows:

1) The balance sheet amount of deferred rights retained shall be amortized using the straight-line method over a period not exceeding 36 months from the date of creation, deducting 1/36 from the balance at the end of the first month, and 1/35 from the balance at the end of the second month, and thereafter.

2) At each reporting date, the entity shall examine the need for impairment of the deferred rights.

3) If, after securitization, a significant portion of the deferred rights retained is sold to non-related parties, the remaining deferred rights shall be measured according to the relevant sections of the Reporting to the Public directive.

"Public Credit and Off-Balance Sheet Credit Risk According to the Size of the Borrower"
A banking corporation may include in the "Credit Risk on-Balance Sheet" column the balance of "Assets for Derivatives with Borrowers" and provide disclosure of the total of the balances referred to as "Public Credit".
Contingent Claims
Regarding contingent claims with a remote possibility of realization as stated in Section 47.b(1)(g) on page 11.663, a banking corporation may present an additional exposure amount in one of the amounts according to the Reporting to the Public directive.
Assets and Liabilities Based on Basic Maturity and Indexation
A banking corporation may present cash flows prepared other than those required according to Section 51.b of International Reporting 16.663, assuming a variable interest rate based on the expected change in the variable interest rate of the derivative following the yield curve of conventional markets, without assuming a change in the variable interest rate base at the known time of the Reporting to the Public directive.
Summary of the Banking Group Structure
A banking corporation shall not present the explanation of the financial reports summary of the banking group structure according to the format specified in Section 79 (pages 29-669 and 29-67.1-669) in the Reporting to the Public directive.
Implementation of Directive 305 "Qualified Bank Accountant"
When the Supervisor of Banks has established specific transitional directives for a banking corporation regarding the implementation of directive 305, the corporation should contact the Supervisor of Banks for "Qualified Bank Accountant" guidance regarding the signature on this report.
Comparative Data Included in the Amendments to this Circular
A banking corporation having difficulty sorting comparative data according to these transitional directives may contact the Manager of the Reporting Unit of the Supervisor of Banks to consider specific guidance according to the matter.
Annual Report of "A"
The transitional directives specified in Part A above shall also apply to "A" to the extent relevant to their annual and quarterly reports.
Management Review
"A" may present in the addendum to 'V' of the Management Review regarding "Income and Expense Ratios of Credit Card Companies" the average balance in the Israeli currency sector indexed to its consolidated companies' credit card balances at the beginning of the months.
"A" shall not be entitled to provide disclosure on exposures to foreign countries if there is no material exposure to foreign countries.
"A" may present in the Cash Flow Statement the movement in deposits in banks, on a net basis, with respect to credit card holders and branches.
"A" shall not be entitled to provide disclosure on "Inventory / Movement Points" according to the explanation of "Entitled to Credit Card Activities" as detailed.
The changes above shall apply to the quarterly report of "A" published in 2013.
Comparative Data Included in the Amendments to this Circular
"A" may contact the Manager of the Reporting Unit of the Supervisor of Banks to consider specific guidance according to the matter.

(2/13 1 [) ] Reporting to the Public directive: Supervisor of Banks 672-7 ' p. 640 24' – p. - Management Review (2012 Transitional Directive)

From Addendum 'V' and Explanation 4 of the Management Review – Demonstration of Certain Parts of the Report Credit Risk by Economic Sector ₪ Millions, Consolidated Basis Provisions Write-offs Expenses Accounting Losses on Impairment: Of Which* Total Israel Operations 5 *Total Problematic 2 Debts 5 Net Credit Problematic Impaired Commercial - Public 0 Agriculture 0 Industry 0 Construction - Real Estate 0 Real Estate Activities - Real Estate 0 Electricity and Water 0 Commerce 0 Hotels and Restaurant Services 0 Transportation and Storage 0 Computer and Communication Services 0 Financial Services 0 Other Business Services 0 Public and Community Services 0 Total Commercial 0 Housing Loans - Private Individuals 0 Other - Private Individuals 0 Total Israel Operations - Public 0 Banks in Israel 0 Israeli Government 0 Total Israel Operations Abroad Operations Commercial - Public 0 Agriculture 0 Industry 0 Construction - Real Estate 0 Electricity and Water 0 Commerce 0 Hotels and Restaurant Services 0 Transportation and Storage 0 Computer and Communication Services 0 Financial Services 0 Other Business Services 0 Public and Community Services 0 Total Commercial 0 Housing Loans - Private Individuals 0 Other - Private Individuals 0 Total Abroad Operations - Public 0 Banks Abroad 0 Governments Abroad 0 Total Abroad Operations Total 1 0

Includes Credit Risk
Includes Repurchase Agreements and Securities Borrowed/Lent, "A", including Derivatives
Includes On-Balance Sheet Credit Risk and Off-Balance Sheet Credit Risk, including Derivatives
Includes Financial Assets and Liabilities Calculated as per Borrower Limits, in Millions "S", 0,0,0,0,0
Includes Off-Balance Sheet Credit Risk and On-Balance Sheet Credit Risk, Impaired, including Special Supervision or Subordinated, Housing Loans, with Provisions Based on Delinquency Depth, Not with Provisions Based on Delinquency Depth of 90 Days or More
31.12.2012

(2/13 ( ] ) 1 Reporting to the Public directive: Supervisor of Banks 672-8 p. '640 – 25' p. - Management Review (2012 Transitional Directive)

Includes Credit Risk
Includes Repurchase Agreements and Securities Borrowed/Lent, "A", including Derivatives
Includes On-Balance Sheet Credit Risk and Off-Balance Sheet Credit Risk, including Derivatives
Includes Financial Assets and Liabilities Calculated as per Borrower Limits, in Millions "S", 0,0,0,0,0
Includes Off-Balance Sheet Credit Risk and On-Balance Sheet Credit Risk, Impaired, including Special Supervision or Subordinated, Housing Loans, with Provisions Based on Delinquency Depth, Not with Provisions Based on Delinquency Depth of 90 Days or More
31.12.2011

669-16.1 'p. – The Following Page
Public Credit, Loan Loss Provisions, Credit Risk - Explanation 4 ₪ Millions, Consolidated Basis Off-Balance Sheet Financial Instruments* and Debts. Loan Loss Provisions Movement in Loan Loss Provisions for Housing and Commercial Loans. Private Other Total Housing Commercial Total Private Other Total Total 0 Loan Loss Provisions Balance at Beginning of Year 0 - - - - - - Net Accounting Write-offs Recognized as of 1.1.2011 0 - - - - - - Other Changes in Provisions as of 1.1.2011 (Charged to Own Equity) 0 Expenses for Loan Losses 0 Accounting Write-offs 0 Debts Written Off in Prior Years 0 Net Accounting Write-offs 0 Translation Adjustments in Financial Reports 0 Other 1 0 Loan Loss Provisions Balance at End of Year Of Which 1 0 Off-Balance Sheet Financial Instruments Additional Information on the Method of Calculating Loan Loss Provisions for Debts.* 2 :*Recorded Debt Balance 0 Individually Assessed 2 0 Collectively Assessed Provisions Calculated Based on Delinquency Depth: Of Which 2 0 - 0 - 0 - 0 Total Debts :Loan Loss Provisions for Debts 0 Individually Assessed 3 0 Collectively Assessed Provisions Calculated Based on Delinquency Depth: Of Which 3 0 - 0 - 0 - 0 - 0 Total Loan Loss Provisions Public Credit, Loans to Governments, Deposits in Banks, and Other Excluding Securities Purchased/Resold under Repurchase Agreements ₪ Millions 0,0 Total Individually Assessed, ₪ Millions 0,0 Total Collectively Assessed Including Deferred Provision Balance Over the Borrower by the Delinquency Depth Method - Banks and Governments Public Credit 2012 Total Loan Loss Provisions Banks and Governments 2011 Loan Loss Provisions Total Public Credit Supervisor of Banks: Reporting to the Public directive [ 1 ] ( 2/13 ( Transitional Directive 2012 (Annual Financial Report - p. 16 – 669 ( p. 9 – 672

Page 16.1 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

Amounts reported in NIS millions, Banking Institutions

a. Off-balance sheet liabilities and debt instruments.*

Loan Loss Provisions

Opening balance of loan loss provisions for the year

	Commercial	Residential	Other	Total	Commercial	Residential	Other	Total
Opening balance of loan loss provisions for the year	0	0	0	0	0	0	0	0
Net accounting write-offs recognized as of 1.1.2011	-	-	-	-	-	-	-	-
Other changes in provisions as of 1.1.2011 (reflected in equity)	-	-	-	-	-	-	-	-
Expenses for loan losses	0	0	0	0	0	0	0	0
Accounting write-offs	0	0	0	0	0	0	0	0
Debts written off in previous years	0	0	0	0	0	0	0	0
Net accounting write-offs	0	0	0	0	0	0	0	0
Translation adjustments	0	0	0	0	0	0	0	0
Other	0	0	0	0	0	0	0	0

Closing balance of loan loss provisions for the year

	Commercial	Residential	Other	Total	Commercial	Residential	Other	Total
Closing balance of loan loss provisions for the year	0	0	0	0	0	0	0	0

Additional information on the method of calculating loan loss provisions for off-balance sheet liabilities and debt instruments.*

	Individually assessed	Group assessed	Total
Provisions calculated based on delinquency depth for debts*	0	0	0

	Individually assessed	Group assessed	Total
Provisions calculated based on delinquency depth for debts*	0	0	0

	Individually assessed	Group assessed	Total
Provisions calculated based on delinquency depth for debts*	0	0	0

	Individually assessed	Group assessed	Total
Total loan loss provisions	0	0	0

Excluding government bonds and other securities acquired or borrowed under repurchase agreements, deposits with banks, loans to governments, and public loans.

	Individually assessed	Group assessed	Total
Total provisions including excess provisions for obligors calculated by delinquency depth	-	-	-

	2011	2012
Total loan loss provisions	0	0
Public loans	0	0
Banks and governments	0	0
Total	0	0

[1] Reporting Instructions for Banks: The Supervisor of Banks (2/13) Transitional Directive for 2012 - Annual Financial Report - pp. 669-16.1 – 672

Page 17 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

b. Debts.

Loan quality and delinquencies.

	30-89 days	Total Delinquent
Total non-Israeli borrowers' activity	3	3
Commercial - Public	0	0
Real Estate - Construction	0	0
Real Estate - Other Activities	0	0
Financial Services	0	0
Other - Commercial	0	0
Total Commercial	0	0
Residential Loans - Private Individuals	0	0
Other - Private Individuals	0	0
Total Public - Israel Activity	0	0
Banks - Israel	0	0
Government - Israel	0	0
Total Israel Activity	0	0
Total Non-Israeli Borrowers' Activity	0	0
Commercial - Public	0	0
Real Estate - Construction	0	0
Other - Commercial	0	0
Total Commercial	0	0
Private Individuals	0	0
Total Public - Non-Israeli Activity	0	0
Banks - Non-Israeli	0	0
Governments - Non-Israeli	0	0
Total Non-Israeli Activity	0	0
Total Public	0	0
Total Banks	0	0
Total Governments	0	0
Total	0	0

	30-89 days	90+ days	Total Delinquent
Total Delinquent	3	0	3

	Individually assessed	Group assessed	Total
Residential loans assessed on an individual basis	0	0	0
Other assessed on a group basis	0	0	0
Total Public	0	0	0
Total Banks	0	0	0
Total Governments	0	0	0
Total	0	0	0

Excluding government bonds and other securities acquired or borrowed under repurchase agreements, deposits with banks, loans to governments, and public loans.

4. Non-problematic debts classified as such (accrued interest income).

5. Debts with 30-89 days delinquency (accrued interest income).

6. Residential loan balances for which a change in the repayment schedule was made when the loan's delinquency repayment arrangement was signed, including residential loans with provisions calculated by delinquency depth, including those under special supervision or subordinated credit risk (see Explanation 4.b.2.4 below).

3. Generally, non-impaired debts do not include restructured problematic debts.

2. Additional information on non-impaired debts.

	Impaired	Non-Impaired
31.12.2012	0	0

[1] Reporting Instructions for Banks: The Supervisor of Banks (2/13) Transitional Directive for 2012 - Annual Financial Report - pp. 669-17 – 672

Page 18 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

b. Debts.

Additional information on impaired debts.

a. Impaired debts and individual provisions.

	Israel Borrowers' Activity	Non-Israeli Borrowers' Activity	Total
Commercial - Public	0	0	0
Real Estate - Construction	0	0	0
Real Estate - Other Activities	0	0	0
Financial Services	0	0	0
Other - Commercial	0	0	0
Total Commercial	0	0	0
Residential Loans - Private Individuals	0	0	0
Other - Private Individuals	0	0	0
Total Public - Israel Activity	0	0	0
Banks - Israel	0	0	0
Government - Israel	0	0	0
Total Israel Activity	0	0	0
Commercial - Public	0	0	0
Real Estate - Construction	0	0	0
Other - Commercial	0	0	0
Total Commercial	0	0	0
Private Individuals	0	0	0
Total Public - Non-Israeli Activity	0	0	0
Banks - Non-Israeli	0	0	0
Governments - Non-Israeli	0	0	0
Total Non-Israeli Activity	0	0	0
Total Public	0	0	0
Total Banks	0	0	0
Total Governments	0	0	0
Total	0	0	0

Measured at present value of cash flows.
Restructured problematic debts.

	Total Public	Total Banks	Total Governments	Total
1. Measured at present value of cash flows	-	-	-	-
2. Restructured problematic debts	-	-	-	-

Excluding government bonds and other securities acquired or borrowed under repurchase agreements, deposits with banks, loans to governments, and public loans.

	Recorded Debt Balance	Individual Provision***	Individual Provision***
31.12.2011	0	0	0
31.12.2012	0	0	0

	Recorded Debt Balance	Individual Provision***	Individual Provision***
Impaired debts for which a provision exists	0	0	0
Non-impaired debts for which a provision exists	0	0	0
Total	0	0	0

Recorded Debt Balance

Individual Provision

[1] Reporting Instructions for Banks: The Supervisor of Banks (2/13) Transitional Directive for 2012 - Annual Financial Report - pp. 669-18 – 672

Page 19 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

b. Debts.

Additional information on impaired debts.

b. Average balance and interest income.

	2011	2012
Average recorded debt balance of impaired debts during the reporting period	0	0
Total interest income recorded during the period	0	0
Interest income that would have been recorded during the period for these debts if they had been accruing interest according to their original terms	0	0

Interest income recorded according to:
- The accounting method on a cash basis | 0 | 0 |

Excluding government bonds and other securities acquired or borrowed under repurchase agreements, deposits with banks, loans to governments, and public loans.

[1] Reporting Instructions for Banks: The Supervisor of Banks (2/13) Transitional Directive for 2012 - Annual Financial Report - pp. 669-19 – 672

Page 20 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

b. Debts.

Additional information on impaired debts.

c. Restructured problematic debts.

	Not Accruing Interest	Accruing Interest 90+ days	Accruing Interest 30-89 days	Accruing Interest Not Delinquent	Total *
Israel Borrowers' Activity	0	0	0	0	0
Commercial - Public	0	0	0	0	0
Real Estate - Construction	0	0	0	0	0
Real Estate - Other Activities	0	0	0	0	0
Financial Services	0	0	0	0	0
Other - Commercial	0	0	0	0	0
Total Commercial	0	0	0	0	0
Residential Loans - Private Individuals	0	0	0	0	0
Other - Private Individuals	0	0	0	0	0
Total Public - Israel Activity	0	0	0	0	0
Banks - Israel	0	0	0	0	0
Government - Israel	0	0	0	0	0
Total Israel Activity	0	0	0	0	0
Non-Israeli Borrowers' Activity	0	0	0	0	0
Commercial - Public	0	0	0	0	0
Real Estate - Construction	0	0	0	0	0
Other - Commercial	0	0	0	0	0
Total Commercial	0	0	0	0	0
Private Individuals	0	0	0	0	0
Total Public - Non-Israeli Activity	0	0	0	0	0
Banks - Non-Israeli	0	0	0	0	0
Governments - Non-Israeli	0	0	0	0	0
Total Non-Israeli Activity	0	0	0	0	0
Total Public	0	0	0	0	0
Total Banks	0	0	0	0	0
Total Governments	0	0	0	0	0
Total	0	0	0	0	0

	Total Public	Total Banks	Total Governments	Total
Total Public	0	0	0	0
Total Banks	0	0	0	0
Total Governments	0	0	0	0
Total	0	0	0	0

Excluding government bonds and other securities acquired or borrowed under repurchase agreements, deposits with banks, loans to governments, and public loans.

	Accruing Interest Included in Impaired Debts*	Recorded Debt Balance 31.12.2012	Recorded Debt Balance 31.12.2011
Accruing Interest Included in Impaired Debts*	0	0	0

[1] Reporting Instructions for Banks: The Supervisor of Banks (2/13) Transitional Directive for 2012 - Annual Financial Report - pp. 669-20 – 672

Page 23 - 669

Explanation 4 - Credit Risk, Public Loans, and Loan Loss Provisions

b. Debts.

Additional information on residential loans.

Balances at year-end by interest repayment type and Loan-to-Value (LTV) ratio.

	Total	Balloon and Variable Interest*
60% and below	0	0
Above 60%	0	0
Total	0	0

The ratio between the approved credit limit and the value of the asset at the time the bank approved the facility.

Note: A banking institution is not required to provide this information disclosure if its residential loan activity does not include loans with a balloon or variable interest repayment type without collateral or with secondary collateral.

	December 31, 2012	December 31, 2011
First Collateral LTV Ratio
Residential Loan Balances	0	0

Updates to 699-104

Circular No. 2368 06 - Ch dated 23/02/2013
"Transitional Directive for 2012"

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This page was reprinted following the side-by-side printing of this update, identical to the existing text.

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[1] Reporting Instructions for Banks: The Supervisor of Banks

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