About Bank Hapoalim B.M.

Bank Hapoalim B.M., together with its subsidiaries, provides various banking and financial products and services. Strategy The key elements of the company's strategy include strengthening the leadership of the company in core banking; optimizing the use of resources and enhancing productivity; and differentiating and influential innovation. Segments The company operates through Private Customer, Small Business, and Housing Loan, Commercial, Corporate, International Activity, and Financial Management segments. Private Customer segment The bank provides a wide range of services to private customers, including routine account-management services, lending for various purposes, deposits, savings plans, and capital-market activity. In addition, the bank offers services and solutions to customers with complex financial needs, through advanced products, global asset management, and a professional service package, which includes meetings, proactively initiated telephone calls, and an advanced advisory system aided by decision support tools. The bank's services are provided to customers through a network of branches, in addition to Poalim Close to You service points, advising centers, Platinum Centers for selected customers, and two mobile branches serving customers at locations nationwide. In addition to the extensive branch network, the bank offers its customers a wide range of self-service and digital service options, allowing customers to conduct banking activities in independent, efficient, available channels. These include self-service stations at branches and on customer premises, Poalim Online, Poalim Mobile, the Poalim by Telephone call center, the Pro contact center for digitally oriented customers, the interactive voice response (IVR) system for information and transactions, written messages on the website and application, and social media. There has been an ongoing trend over the last few years of growth in banking activity through unstaffed channels (self-service automated teller machines, the website, applications, the mobile site, and the automated voice response at the Poalim by Telephone call center). Note that more than 85% of common banking transactions of customers of the bank are performed through digital services and self-service. Products and Services As part of the bank's strategy of enhancing value for customers and guiding customers at important decision points in their lives, the bank offers a range of products and services to its customers, including services for groups of customers with common characteristics (the High Tech Zone Club, Poalim Young and the Student Club, and Poalim Wonder), services through the direct channels, and the development of dedicated applications (the Open application for opening accounts, the Bit application, and the capital-market trading application). The bank launched a loyalty (reward) program designated for its customers who hold a bank credit card (Poalim Wonder), regardless of which credit-card company operates the card. The program replaced some of the plans administered by the credit-card companies that operate the bank cards. Capital Market Activity Services for customers of the segment in the capital market include a range of activities and financial services in various fields: trading, operations, and custody in Israeli securities (including Maof); trading in foreign securities; and research and advisory services for customers in the area of the capital market. Some of these activities are performed directly by the bank, while others are performed by subsidiaries, each of which specializes and engages in a specified field. The bank provides financial advising services at fourteen Poalim Invest advising centers, as well as through the Platinum Unit, the Corporate Banking Division, and Poalim Pro. The investment advisors at the bank provide their customers with professional, innovative advisory services using advanced tools and systems, through understanding their needs, maximizing value, and strengthening relationships in a personal service package tailored to each customer. Pension Advising The bank offers pension advising and retirement planning services through a network of advisors located throughout Israel. The bank is connected to the pension clearing house, and receives information through the clearing house for the purpose of providing advisory services. The bank holds a pension advisor's license and employs licensed advisors at fourteen Poalim Invest pension advising centers and a national retirement planning center. The bank has signed distribution agreements with most of the management companies of provident funds and pension funds. The bank, as an objective advisor, is entitled to a uniform distribution fee for the distribution of the funds, in accordance with the regulations. The Capital Market, Insurance, and Savings Authority is acting to promote a legislative amendment aimed at permitting banking corporations to provide advisory services by telephone and through digital means. Marketing and Distribution Marketing and distribution in Israel are conducted through the branches of the bank, at Poalim by Telephone, and through the digital and direct channels (self-service devices, the website, and the application). In recent years, the bank has expanded its use of digital channels via internet and mobile applications, allowing customers to receive service without visiting a brick-and-mortar branch. Marketing through digital media has also expanded, on the internet and on mobile applications, which allow a targeted approach to customers according to their interests and the characteristics of their online activity. Customers This segment consists of private customers who receive services through the branches, Poalim by Telephone, and the digital channels. Services provided are adapted to the characteristics of the various customers. Small Business segment The bank provides a range of banking services and financial products to small businesses. This segment's activities are conducted through the bank's nationwide branch network and through the direct channels. The branch network also provides necessary services to business customers of the Corporate and Commercial segments. Services for the segment's customers include routine account management, alongside extensive efforts aimed at support for and growth of this segment, including targeted credit tailored to customers' needs through a wide range of products. Products and Services The bank offers a wide range of products and services to its customers, within its strategy of focusing on the expansion of its activity in the Small Business segment, including financing for business activities, a set of products and services for the expansion of a business, advanced digital services, and a service center specializing in businesses. The bank has also continued the activity of the Financial Growth Center, which provides small businesses across Israel with knowledge and tools for business management and growth. Marketing and Distribution Marketing and distribution in Israel are conducted face-to-face or over the telephone at the bank's branches, through Poalim by Telephone, and through the various digital properties, both proactively and in response to customers' inquiries. Marketing initiatives are also reflected in advertising in newspapers, on television, on the internet, on the radio, on billboards, and at branches. In recent years, the bank has significantly expanded its use of marketing via digital media, on the internet and on mobile applications, which allows a targeted approach to customers according to their interests and the characteristics of their online activity. Customers This segment provides financial services and products to small and mid-sized businesses from a wide range of economic sectors. This segment also handles the private accounts of business clients. Housing Loan segment The bank offers housing loans to private customers, from bank funds, as well as through government assistance programs, via mortgage advisors stationed at Mishkan representative offices at various branches located nationwide. Applications for in-principle approval of housing loans can also be submitted via digital channels and Poalim by Telephone. Products and Services The main activity of this segment is granting housing loans. This activity is targeted to customers who apply for a loan for one of the following purposes: A loan for the acquisition, construction, expansion, or renovation of a home. A loan for the acquisition of land for the construction of a home, or acquisition of an interest in a home. A loan granted with a mortgage on a home, other than for business purposes. A loan for the prepayment of a loan. Mortgage underwriting is performed and examined based on four essential components: repayment capability, collateral (the proposed property to be pledged), financing rate, and spreads. Marketing and Distribution Marketing and distribution are carried out through Mishkan representative offices within the branches of the bank, as well as through Poalim by Telephone and Poalim Online. Marketing and distribution activities are also conducted through various media channels and through billboards at construction sites. Customers The bank grants housing loans to private and business customers with accounts at the bank or at other banks. Commercial segment This segment provides a wide range of banking services to middle-market business clients. This segment operates through business centers for established customers and business centers for growing customers. Operational services for the segment's customers are provided by service centers. Based on the decision to expand the bank's focus on the high-tech sector, this activity was centralized in a new unit whose mission is to develop value offers for targeted high-tech customers, thereby also solidifying the bank's market share. The unit provides banking services, including credit and guarantees, deposits, foreign-currency activity, current accounts, etc. Products and Services Services offered by the bank to customers of the segment include credit for routine operations and investment financing, guarantees, letters of credit, foreign trade, and transactions in financial and derivative instruments. Investment services are also provided, in the various channels: foreign currency, shekels, securities, etc. This segment also provides banking services to clients who operate in the construction and real-estate sector. These banking services include the provision of credit to customers, as well as the issuance of guarantees of various types, including guarantees to buyers of homes pursuant to the Sale Law. This segment also serves technology industry customers through the High Tech Business Center, which provides banking services, including credit and guarantees, foreign-currency activity, current accounts, etc. Complementary Activities Business Direct Credit - loans within an approved credit facility, which can be taken through the Business Online website. FX Trader - an online trading system with a convenient platform accessible to customers. Digital Empowerment - Development of adapted solutions in response to the needs of the customers of the Corporate Banking Division; expansion of the infrastructure for activity on the business website and business application. Digital Guarantees - Development of a platform for the production of digital guarantee files. ERPay - A direct interface for transfers in NIS and foreign currency from the customer's ERP system. Marketing and Distribution Marketing of banking products and services and distribution to customers are conducted through the Customer Relationship Managers in the Commercial Area and the Sales Management Department in the headquarters of the Commercial Area, and in collaboration with the headquarters of the division. The communication channels commonly used in local banking are available to customers, such as service centers, Poalim by Telephone, the website, etc. Customers The main areas of activity of the segment's customers are industry, commerce, and construction and real estate; these customers primarily operate in the domestic market. This segment also serves customers engaged in import and export activities. Corporate segment The Corporate Segment specializes in providing financial services to large corporations. Credit granting constitutes its principal area of activity. The segment operates through four sectors, each of which contains specialist Customer Relationship Managers (CRMs): Real estate; Industry, commerce, and hotels; Infrastructures, energy, and capital market; and Project and infrastructure financing. The sector also specializes in complex financing products, including foreign-trade financing, financing of working capital, financing of assets overseas, complex financing transactions, syndication, and credit-risk sales. Also operating within the Corporate Banking Division is the Special Credit Area, which coordinates the handling of customers experiencing financial difficulties in the Corporate and Commercial segments and endeavors to assist them in restructuring by providing business support. Products and Services Services offered to customers of the segment include financing of routine operations, financing of investments, financing of infrastructure projects based on the BOT/PFI method, financial services, foreign-trade transactions, and transactions in financial derivatives. Services provided to customers operating in the construction and real-estate sector include financing of construction projects, granting credit to customers, and issuing various types of guarantees, including guarantees to buyers of homes pursuant to the Sale Law Marketing and Distribution Banking products are marketed and distributed to customers of this segment through Customer Relationship Managers in the Corporate Area, in collaboration with the headquarters of the division. As a key element of this sales platform, product experts, working closely with the CRMs, are at the disposal of the segment's customers, in the areas of the dealing room, investment advising, foreign trade, foreign currency, current accounts, and more. CRMs are in continuous contact with the customers they serve, in order to respond to their banking needs, market the bank's products, and tailor financing solutions to various transactions. The communication channels commonly used in local banking are available to customers, such as service centers, Poalim by Telephone, the website, etc Customers Customers of the segment are large corporations in Israel, mainly operating in the areas of real estate, industry, the capital market, communications, commerce, hotels, infrastructure, and energy. International Activity segment This segment includes the New York branch and representative offices in the United States, and Bank Pozitif in Turkey, as well as relationships with banks around the world. Most of the international business banking activity of the bank is conducted through the New York branch, which focuses on providing comprehensive banking services to Israeli companies operating in the United States, as well as to local companies and clients, including credit, foreign trade, deposits, and dealing-room services. The New York branch also offers its customers FDIC deposit insurance. Activity with banks includes trading through dealing rooms, cooperation in foreign trade and international trade financing, project financing, clearing of payments, and capital-market services. Main International Banking Units New York Branch Most of the company's international business banking is conducted through the New York branch and through representative offices, as well as through relationships maintained with banks around the world. The New York branch has activity in the middle-market sector in the United States, through the development of relationships with and granting of direct credit to local commercial clients. The branch also operates in the syndication market, as a complementary activity. Activity in Turkey The bank holds Bank Pozitif, in Turkey, which is engaged in corporate banking. In accordance with the strategy of the bank, the bank is acting to sell its holding in Bank Pozitif. Accordingly, the bank is working to gradually reduce the credit portfolio of Bank Pozitif. Financial Management segment The activity of this segment includes: Activity in the banking book - Management of assets and liabilities, including the management of market and liquidity risks through the establishment of internal transfer prices, investment portfolio management, issuance of bonds and notes, deposits with banks outside Israel, and the execution of transactions in derivative financial instruments. The segment's activity in the banking book is mostly conducted through the Asset and Liability Management (ALM) units in Israel and abroad, and through the Nostro Investment Management Unit, which is responsible for managing the portfolio of corporate bonds. Activity in the trading books mainly includes the provision of services to the bank's customers for the execution of transactions in Israeli and foreign securities, financial instruments in Israeli shekels, foreign currency, and interest rates, through the dealing rooms, as well as support for the development and pricing of sophisticated financial products. Most of the income of the segment derives from exposure management in the banking book and in the trading book, and from spreads and fees in the dealing rooms' activity and operational services for customers. In addition, in calculating its income, the segment includes the results of the management of a portfolio of shares and bonds and investments in equity-basis investee companies. This segment is also responsible for managing relationships with banks and financial institutions around the world, and is responsible for providing services to customers operating in Israel in a range of areas, including the capital and money markets. Activities, Products and Services The Asset and Liability Management Area (ALM Area) of the bank is responsible for managing the assets and liabilities of the bank, over the range of activities of the various segments. The ALM Area sets internal transfer prices (Wholesale Rate) for raising and allocating resources for the use of the various segments. The Wholesale Rate constitutes the basis for the activity of the various segments with the bank's customers, and is used to debit and credit the segments. The Wholesale Rate also serves as a means for market and liquidity risk management. The bank accords high importance to raising resources that are stable and highly diversified. The bank has varied sources of financing, primarily arising from deposits from the public in Israel, the large majority of which are from retail customers, with no dependence on any single depositor or group of depositors. The bank also takes deposits from large institutional and corporate clients. In addition, the bank raises resources through bonds and capital instruments (subordinated notes) issued by the bank. Funding in foreign currency includes deposits of private customers and corporate customers in Israel, foreign residents, Global Private Banking customers, Israeli companies abroad, issues of CDs and other instruments secured by the Federal Deposit Insurance Corporation (FDIC) in the United States, issues of bonds abroad, NIS-foreign currency swap transactions, and repo transactions. As part of market and liquidity risk management, the Financial Markets and International Banking Division maintains a bond portfolio, consisting of government bonds and corporate bonds. The portfolio is managed by the ALM Unit and the Nostro Investment Management Unit of the bank. Nostro investment activity is aimed at increasing flexibility in the management of the banking book, while taking advantage of opportunities to improve returns on liquidity surpluses and diversify areas of activity. The investment portfolio is part of the banking book, and includes investments in bonds and shares, in Israel and overseas. Trading Activity - Dealing Room (OTC and Derivatives) The bank provides comprehensive services to its customers through its dealing rooms (OTC and derivatives), allowing them to operate in a range of financial instruments, with various underlying assets, for trading, protection, and risk-hedging purposes. Transactions with the bank's customers are conducted in accordance with the credit limits allocated to them by the credit authorities at the bank, and on the basis of the bank's internal models. The models specify credit exposures for transactions executed in the dealing room. Awareness of the activities offered by the dealing room has grown steadily in recent years, leading to demand for a broader range of products with a higher level of sophistication. In response to these needs, and in order to preserve the bank's standing as a leader and innovator, the product range in Israel includes complex Products, such as derivatives (which include interest-rate options in NIS), exotic options, and sophisticated interest-rate products. As part of the bank's trading activity, the dealing room is one of the primary market makers in government bonds, and serves as a market maker in most of the products in which it operates. Brokerage and Custody Services The bank offers its customers services for the execution of transactions in securities and in tradable derivatives, through two dealing rooms: a dealing room for Israeli securities and a dealing room for foreign securities; in addition, securities custody services are provided. Services for Financial Asset Managers The bank provides services to financial-asset managers: managers of mutual funds, managers of investment portfolios, and managers of provident funds, study funds, and pension funds. The bank also offers services related to account management for mutual funds, including, among other matters, asset revaluation, production of control reports, and preparation of reports to government agencies. Services for Financial Institutions The banks and financial institutions department is responsible for managing relationships and business connections with banks and financial institutions around the world. These relationships support the bank's varied business activities, including foreign trade, trading in foreign currency, deposits, derivatives, and securities. Within its activity with foreign banks and financial institutions, the bank provides a wide range of services, including sub-custody services for leading foreign custodian banks active in Israel in the area of securities. Customers This segment provides diverse services to all customers of the other segments at the bank, both through the bank's branches and CRMs, and through direct contact with large clients. The dealing room conducts marketing activity with foreign financial institutions, which has led to substantial expansion of the volume of activity with these customers (in the range of products for which the bank serves as a market maker). History Bank Hapoalim B.M. was founded in 1921.