EXHIBIT 1
[TRANSLATION]
INDUSTRIAL DEVELOPMENT BANK OF ISRAEL LTD.
MAY 27, 2008
THE BOARD OF DIRECTORS OF
THE INDUSTRIAL DEVELOPMENT BANK
APPROVED THE PRIVATIZATION PLAN
THE NET PROFIT OF THE BANK
FOR THE FIRST QUARTER OF 2008
AMOUNTED TO NIS 1.2 MILLION
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The Board of Directors of the Industrial Development Bank approved at its
meeting on May 26, 2008 the filing with the court of a motion to approve a
compromise and arrangement plan between the Bank and its shareholders pursuant
to Section 350 of the Companies Law - 1999, its primary feature being an
arrangement for the sale of the shares of the Bank.
The resolution of the Board to file the arrangement plan was taken after the
Board came to the conclusion that the option of selling the shares of the Bank,
within the framework of the plan, may be more beneficial to the shareholders
than the option of liquidation.
Pursuant to the resolution of the Board of Directors, prior to the filing of the
motion, the Bank must receive certain confirmations and clarifications from the
Government Companies Authority regarding the plan.
DR. RAANAN COHEN, THE CHAIRMAN OF THE BOARD OF DIRECTORS AND URI GALILI, THE
GENERAL MANAGER OF THE BANK announced that the expected filing of the motion to
approve the arrangement plan is a direct result of the broad success in the
execution of the Run-off plan, which was implemented beginning from the first
half of 2003. "Five and a half years ago, after the Bank suffered liquidity
difficulties, no one could have imagined that in 2008 the privatization process
of the Bank would begin, within the framework of which the shareholders of the
Bank should receive substantial amounts." Cohen and Galili added that the Bank
also had positive business results in the first quarter of the year, and that
all of the last six quarters, from the last quarter of 2006, finished with a net
profit.
THE EQUITY OF THE BANK, INCLUDING PREFERENCE SHARES, totaled NIS 558 million as
of March 31, 2008 compared with NIS 557 as of December 31, 2007.
THE NET PROFIT OF THE BANK in the first quarter of 2008 totaled NIS 1.2 million
compared with NIS 4.9 million in the first quarter of 2007.
PROFIT FROM FINANCING OPERATIONS BEFORE ALLOWANCES FOR DOUBTFUL DEBTS for the
first quarter of 2008 amounted to NIS 11.3 million compared with NIS 8.7 million
for the comparable period in 2007. The increase in the profit from financing
operations was due to the following factors:
An increase in income from interest collected for problematic loans, a decrease
in the scope of problematic loans classified as non-income bearing loans and the
impact of the decrease of the rate of interest in the market on the extent of
the non-accumulation of income on non-income bearing loans. On the other hand,
the decrease in the scope of financing activities as part of the Run-off plan of
the Bank, set-off some of the increase in the profit from financing operations.
THE ALLOWANCE FOR DOUBTFUL DEBTS - In the first quarter of 2008 this item
recorded income in the amount of NIS 11.1 million compared with an expense in
the amount of NIS 1.0 million in the first quarter of 2007.The prominent
component of the income in this item was the collection of debts that were
written-off in the past in the amount of NIS 7.6 million as a result of the sale
of the holdings of the kibbutzim in the shares of Tnuva.
PROFIT FROM FINANCING OPERATIONS AFTER ALLOWANCE FOR DOUBTFUL DEBTS amounted to
NIS 22.4 million in the first quarter of 2008 compared with NIS 7.7 million in
the first quarter of 2007.
INCOME FROM OPERATING AND OTHER ACTIVITIES showed an expense of NIS 0.1 million
in the first quarter of 2008 compared with income of NIS 5.3 million in the
first quarter of 2007. The principal component in which there was a change, was
a loss from shares totaling NIS 0.7 million, compared with a profit of NIS 4.2
million in the comparable quarter of 2007.
OPERATING AND OTHER EXPENSES totaled NIS 19.4 million in the first quarter of
2008 compared with NIS 8.1 million in the first quarter of 2007. The increase in
operating expenses is primarily a result from the fact that following the
government's resolution to privatize the Bank, the Board of Directors of the
Bank approved a supplement to the special payments that shall be paid to the
workers at the time of the termination of their employment. This supplement
totals approximately NIS 11 million for which an expense is included in the
early retirement item. The salary expenses were also affected by losses in the
amount of NIS 0.7 million which accumulated in the severance pay funds during
the quarter. The supplementation of the obligation for severance pay, following
these losses, is included in the salary expenses.
OTHER OPERATING EXPENSES amounted in the first quarter of 2008 to NIS 2.0
million compared with NIS 2.5 million in the comparable period in 2007. There
was a substantial reduction in most of the expense items, this as a part of the
efficiency plan accompanying the Run-off plan.
TOTAL CREDIT TO THE PUBLIC, excluding credit guaranteed by the State of Israel
to the Israel Electric Company Ltd. out of a deposit of the State with the Bank,
amounted to NIS 462 million as of March 31, 2008 compared with NIS 558 million
as of December 31, 2007. This decrease reflects the policy carried out by the
Bank to reduce the credit portfolio and is a continuation to the reduction in
the credit which began in 2002.
THE BALANCE SHEET AMOUNT FOR PROBLEMATIC BORROWERS amounted to NIS 273.4 million
as compared with NIS 308.9 million at the end of 2007.