Israel Discount Bank : Rating upgrade by S&P and Maalot rating agencies

December 20, 2016

INTERNATIONAL RATING AGENCY S&P AND LOCAL

RATING AG ENCY 'MAALOT ' RAISE T HE BANK'S RATI N G

THIS FOLLOWS YESTERDAY'S RATING UPGRADE BY 'MIDROOG'

This morning, Tuesday, it was reported that the international rating agency S&P had raised Discount Bank's rating by one notch to 'BBB+' and that 'Maalot' had raised the Bank's rating by one notch to 'ilAA+'.

In the rating overview, it is stated that: "Discount Bank's risk metrics have improved by more than we anticipated to a level more in line with the system average and that compares well with the average for international peer banks. Improving asset quality is beneficial for the bottom-line results".

It was also stated that: "ongoing cost reduction initiatives will also help improve efficiency and earnings capacity to sustainably build a buffer to absorb potential tail risks".

This rating upgrade follows the rating upgrade by 'Midroog', which we announced yesterday. Midroog raised the Bank's deposits rating to a level of Aa1. In its key rationale, Midroog stated that its decision, "is supported by the continuing improvement in the quality of the credit portfolio, an improvement that supports the Bank's future ability to return profits and the potential to build a capital buffer, in parallel with the portfolio's growth and in contrast to prior years, while continuing to make changes in the portfolio mix, focusing on the retail segment and without being any less stringent in underwriting".

Midroog went on to note that, "raising the rating reflects both the potential for growth in the credit portfolio, following the strengthening of the capital structure that will contribute to the revenue base, and also the potential for operational streamlining, which will keep salary inflation restrained and enable the Bank to cope with the challenging business environment".

The upgrade to the Bank's rating by the local and international rating agencies represents an expression of trust in the strategic plan, in our ability to perform and implement it and in the entire improvement process at the Bank.