fragment_size option is ignored when highlighting a stopwords filtered field

[paulintrognon]

Hi there,

I am trying to get highlights from a field that contains a lot of english text. I built an index that uses the standard analyzer with the english stopwords. The highlights I get when I perform a search can be very short or quite big, regardless of the fragment_size option.

Here is my test setup:

Settings

POST /test

{
  "index": {
    "mapper": {
      "dynamic": "strict"
    },
    "analysis": {
      "analyzer": {
        "english": {
          "type": "standard",
          "stopwords": "_english_"
        }
      }
    }
  }
}

Mapping

POST /test/chapter/_mapping

{
  "chapter": {
    "properties": {
      "content": {
        "type": "string",
        "analyzer": "english",
        "index_options": "offsets"
      }
    }
  }
}

Test document (with a big content)

POST /test/chapter

{
    "title": "3. DETAILS OF THE INVESTMENT IN GOVERNMENT BONDS",
    "content": "3. DETAILS OF THE INVESTMENT IN GOVERNMENT BONDS Following are details divided by governments with respect to the total securities portfolio: The Bank's exposure to leveraged finance according to the economic sector: CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review SCHEDULE \"A\" - RATES OF INTEREST INCOME AND EXPENSES AND ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSES - CONSOLIDATED() Part \"A\" - Average balances and interest rates - assets For the three months ended March 31 Average balance 2015 Interest income Rate of income Average balance 2014 Interest income Rate of income CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review SCHEDULE \"A\" - RATES OF INTEREST INCOME AND EXPENSES AND ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSES - CONSOLIDATED() (CONTINUED) Part \"B\" - Average balances and interest rates - liabilities and equity For the three months ended March 31 Average balance Interest expenses Rate of expense Average balance Interest expenses Rate of expense 2015 2014 Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"A\" - RATES OF INTEREST INCOME AND EXPENSES AND ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSES - CONSOLIDATED() (CONTINUED) Part \"C\" - Average balances and interest rates - additional information regarding interest bearing assets and liabilities attributed to operations in Israel For the three months ended March 31 Average balance 2015 Interest income (expense) Rate of income (expense) Average balance 2014 Interest income (expense) Rate of income (expense) For footnotes see next page. SCHEDULE \"A\" - RATES OF INTEREST INCOME AND EXPENSES AND ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSES - CONSOLIDATED() (CONTINUED) Part \"D\" - Analysis of changes in interest income and expenses For the three months ended March 31 2015 Compared to 2014 Increase (decrease) due to change Quantity Price Net change In NIS millions CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review Interest bearing assets: Credit to the public: Footnotes: (1) The data is presented after the effect of hedge derivative instruments. (2) Based on monthly opening balances, except for the non-linked shekels segment in respect of which the average balances are based on daily data. (3) Before deduction of the average stated balance of allowances for credit losses. Including impaired debts that do not accrue interest income. (4) From the average balance of trading bonds and of available-for-sale bonds was deducted (added) the average balance of non-realized gains (losses) from adjustment to fair value of trading bonds as well as gains (losses) in respect of available-for-sale bonds included in shareholders' equity as part of accumulated other comprehensive income, in the item \"Adjustments in respect of available-for-sale securities according to fair value\" in the amount of NIS 10 million and NIS 497 million, respectively; 2014 - NIS 2 million and NIS 218 million respectively. (5) Including derivative instruments and other assets that do not carry interest and net of allowance for credit losses. (6) Including derivative instruments. (7) Net return - net interest income divided by total interest bearing assets. (8) The quantitative impact has been computed by multiplying the interest margin by the change in the average balance between the periods. The price impact has been calculated by multiplying the average balance for the corresponding period last year by the change in the interest margin between the periods. (9) Interest income on other assets and interest expenses on other liabilities include income tax interest income and expenses, respectively. (10) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E (1). (11) The drop in the CPI in the first quarter of 2015, led to the recording of negative linkage increments on assets and liabilities. As a result thereof, the CPI linked segments presents net interest expenses on assets and net interest income on liabilities. (12) An amount lower than NIS 1 million. Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"B\" - EXPOSURE TO CHANGES IN INTEREST RATES - CONSOLIDATED On demand or within 1 month Over 1 month and up to 3 months As at March 31, 2015 Over 3 months and up to 1 year in NIS millions Over 1 year and up to 3 years Over 3 years and up to 5 years Notes: (1) Not including balances of derivative financial instruments and fair value of off-balance sheet financial instruments. (2) Weighted average by fair value of average effective duration. (3) Including shares listed under \"No fixed maturity\". (4) Including Israeli currency linked to foreign currency. CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review Over 5 years and up to 10 years Over 10 years and up to 20 years Over 20 years No fixed maturity date Total fair value Internal rate of return In % Total fair value As at March 31, 2014 Internal rate of return In % Total fair value Effective average duration In years As at December 31, 2014 Internal rate of return In % Effective average duration In years General notes: (a) Data by period in this table represent the present value of future cash flows for each financial instrument, discounted at such interest rate as to discount them to the fair value included in the financial instrument, in a manner consistent with assumptions used in calculation of the fair value of said financial instrument. For details regarding the assumptions used in calculating the fair value of financial instruments, see \"Management and measurement of market risks\" under \"Exposure to risks and risk management\". (b) The internal rate of return is the interest rate used to discount the expected cash flows from a financial instrument to its fair value, as included in Note 10 a. (c) The average effective duration of a group of financial instruments is an approximation of the change, in percentage, in fair value of said group of financial (d) Full data as the exposure to changes in interest rates in each segment according to the various balance sheet items, is available on request. As at March 31, 2015 Effective average duration In years in NIS millions instruments resulting from a small change (0.1% increase) in the internal rate of return of each of the financial instruments. Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"B\" - EXPOSURE TO CHANGES IN INTEREST RATES - CONSOLIDATED (CONTINUED) On demand or within 1 month Over 1 month and up to 3 months As at March 31, 2015 Over 3 months and up to 1 year in NIS millions Over 1 year and up to 3 years Over 3 years and up to 5 years Notes: (1) Not including balances of derivative financial instruments and fair value of off-balance sheet financial instruments. (2) Weighted average by fair value of average effective duration. (3) Including shares listed under \"No fixed maturity\". (4) Including Israeli currency linked to foreign currency. CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review As at March 31, 2015 Over 5 years and up to 10 years Over 10 years and up to 20 years Over 20 years No fixed maturity date Total fair value Internal rate of return In % Total fair value As at March 31, 2014 Internal rate of return In % Total fair value Effective average duration In years As at December 31, 2014 Internal rate of return In % Effective average duration In years General notes: (a) Data by period in this table represent the present value of future cash flows for each financial instrument, discounted at such interest rate as to discount them to the fair value included in the financial instrument, in a manner consistent with assumptions used in calculation of the fair value of said financial instrument. For details regarding the assumptions used in calculating the fair value of financial instruments, see \"Management and measurement of market risks\" under \"Exposure to risks and risk management\". (b) The internal rate of return is the interest rate used to discount the expected cash flows from a financial instrument to its fair value, as included in Note 10 a. (c) The average effective duration of a group of financial instruments is an approximation of the change, in percentage, in fair value of said group of financial (d) Full data as the exposure to changes in interest rates in each segment according to the various balance sheet items, is available on request. instruments resulting from a small change (0.1% increase) in the internal rate of return of each of the financial instruments. Effective average duration In years in NIS millions Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"C\" - EXPOSURE TO FOREIGN COUNTRIES - CONSOLIDATED() A. Information regarding the total exposure to foreign countries and to countries where the total exposure to each country amounts to over 1% of total consolidated assets or over 20% of the Bank's equity, the lower of the two Of which - Total exposure to LDC countries Notes: (1) Based on the final risk, net of the effect of guarantees, liquid collateral and credit derivatives. (2) Balance sheet and off-balance sheet credit risk, Problematic credit risk and impaired debts are presented before the impact of the allowance for credit losses and before the impact of collateral that are deductible for the purpose of a borrower or a group of borrowers liability. (3) Credit risk of off-balance sheet financial instruments as computed for the purpose of borrower indebtedness limitations. (4) Governments, official institutions and central banks. (5) Portugal, Ireland, Italy, Greece and Spain. B. Information regarding countries the amount of exposure in respect of each amounts to between 0.75% and 1% of total consolidated assets or between 15% and 20% the equity, whichever is lower. C. Information regarding balance sheet exposure to foreign countries having liquidity problems, for the period of three months ended March 31, 2015 As of March 31, 2015, the Bank had no such exposure. The Country March 31, 2015 Balance sheet exposure Across the border balance sheet exposure To governments To banks To others In NIS millions 1. Information regarding balance-sheet exposure to foreign countries As of March 31, 2015 the Bank had no such exposure. 2. Information regarding balance-sheet exposures that have undergone restructuring As of March 31, 2015 the Bank had no such exposure. CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review Balance sheet exposure to local resident customers of extensions of the banking corporation in a foreign country Balance sheet exposure March 31, 2015 Off-balance sheet exposure Across the border balance sheet exposure Balance sheet exposure before deduction of local liabilities Deduction in respect of local liabilities Net balance sheet exposure after deduction of local liabilities Total balance sheet exposure Balance sheet problematic credit risk Impaired debts Total offbalance sheet exposure Of which off-balance sheet problematic credit risk Due up to one year Due over one year The item \"Total LDC countries\" includes the total exposure to countries defined as less developed countries (LDC) in Proper Banking Management Directive No. 315 regarding \"Supplementary provision for doubtful debts\". Balance sheet exposure to a foreign country includes across the border balance sheet exposure and balance sheet exposure of overseas extensions of the banking corporation to local resident customers; across the border balance sheet exposure includes balance sheet exposure of the banking corporation offices in Israel to residents of a foreign country and the balance sheet exposure of the overseas extensions of the banking corporation to customers who are not residents of the country in which the extension is located. Balance sheet exposure of extensions of the banking corporations in a foreign country to local resident customers includes the balance sheet exposure of extensions of the banking corporation in that foreign country to residents of that country, net of the extensions liabilities (the deduction is performed up to the exposure amount). In NIS millions Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"C\" - EXPOSURE TO FOREIGN COUNTRIES - CONSOLIDATED() (CONTINUED) A. Information regarding the total exposure to foreign countries and to countries where the total exposure to each country amounts to over 1% of total consolidated assets or over 20% of the Bank's equity, the lower of the two. Of which - Total exposure to LDC countries Notes: (1) Based on the final risk, net of the effect of guarantees, liquid collateral and credit derivatives. (2) Balance sheet and off-balance sheet credit risk, commercial criticized exposure and impaired debts are presented before the impact of the allowance for credit losses and before the impact of collaterals that are deductible for the purpose of a borrower or a group of borrowers liability. (3) Credit risk of off-balance sheet financial instruments as computed for the purpose of borrower indebtedness limitations. (4) Governments, official institutions and central banks. (5) Portugal, Ireland, Italy, Greece and Spain. (6) Reclassified - classification between countries (7) Reclassified - classification of balance to \"local residents\", following classification in a subsidiary. Balance sheet exposure Across the border balance sheet exposure The Country To governments To banks To others In NIS millions The Country March 31, 2014 Balance sheet exposure Across the border balance sheet exposure To governments In NIS millions To banks To others CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review March 31, 2014 Balance sheet exposure Balance sheet exposure to local resident customers of extensions of a banking corporation in a foreign country Balance sheet exposure before deduction of local liabilities Deduction in respect of local liabilities Net balance sheet exposure after deduction of local liabilities Total balance sheet exposure Balance sheet commercial criticized exposure Impaired debts In NIS millions Off-balance sheet exposure Across the border balance sheet exposure Total offbalance sheet exposure Of which off-balance sheet commercial criticized exposure Due up to one year Due over one year 2 The item \"Total LDC countries\" includes the total exposure to countries defined as less developed countries (LDC) in Proper Banking Management Directive No. 315 regarding \"Supplementary provision for doubtful debts\". Balance sheet exposure to a foreign country includes across the border balance sheet exposure and balance sheet exposure of overseas extensions of the banking corporation to local resident customers; across the border balance sheet exposure includes balance sheet exposure of the banking corporation offices in Israel to residents of a foreign country and the balance sheet exposure of the overseas extensions of the banking corporation to customers who are not residents of the country in which the extension is located. Balance sheet exposure of extensions of the banking corporations in a foreign country to local resident customers includes the balance sheet exposure of extensions of the banking corporation in that foreign country to residents of that country, net of the extensions liabilities (the deduction is performed up to the exposure amount) Balance sheet exposure Off-balance sheet exposure Balance sheet exposure to local resident customers of extensions of the banking corporation in a foreign country Across the border balance sheet exposure Balance sheet exposure before deduction of local liabilities Of which off-balance sheet problematic credit risk Due up to one year Due over one year Deduction in respect of local liabilities Net balance sheet exposure after deduction of local liabilities Total balance sheet exposure Balance sheet problematic credit risk Impaired debts Total offbalance sheet exposure In NIS millions Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"C\" - EXPOSURE TO FOREIGN COUNTRIES - CONSOLIDATED() (CONTINUED) As of March 31, 2014, and December 31, 2014, the Bank had no such exposure. B. Information regarding countries the amount of exposure in respect of each amounts to between 0.75% and 1% of total consolidated assets or between 15% and 20% of shareholders' equity, whichever is lower. C. Information regarding exposure to foreign countries having liquidity problems for the period of three months ended March 31, 2014 and for the year ended December 31, 2014 1,139 604 14,822 13,784 11,257 3,302 16,541 1,919 3,247 2,351 8,841 5,825 2,318 85,950 21,817 150,264 42,497 3,142 20,613 34 158 6,767 516 9,007 372 853 6,577 1,119 201 11,552 8,210 2,273 3,431 106 42,860 2,324 45,290 9,287 1,998 56,575 230,594 Total() Credit Performance Rating 1,104 603 13,572 13,241 10,661 3,231 1,585 15,463 3,014 1,287 8,576 5,625 2,286 80,248 21,257 143,400 41,895 3,142 20,613 167,155 34 158 6,102 516 8,594 6,479 372 853 1,101 173 11,424 8,210 2,258 3,387 100 41,451 2,323 43,874 9,287 1,998 55,159 222,314 Problematic Of which: 24,232 4,750 24 22,687 1,443 1,604 1,289 102 99 4,546 730 172 794 516 8,916 58,381 20,270 20,796 99,447 1,205 147,405 385 149,570 101,037 34 9 1,138 604 14,517 (6)13,754 11,147 2,726 16,390 1,902 3,162 2,151 7,546 5,806 2,313 83,156 21,817 42,432 1,524 641 34 138 6,673 4,029 465 6,981 353 853 6,563 1,095 176 1,935 - 2,812 - 2,235 1,362 106 31,726 2,300 34,132 4,898 24 Total Debts Problematic in NIS millions 860 359 9,874 5,376 9,216 1,782 1,596 13,321 2,515 1,593 6,269 3,960 1,660 14 24 1 987 475 494 10 229 1,002 216 724 257 110 15 376 334 - - - - 147 227 333 - 97 - 18 27 96 - - 959 6 1 966 100 29 14 24 1 983 475 486 11 230 1,002 211 724 258 109 15 377 334 - - - - 147 227 333 - 97 - 7 27 96 - - 948 6 1 955 - - 29,006 39,054 188,624 130,043 4,544 5,254 5,254 1,095 6,349 955 6,194 5,240 5,240 4,529 14 - 376 172 430 9 535 221 165 551 123 74 2,678 8 - 87 - 2,765 - 2,765 - - 22 227 121 - - - 6 26 95 - - - - 497 - 497 - - 497 3,262 Impaired 4 Periodic Credit Loss Expenses (2) (1) (28) (15) (2) - 8 (2) 19 68 (8) 6 42 (1) - 39 (3) - - 39 (1) - 20 (11) (29) - 15 1 - 2 (2) - - (1) - (4) (5) (2) - (7) 32 Credit Losses Net Accounting Write-Offs Recognized during the Period - - 5 8 1 - 7 1 15 14 (19) (2) - 30 91 10 131 - - 131 - - - - (7) 1 - - - - (2) - - - - (8) (1) (9) - - (9) 122 Balance of Allowance for Credit Losses 18 - 280 127 138 4 321 13 56 134 86 64 8 1,249 172 381 2 1,802 - 1,804 1 - 61 3 74 75 1 7 9 25 29 - 23 13 321 - 14 335 1 - 336 2,140 Footnotes: (1) Balance Sheet and Off-Balance Sheet Credit Risk, including in respect of derivative instruments. Including: Debts, bonds, securities borrowed or purchased under resale agreements, assets in respect of derivative instruments, credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, and guarantees and liabilities on account of clients in an amount of NIS 130,043, 35,703, 387, 5,159, 59,302 million, respectively. (2) Credit to the Public, Credit to Governments, deposits with banks and other debts, excluding investments in bonds and securities borrowed or purchased under resale agreements. (3) Credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, excluding in respect of derivative instruments. (4) Including in respect of off-balance sheet credit instruments (stated in the balance sheet under \"Other liabilities\"). (5) Balance sheet and off-balance sheet credit risk, which is impaired, substandard or under special mention, including in respect of housing loans, in respect of which an allowance is made according to the extent of arrears, and housing loans in respect of which no allowance is made according to the extent of arrears, and are in arrears of 90 days or more. (6) Including acquisition groups in an amount of NIS 469 millions. (7) Including mortgage backed securities in the amount of NIS 5,164 million, issued by GNMA and in the amount of NIS 5,088 million, issued by FNMA and FHLMC. (8) Including mainly municipal bonds and bonds of states in the U.S. (9) Including credit facilities guaranteed by banks outside the Group in the amount of NIS 5,495 million. (10) Credit risk, the credit rating thereof at date of reporting matches the credit rating for the granting of new credit in accordance with the Bank's policy of the Bank. Total Credit Risk Debts and off-balance sheet Credit Risk (excluding Derivatives) March 31, 2015 - 1 2,899 2,777 1 1 - - 1 Israel Discount Bank Limited and its Subsidiaries SCHEDULE \"D\" - OVERALL CREDIT RISK IN RESPECT OF THE PUBLIC CLASSIFIED BY ECONOMIC SECTORS - CONSOLIDATED (CONTINUED) Excluding balances classified as assets and liabilities held for sale - see Note 18 Footnotes: (1) Balance Sheet and Off-Balance Sheet Credit Risk, including in respect of derivative instruments. Including: Debts, investments in bonds, securities borrowed or purchased under resale agreements, assets in respect of derivative instruments, and credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, of NIS 124,489, 37,163, 624, 3,575, 54,301 million, respectively. (2) Credit to the Public, Credit to Governments, deposits with banks and other debts, excluding investments in bonds and securities borrowed or purchased under resale agreements. (3) Credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, excluding in respect of derivative instruments. (4) Including in respect of off-balance sheet credit instruments (stated in the balance sheet under \"Other liabilities\"). (5) Balance sheet and off-balance sheet credit risk in respect of the public, which is impaired, substandard or under special mention, including in respect of housing loans, in respect of which a allowance is made according to the period in arrears, and housing loans in respect of which no allowance is made according to the period in arrears, and are in arrears of 90 days or more. (6) Includes problematic credit risk due to certain bonds issued by banking holding corporations, held by a subsidiary in an amount of NIS 138 million. (7) Including acquisition groups in an amount of NIS 741 millions. (8) Including mortgage backed securities in the amount of NIS 2,581 million, issued by GNMA and in the amount of NIS 5,736 million, issued by FNMA and FHLMC. (9) Including mainly municipal bonds and U.S. Government bonds. (10) Including credit facilities guaranteed by banks outside the Group in the amount of NIS 4,535 million. Lending Activity in Israel Agriculture Total Credit Risk Total Problematic March 31, 2014 Debts and off-balance sheet Credit Risk (excluding Derivatives) Credit Losses Total Of which: Debts Problematic Impaired Periodic Credit Loss Expenses Net Accounting Write-Offs Recognized during the Period Balance of Allowance for Credit Losses in NIS millions CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review Footnotes: (1) (2) (3) (4) (5) SCHEDULE \"D\" - OVERALL CREDIT RISK IN RESPECT OF THE PUBLIC CLASSIFIED BY ECONOMIC SECTORS - CONSOLIDATED (CONTINUED) Lending Activity in Israel Agriculture Mining & Quarrying Industry Construction and Real Estate - Construction Construction and Real Estate - Real Estate Activity Electricity and Water Commerce Hotels, Hotel Services and Food Transportation and Storage Communication and Computer Services Financial Services Other Business Services Public and Community Services Total Commercial Private Individuals - Housing Loans Private Individuals - Other Total Public Banks in Israel Israeli Government Total Lending Activity in Israel Lending Activity Outside of Israel Agriculture Mining & Quarrying Industry Construction and Real Estate - Construction Construction and Real Estate - Real Estate Activity Electricity and Water Commerce Hotels, Hotel Services and Food Transportation and Storage Communication and Computer Services Financial Services Of which: Federal agencies in the U.S. Other Business Services Public and Community Services Total Commercial Private Individuals - Housing Loans Private Individuals - Other Total Public Banks Outside of Israel Governments Outside of Israel Total Lending Activity Outside of Israel TOTAL Excluding balances classified as assets and liabilities held for sale - see Note 18 86,015 57,138 229,474 45,045 42,696 172,336 149,090 Total Credit Performance Rating Problematic 221,565 - 5,698 5,698 4,896 1,125 420 15,511 14,443 11,064 3,725 16,579 1,902 3,072 2,242 8,435 5,229 2,268 21,873 41,202 2,067 21,179 93 55 7,150 694 8,420 128 6,448 876 1,215 300 11,985 8,612 2,219 3,113 93 2,256 10,047 2,046 27 1 1,178 460 578 11 1,075 241 180 708 314 107 16 458 344 - - - - 91 264 318 - 27 - 15 89 129 - 13 - 946 6 1 953 122 30 1,084 421 14,249 13,908 10,468 3,682 15,436 1,547 2,858 1,529 8,114 5,032 2,236 80,564 21,281 40,443 142,288 2,067 21,179 165,534 93 55 7,059 429 7,988 128 6,424 876 1,200 209 11,821 8,612 2,204 3,112 41,598 87 2,253 43,938 10,047 2,046 56,031 1,105 6,803 4,879 3 Debts and off-balance sheet Credit Risk (excluding Derivatives) 946 6,626 27 1 1,177 459 570 11 1,075 240 174 707 313 107 17 458 344 - - - - 91 264 318 - 26 - 7 90 129 - 14 - 939 6 1 946 - - 5,680 Problematic Of which: Debts in NIS millions 884 319 9,884 5,608 9,310 2,092 13,381 1,594 2,382 1,490 5,666 3,474 1,610 57,694 20,308 20,350 98,352 604 5,680 4,878 23 29,202 115 4,422 644 6,508 93 9 4,142 1,123 415 15,185 (6)14,424 11,007 3,181 16,458 1,886 3,017 2,058 7,062 5,194 2,262 83,272 21,873 41,141 146,286 648 1,770 1,510 148,704 100,466 93 51 7,044 693 8,356 116 6,442 876 1,193 820 928 203 275 2,852 1,927 - 1,507 - 2,193 1,098 1,024 22,342 90 31,282 93 2,248 33,623 1,388 23,820 5,359 5,752 23 39,398 2,690 188,102 129,668 2,815 15 1 463 125 471 9 298 231 126 117 169 63 8 2,096 - 82 2,178 - - 2,178 - - - 264 152 - - - 7 87 128 - - - 638 - 1 639 - - 639 2,817 3 Total 3 Impaired Credit Losses Periodic Credit Loss Expenses (3) (6) 1 (56) 24 1 30 2 29 (20) (7) 5 (3) (3) 19 102 118 1 - 119 (2) (1) (11) 54 (12) (1) (106) (3) (3) 133 (5) - (15) 5 33 - 11 44 1 - 45 164 - Net accounting write-off for the year (1) (4) 97 (38) 30 1 12 3 10 (18) 1 11 - 104 11 49 164 - - 164 - - - 94 (31) - (110) (1) 29 123 16 - (3) - 117 - 7 124 - - 124 288 - Balance of allowance for credit loss 20 1 311 143 141 6 317 16 52 36 124 60 9 1,236 262 394 1,892 2 - 1,894 1 - 44 11 97 1 57 5 10 23 29 - 19 12 309 1 17 327 3 - 330 2,224 7 Balance Sheet and Off-Balance Sheet Credit Risk, including in respect of derivative instruments. Including: Debts, bonds, securities borrowed or purchased under resale agreements, assets in respect of derivative instruments, credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, and guarantees and liabilities on account of clients in an amount of NIS 129,668, 35,661, 466, 4,596, 59,083 million, respectively. Credit to the Public, Credit to Governments, deposits with banks and other debts, excluding investments in bonds and securities borrowed or purchased under resale agreements. Credit risk in respect of off-balance sheet financial instruments, as calculated for single borrower liability limitation, excluding in respect of derivative instruments. Including in respect of off-balance sheet credit instruments (stated in the balance sheet under \"Other liabilities\"). Balance sheet and off-balance sheet credit risk, which is impaired, substandard or under special mention, including in respect of housing loans, in respect of which an allowance is made according to the extent of arrears, and housing loans in respect of which no allowance is made according to the extent of arrears, and are in arrears of 90 days or more. Including acquisition groups in an amount of NIS 480 millions. Including mortgage backed securities in the amount of NIS 3,976 million, issued by GNMA and in the amount of NIS 4,636 million, issued by FNMA and FHLMC. Including mainly municipal bonds and bonds of states in the U.S. Including credit facilities guaranteed by banks outside the Group in the amount of NIS 4,798 million. December 31, 2014 Total Credit Risk (6) (7) (8) (9) (10) Credit risk, the credit rating thereof at date of reporting matches the credit rating for the granting of new credit in accordance with the Bank's policy of the Bank. (11) Reclassified - improving classification in different sectors. Israel Discount Bank Limited and its Subsidiaries I, Lilach Asher-Topilsky, certify that: 1. I have reviewed the quarterly report of Israel Discount Bank Ltd. (hereinafter: \"the Bank\") as of March 31, 2015 (hereinafter: \"the Report\"). 2. Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Report. 3. Based on my knowledge, the interim financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations (including the comprehensive income), changes in equity and cash flows of the Bank as of, and for, the periods presented in this report. 4. Other officers of the Bank providing this certification and I are responsible for establishing and maintaining disclosure controls and procedures and to the internal control of the Bank over financial reporting (as defined in the public reporting instructions regarding \"Directors' Report\"), and have: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Bank, including its consolidated subsidiaries, is made known to us by others within the Bank and those entities, particularly during the period of preparing this report; We established such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accepted accounting principles and directives and guidelines of the Supervisor of Banks; Evaluated the effectiveness of the Bank's disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the Report based on such evaluation; Disclosed in the Report any change in the Bank's internal control over financial reporting that occurred during this quarter that has materially affected, or is reasonably likely to materially affect, the Bank's internal control over financial reporting; and 5. The other officers of the Bank providing this certification and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Bank's Auditors, to the Board of Directors and to the Audit Committee of the Board of Directors: All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Bank's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the Bank's internal control over financial reporting. (a) (b) (c) (d) (a) (b) Nothing in that stated above derogates my responsibility or the responsibility of any other person under any law. CERTIFICATION May 20, 2015 Ms. Lilach Asher-Topilsky President & Chief Executive Officer CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Management Review CERTIFICATION I, Joseph Beressi, certify that: 1. I have reviewed the quarterly report of Israel Discount Bank Ltd. (hereinafter: \"the Bank\") as of March 31, 2015 (hereinafter: \"the Report\"). 2. Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Report. 3. Based on my knowledge, the interim financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations (including the comprehensive income), changes in equity and cash flows of the Bank as of, and for, the periods presented in this report. 4. Other officers of the Bank providing this certification and I are responsible for establishing and maintaining disclosure controls and procedures and to the internal control of the Bank over financial reporting (as defined in the public reporting instructions regarding \"Directors' Report\"), and have: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Bank, including its consolidated subsidiaries, is made known to us by others within the Bank and those entities, particularly during the period of preparing this report; We established such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accepted accounting principles and directives and guidelines of the Supervisor of Banks; Evaluated the effectiveness of the Bank's disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the Report based on such evaluation; Disclosed in the Report any change in the Bank's internal control over financial reporting that occurred during this quarter that has materially affected, or is reasonably likely to materially affect, the Bank's internal control over financial reporting; and 5. The other officers of the Bank providing this certification and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Bank's Auditors, to the Board of Directors and to the Audit Committee of the Board of Directors: All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Bank's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the Bank's internal control over financial reporting. (a) (b) (c) (d) (a) (b) Nothing in that stated above derogates my responsibility or the responsibility of any other person under any law. May 20, 2015 Joseph Beressi Senior Executive Vice President Chief Accountant REVIEW REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF ISRAEL DISCOUNT BANK LTD. We have reviewed the accompanying financial information of Israel Discount Bank Ltd. and its subsidiaries (hereinafter: \"the Bank\") comprising of the condensed consolidated interim balance sheet as at March 31, 2015 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the three months period then ended. The Board of Directors and management are responsible for the preparation and presentation of the financial data for this interim period in accordance with Israeli GAAP regarding financial reporting for this interim period and in accordance with the guidelines and directives of the Supervisor of Banks. Our responsibility is to express a conclusion on the financial information for these interim periods based on our review. INTRODUCTION We have conducted our review in accordance with Standard on Review Engagements 1, \"Review of Interim Financial Information Performed by the Independent Auditor of the Entity\" of the Institute of Certified Public Accountants in Israel, and a review standard applied in the review of banking institutions according to the guidelines and directives of the Supervisor of Banks. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. SCOPE OF REVIEW Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial information was not prepared, in all material respects, in accordance with Israeli GAAP regarding financial reporting for interim periods and in accordance with the instructions and directives of the Supervisor of Banks. CONCLUSION Without qualifying our above conclusion, we call attention to the Note 8 B items 4.9 and 5 concerning motion to approve certain lawsuits as class action suits and with regard to other claims against the Bank and investee companies and to that stated in Note 16 b (2) with respect to the notice given by the State Attorney Office, according to which the State Attorney is considering the filing of an indictment against ICC. According to the said Note, at this stage, the Managements of ICC and the Bank are unable to assess the results of the proceedings that would be instituted, if at all, and their consequences on ICC. EMPHASIS OF A MATTER Somekh Chaikin Certified Public Accountants (Isr. ) May 20, 2015 Somekh Chaikin, an Israeli partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (\"KPMG International\"), a Swiss entity Ziv Haft Certified Public Accountants (Isr. ) Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 CONDENSED CONSOLIDATED BALANCE SHEET Footnotes: (1) Of which NIS 176 million, NIS 177 million and NIS 170 million, as of March 31, 2015, March 31, 2014 and December 31, 2014, respectively, allowance for credit losses in respect of off-balance sheet credit instruments. (2) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E (1). The notes to the condensed financial statements form an integral part thereof. Joseph Beressi Senior Executive Vice President, Chief Accountant Ms. Lilach Asher-Topilsky President & Chief Executive Officer Dr. Yossi Bachar Chairman of the Board of Directors May 20, 2015 Unaudited Audited CONDENSED CONSOLIDATED STATEMENT OF INCOME Israel Discount Bank Limited and its Subsidiaries Consolidated Unaudited Notes For the three months ended March 31, 2015 Audited For the year ended December 31, 2014 2014 in NIS millions Footnotes: (1) For details regarding the provision for impairment in value of the investment in FIBI, see Note 6 D (3) to the financial statements of 2014 (p. 417). (2) For details as to the elimination of the Bank's share in the reserves of FIBI, previously recognized in other comprehensive income, see Note 6 D (4) to the financial statements of 2014 (p. 418). (3) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 (E) 1. The notes to the condensed financial statements form an integral part thereof. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME() Footnotes: (1) See Note 14. (2) Reflects mostly adjustments in respect of actuarial assessments as of the end of the year of defined benefits pension plans and amortization of amounts recorded in the past in other comprehensive income. (3) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E (1). The notes to the condensed financial statements are an integral part thereof. 2014 Unaudited For the three months ended March 31, 2015 Audited For the year ended December 31, 2014 in NIS millions 2013 (d) The Bank's updated accounting policy (c) Preparations by the Bank. The Bank is preparing for the implementation of the new policy. The following principal subjects are included in the said framework: 1. Definition of a process for the determination of the discount rate on the basis of Israeli CPI linked government bonds, in accordance with the average period to maturity of the estimated indebtedness, with the addition of an average spread of U.S. corporate bonds having a rating of AA and above. The process includes aspects of control of the appropriateness of choosing the bonds, validation of the resultant discount rate and examination of the reasonableness of changes in the discount rate. 2. Determination of a mechanism for defining the forecasted return on assets of the plan. The parameters used in determining the forecasted return are mostly the actual and past composition of the plan's assets, possible changes in the composition of the assets in accordance with the investment policy, as defined, past yields of the fund, the yield of the assets and its weight in the total portfolio, after deduction of operating expenses and commissions. The mechanism also includes examination of the need for the updating of the forecasted return during the reported period. 3. The change in the method of measurement of the Bank's liability in respect of benefits to retirees in relation to the population of active employees, and the transition to computing the liability on the date on which it becomes certain. This, instead of a computation assuming retirement rates prior to the age of 67 and a pro-rata charge in accordance therewith. 4. Definition of the work process for the treatment of actuarial profits and losses, differentiating in the framework thereof between: - The actuarial loss arising from the change in the discount rate as of January 1, 2013; Actuarial profits that would arise from changes in the discount rate subsequent to the date of initial implementation; - - Actuarial losses arising from changes in the discount rate and from other components subsequent to the date of initial - Actuarial profits/losses arising from the difference between the forecasted return on the plan's assets and the return actually The process includes reference to reasonableness of the resultant actuarial profit/loss, the accounting records, the mechanism for the amortization of the profits/losses and the determination of the amortization period. Post retirement benefits - defined deposits plans The Bank recognizes amounts relating to pension and severance plans and other post retirement plans on the basis of computations that include actuarial and other assumptions, including: discount rates, mortality rates, early retirement rates, forecasted long-term return rates on assets of the plan, remuneration increases and employee turnover; The Bank reviews its assumptions on a periodic basis and updates these assumptions where required. As a general rule, the actuarial estimates are made once a year, unless material changes occur in the actuarial assumptions in the interim period, which materially impact the actuarial liabilities or the assets of the plan; Changes in assumptions are in general recognized, subject to the instructions stated above, firstly in accumulated other comprehensive income, and are amortized to the statement of income in following periods; The liability is accumulated over the relevant period determined in accordance with the rules detailed in item 715 of the codification; The Bank implements the guidelines issued by the Supervisor of Banks with respect to internal control over the financial reporting process in the matter of employee rights, including with respect to examining the \"liability in substance\" of the Bank to grant its employees benefits comprising increased severance pay and/or early pension. A defined deposit plan is a plan according to which the Bank deposits fixed amounts with a third party, thereby avoiding any legal or inferred liability for additional payments. The Bank's commitment to deposit in the defined deposit plan, are recognized as an expense in the statement of income in the periods during which the employees have provided the relevant services. - - - - - - implementation; earned. - Post retirement benefits - pension, severance pay and other benefits - defined benefits plans - 1. ACCOUNTING POLICIES (CONTINUED) - Other long-term benefits to active employees: long-service (jubilee) awards Israel Discount Bank Limited and its Subsidiaries (e) The accounting policy applied in the past - The liability accrues over the period entitling to the benefit; For the purpose of computing the liability, the rates of discount and actuarial assumptions are taken into consideration; - - The whole cost component of the benefit for the period, including actuarial profits and losses, are recognized immediately in - The liability in respect of vacation pay is measured on a current basis, without the use of discount rates and actuarial assumptions; The Bank does not accrue a liability for sick-leave that may materialize during the employee's current service. - Retirement plan 2014. Within the Bank's strategic plan for the years 2015-2019, approved in August 2014, employees have been offered early retirement plan which, in view of its characteristics and circumstances, comprised a structural change. The costs that have been involved in its implementation were handled accordingly. In accordance with instructions of the Supervisor of Banks, the rate of discount used in the actuarial computations was 4%; Actuarial profits and losses were immediately recognized in the statement of income; In accordance with guidelines of the Supervisor of Banks regarding internal control over financial reporting in the matter of employee rights, the liability for severance pay had been presented either in the amount of the liability as computed on an actuarial basis, taking into account the additional cost that might arise in respect of these benefits, as stated, or in the amount of the liability computed as a multiplication of the monthly salary of the employee by the number of years of service, in accordance with Opinion No. 20 of the Institute of Certified Public Accountants in Israel, which ever was the higher amount; - Additional information regarding the accounting policy to be applied by the Bank in the matter of employee rights is presented in It is required to include in the report for the first quarter of 2015, extensive disclosure, in the format of the annual report, in addition to the disclosure required in a regular quarterly report, in respect of restated prior periods' data, mainly: - Income statement amounts in respect of the years 2013 and 2014; Outstanding balance sheet amounts and assumptions used as of December 31, 2013 and December 31, 2014. Notwithstanding the above, a bank is permitted not to include the required disclosure regarding the assets of a plan in accordance with the Reporting to the Public Directives as of December 31, 2013, and the required disclosure as to the \"movement in fair value of assets of the plan, which are measured on the basis of significant unobservable inputs (level 3)\" for the years 2013 and 2014. Furthermore, for the purpose of presentation of the comparative data for the years 2013 and 2014, a bank is permitted, for practical reasons, to use the actual rates of return in those years instead of determining forecasted rates of return. - the statement of income. Absence from work entitling compensation - vacation and sick leave - - - - Notes 1 and 16 to the financial statements as of December 31, 2014. (f) Disclosure requirements in interim financial statements in the year 2015 - Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 1. ACCOUNTING POLICIES (CONTINUED) (g) Effect of the initial Implementation of the new rules as of March 31, 2014 and December 31, 2014 Following are data regarding the effect of implementation of the new directive as of March 31, 2014 and December 31, 2014: December 31,2014 In accordance with the previous reporting directives (audited) Effect of implementation of the new rules In accordance with the new rules regarding employee rights In accordance with the previous reporting directives Unaudited March 31,2014 Effect of implementation of the new rules In accordance with the new rules regarding employee rights In accordance with the prior reporting instructions Unaudited For the three months ended March 31, 2014 The effect of implementation of the new rules in NIS millions In accordance with the new rules in the matter of employee rights 1. ACCOUNTING POLICIES (CONTINUED) Israel Discount Bank Limited and its Subsidiaries In accordance with the prior reporting instructions (Audited) For the year ended December 31, 2014 Effect of the implementation of the instruction regarding the measurement of interest income in NIS millions In accordance with the instruction regarding the measurement of interest income 2. Reporting according to U.S. generally accepted accounting principles in the matter of Distinguishing Liabilities from Equity. On October 6, 2014 the Supervisor of Banks published an instruction in the matter of reporting according to U.S. generally accepted accounting principles regarding distinguishing liabilities from equity. This, in continuation to the policy of the Supervisor of Banks adopting, in cases of material issues, the financial reporting layout applying to banks in the United States. According to the instruction, it is required to apply the U.S. generally accepted accounting principles in the matter of classification of financial instruments as equity or liabilities, including hybrid instruments. For this purpose, it would be required to apply, among other things the presentation, measurement and disclosure principles determined within the framework of the following topics in the codification: - - - In addition, in applying the differentiation between liabilities and capital, it is required to refer to the reporting to the public instructions as regards embedded instruments. Concurrently, the Supervisor of Banks published an FQA file in this matter, within the framework of which, it has been clarified that existing debt instruments having a conditional conversion component into shares (which under the Basel II instructions is included in Common equity tier I, and according to the transitional instructions agrees with the definition of a hybrid capital instrument, or which is included as a regulatory capital component under the Basel III Instructions) are to be classified as a liability measured according to amortized cost, without separating the embedded derivative. The Bank implements the said rules as from January 1, 2015. The implementation of the instruction did not have material effect. Statement of Income Other income Topic 480 regarding \"Distinguishing Liabilities From Equity\"; Topic 470-20 regarding \"Debt with Conversion and Other Options\"; and Topic 505-30 regarding \"Treasury stock\". Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 1. ACCOUNTING POLICIES (CONTINUED) F. NEW ACCOUNTING STANDARDS AND NEW DIRECTIVES OF THE SUPERVISOR OF BANKS IN THE PERIOD PRIOR TO THEIR - Full disclosure according to the new rules is required as from the financial report for the first quarter of 2016, excluding disclosure of the 1. Regulatory operating segments. An amendment to the reporting to the public instructions in the matter of regulatory operating segments was published on November 6, 2014. The circular is intended to allow a banking corporation to report operating segment data in accordance with a uniform and comparable format, as determined by the Supervisor of Banks. The main changes are: - Additional requirement for disclosure of \"regulatory operating segments\" was added, in accordance with the definition of the Supervisor of Banks. The format of disclosure regarding regulatory operating segments refers to the following segments: private banking, households, one-man and small businesses, medium businesses, large businesses, institutional bodies and financial management; New definitions were added clarifying which customers are to be included in each segment; A new requirement was added for a separate disclosure of the \"financial management\" segment. - - In addition, a FAQ file in the matter was distributed November 6, 2014. The circular determines that the disclosure in the matter of \"operating segments according to Management's approach\" shall be provided in accordance with Generally Accepted Accounting Principles at U.S. banks in the matter of operating segments (included in ASC 280), to the extent that a difference exists between Management's approach and operating segments according to guidelines of the Supervisor of Banks. The new rules apply as from the 2015 financial statements and thereafter, as follows: - The disclosure requirement in the 2015 statements shall apply to balance sheet data regarding supervisory operating segments, as defined in the new instructions. According to the new instructions, it is permitted not to provide disclosure of balance sheet comparative data for the supervisory operating segments, but to include comparative data in accordance with the Reporting to the Public Directives in effect prior to the letter taking effect. Furthermore, no disclosure is required for the financial management segment; financial management segment. The comparative data are to be adjusted retroactively. It is permitted to present in the financial statements for 2016 comparative data for one year only in respect of the Note regarding the supervisory operating segments. For the purpose of presentation of the comparative data it would be possible to rely on the classification of customers to supervisory operating segments as of January 1, 2016; Implementation in full of the guidelines of the circular is required as from the financial statements for the first quarter of 2017. - The Bank is of the opinion that the new instructions are not expected to have a material effect, save for the manner of presentation and disclosure. 2. Recognition of income from contracts with customers. A circular was published on January 14, 2015, in the matter of adoption of the update for accounting principles regarding income from contracts with customers. The circular updates the Reporting to the Public Directives in view of the publication of ASU 2014-09, which adopts in U.S. GAAP a new standard in the matter of income recognition. The Standard states that income shall be recognized by the implementation of a five stage model, which, among other things, include rules for the identification of the contract with the customer and for the determination of the transaction price, rules defining how the different components of the contract should be separated and the manner by which the total transaction price should be attributed to each separate and identified component. Furthermore, in accordance with the provisions of the Standard, income is to be recognized in respect of each identified component separately, and this in accordance with rules stated by the Standard with respect to the timing of recognition of the income - at a specific date or over a period of time. The amendments in the Directives will apply as from January 1, 2017. In accordance with the transitional instructions of the circular, upon initial implementation it would be possible to elect the retroactive application alternative by way of a restatement of the comparative data, or the alternative of retroactive application by way of recording the cumulative effect of the initial implementation of the Standard, while attributing the cumulative effect, to be recognized at date of the initial implementation, to the equity. IMPLEMENTATION 1. ACCOUNTING POLICIES (CONTINUED) Israel Discount Bank Limited and its Subsidiaries The new standard does not apply, among other things, to financial instruments and to contractual rights or liabilities under Chapter 310 of the Codification. The Bank has not yet examined the effect of the standard on its financial statements, and has not yet elected the alternative manner of implementation of the transitional instructions. 3. Guidelines in the matter of capitalization of in-house software development costs. The Bank implements International Accounting Standard No. 38 \"Intangible assets\" and the guidelines determined by \"SOP 98-1 - Accounting for the cost of Computer Software Developed or Obtained for Internal Use\". Due to the accounting complexity involved in the process of capitalizing in-house software development costs, and in view of the materiality of the amounts of software costs capitalized, the Supervisor of Banks has determined guidelines for the Bank in the matter of capitalization of software costs, as follows: - A minimum materiality level of between NIS 450 thousand and NIS 600 thousand, shall be determined for each software development project, in respect of which software development costs are capitalized. Any software development project, the total cost of which is lower than the determined materiality level, shall be recognized as an expense in the statement of income; The period of amortization of software development costs shall not exceed five years; - - Capitalization coefficients of lower that 1, shall be determined for hours worked, taking into consideration the potential for deviation in - The change in the accounting policy in accordance with the said guidelines shall be implemented starting with the interim financial statements as of June 30, 2015, by way of retroactive implementation, with a restatement of the comparative data. It is noted, that to the Bank's best knowledge, similar guidelines have been determined for other banking corporations in Israel. According to a preliminary assessment of the Bank, implementation of the requirements included in the draft, would reduce the equity by an amount of NIS 100 million after tax. It is noted that as from January 1, 2015, the Bank implements the contents of the draft with respect to current projects - as regards the materiality threshold with respect to capitalization coefficients and with respect to the level of employees whose costs are capitalized. computing the hours worked and the lack of economic efficiency; Limiting the level of employees, the costs of whom are to be capitalized. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 A. Composition (Continued) Unaudited March 31,2014 Book value Amortized cost Unrecognized gains from adjustment to fair value Unrecognized losses from adjustment to fair value In NIS millions Fair value (1) Held-to-maturity bonds Bonds and loans: Unaudited March 31,2014 Accumulated other comprehensive income Profits Losses Fair value Book value Amortized cost (in shares cost) In NIS millions (2) Available for sale securities 2. SECURITIES - CONSOLIDATED (CONTINUED) A. Composition (Continued) Israel Discount Bank Limited and its Subsidiaries Unaudited March 31,2014 Book value Amortized cost (in shares cost) Unrealized gains from adjustment to fair value Unrealized losses from adjustment to fair value In NIS millions Fair value Footnotes: (1) Fair value data based on market prices, does not necessarily reflect the price that may be obtained on the sale of securities in large volumes. (2) Including securities sold by overseas consolidated subsidiary under buy-back terms from held to maturity portfolio at a reduced cost of NIS832 million (approx. US$ 239 million) and from the available for sale portfolio with a market value of NIS 3,570 million (approx. US$ 1,024 million). (3) Included in \"Accumulated other comprehensive income\". (4) Including shares, the fair value of which is not readily available, stated at cost of NIS 755 million. (5) Recorded in the statement of income. (6) Including U.S. Government agencies and municipal bonds and bonds of states in the U.S.A, in amount of NIS 1,949 million (book value). (7) Including U.S. Government agencies, in amount of NIS 57 million (book value). (8) Excluding balances classified as assets and liabilities held for sale - see Note 18. *Loss amount lower then NIS 1 million. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) A. Composition (Continued) Book value Amortized cost Audited December 31, 2014 Unrecognized gains from adjustment to fair value In NIS millions Unrecognized losses from adjustment to fair value Fair value (1) Held-to-maturity bonds Bonds and loans: Audited December 31, 2014 Accumulated other comprehensive income Profits Losses Fair value Book value Amortized cost (in shares cost) In NIS millions 2. SECURITIES - CONSOLIDATED (CONTINUED) A. Composition (Continued) Israel Discount Bank Limited and its Subsidiaries Book value Amortized cost (in shares cost) Audited December 31, 2014 Unrealized gains from adjustment to fair value In NIS millions Unrealized losses from adjustment to fair value Fair value Footnotes:: (1) Fair value data based on market prices, does not necessarily reflect the price that may be obtained on the sale of securities in large volumes. (2) Including securities sold by overseas consolidated subsidiary under buy-back terms from held to maturity portfolio at a reduced cost of NIS 848 million (approx. US$ 218 million) and from the available for sale portfolio with a market value of NIS 3,810 million (approx. US$ 980 million). (3) Included in \"Accumulated other comprehensive income\". (4) Including shares, the fair value of which is not readily available, stated at cost of NIS 765 million. (5) Recorded in the statement of income. (6) Including U.S. Government agencies and municipal bonds and bonds of states in the U.S.A, in an amount of NIS 2,026 million (book value). (7) Including U.S. Government agencies, in an amount of NIS 67 million (book value). (8) Excluding balances classified as assets and liabilities held for sale - see Note 18. (9) Including investment in Tracking Funds in the amount of NIS 16 million. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) B. Amortized cost and unrealized losses, according to the length of the period and rate of impairment of held-to-maturity bonds which are in an unrealized loss position - consolidated Unaudited March 31,2014 Less than 12 months More than 12 months Unrecognized losses from adjustment to fair value Unrecognized losses from adjustment to fair value Audited December 31, 2014 Less than 12 months More than 12 months Unrecognized losses from adjustment to fair value Unrecognized losses from adjustment to fair value Unaudited March 31,2015 Less than 12 months Unrecognized losses from adjustment to fair value More than 12 months Unrecognized losses from adjustment to fair value 2. SECURITIES - CONSOLIDATED (CONTINUED) Israel Discount Bank Limited and its Subsidiaries C. Fair value and unrealized losses, according to the length of the period and rate of impairment of available-for-sale securities which are in an unrealized loss positionconsolidated Unaudited March 31,2014 Less than 12 months More than 12 months Unrealized losses Unrealized losses Unaudited March 31,2015 Less than 12 months More than 12 months Unrealized losses Unrealized losses Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) C. Fair value and unrealized losses, according to the length of the period and rate of impairment of available-for-sale securities which are in an unrealized loss positionconsolidated (Continued) D. The securities portfolio, as of March 31, 2015, includes investments in asset backed securities, primarily investment in mortgage - backed securities (MBS), which are held mainly by a consolidated subsidiary abroad. Details regarding the terms \"Mortgage-backed Securities - MBS\", \"Mortgage Pass - Through\" and \"Collateralized Mortgage Obligation - CMO\" were brought in Note 3 to the financial statements as of December 31, 2014. E. Most of the unrealized losses at March 31, 2015 are attributed to certain factors, including changes in market interest rate subsequent to acquisition, an increase in margins occurring in the credit market concerning similar types of securities, the impact of inactive markets and changes in the rating of securities. For debt securities, there are no securities past due or securities for which the Bank and/or it's relevant consolidated companies estimates that it is not probable that they will be able to collect all the amounts owed to them, pursuant to the investment contracts. Since the Bank and the relevant consolidated subsidiaries have the ability and intent to hold on to securities with unrealized losses until a market price recovery (which for debt securities, might not be until maturity), the Bank and the relevant consolidated subsidiaries do not view the impairment in value of these investments to be other than temporarily impaired at March 31, 2015. F. The securities portfolio of the Discount Group as at December 31, 2014, included a direct investment in bonds of the Federal Home Loan Bank (FHLB), Fannie Mae and Freddie Mac (hereinafter: \"the Federal Agencies\"), which were held by IDB New York, in an amount of US$25 million (NIS 97 million). The said bonds were redeemed in the course of the first quarter of 2015. G. Fair value presentation. The balances of securities as of March 31, 2015, March 31, 2014 and December 31, 2014, include securities amounting to *Loss amount lower then NIS 1 million. Audited December 31, 2014 Less than 12 months More than 12 months Unrealized losses Unrealized losses NIS 29,618 million, NIS 31,751 million and NIS 29,597 million, respectively, that are presented at fair value. 2. SECURITIES - CONSOLIDATED (CONTINUED) H. Additional details (consolidated) regarding mortgage and asset backed securities Israel Discount Bank Limited and its Subsidiaries Unaudited March 31,2015 Amortized cost Unrealized gains from adjustment to fair value Unrealized losses from adjustment to fair In NIS millions value Fair value *Loss amount lower then NIS 1 million. Footnote: (1) For available for sale securities-accumulated other comprehensive income. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) H. Additional details (consolidated) regarding mortgage and asset backed securities (continued) 1. Mortgage-backed securities (MBS): Available-for-sale securities Amortized cost Unaudited March 31,2014 Unrecognized gains from adjustment to fair value Unrecognized losses from adjustment to In NIS millions fair value Fair value *Loss amount lower then NIS 1 million. Footnote: (1) For available for sale securities-accumulated other comprehensive income. 2. SECURITIES - CONSOLIDATED (CONTINUED) H. Additional details (consolidated) regarding mortgage and asset backed securities (continued) Israel Discount Bank Limited and its Subsidiaries Audited December 31, 2014 Amortized cost Unrealized gains from adjustment to fair value Unrealized losses from adjustment to fair In NIS millions value Fair value *Loss amount lower then NIS 1 million. Footnote: (1) For available for sale securities-accumulated other comprehensive income. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) Additional details regarding mortgage and asset backed securities in unrealized loss position: I. Additional details (consolidated) regarding mortgage and asset backed securities Fair value Unaudited March 31, 2015 Less than 12 months 12 months and over Unrealized losses In NIS millions Fair value Unrealized losses *Loss amount lower then NIS 1 million. Israel Discount Bank Limited and its Subsidiaries 2. SECURITIES - CONSOLIDATED (CONTINUED) Additional details regarding mortgage and asset backed securities in unrealized loss position (continued): I. Additional details (Consolidated) regarding mortgage and asset backed securities (continued) Fair value Unaudited March 31, 2014 Less than 12 months 12 months and over Unrealized losses In NIS millions Fair value Unrealized losses *Loss amount lower then NIS 1 million. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. SECURITIES - CONSOLIDATED (CONTINUED) Additional details regarding mortgage and asset backed securities in unrealized loss position (continued): I. Additional details (Consolidated) regarding mortgage and asset backed securities (continued) Fair value Audited December 31, 2014 Less than 12 months 12 months and over Unrealized losses In NIS millions Fair value Unrealized losses *Loss amount lower then NIS 1 million. J. Information regarding impaired bonds - consolidated Recorded amount of non accruing interest income impaired bonds Unaudited 24 March 31, 2015 March 31, 2014 In NIS millions 22 Audited December 31, 2014 20 Israel Discount Bank Limited and its Subsidiaries 1. Change in the balance of the allowance for credit losses - Consolidated A. Debts and off-balance sheet credit instruments 2. Additional information regarding the mode of computing the allowance for credit losses in respect of debts and regarding the debts for which the allowance is computed - consolidated A. Debts and off-balance sheet credit instruments (continued) Includes the balance of allowance in excess of that required by the extent of arrears method, computed on a specific basis in amount of NIS 26 million, computed on a group basis in an amount of NIS 73 million. Including credit examined on a specific basis and found un-impaired and the allowance in respect of which was calculated on a group basis. Total Audited Credit to the public Private Commercial Individuals - Housing Loans Private Individuals - Other Loans Total Banks and Governments In NIS millions Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 B. Debts 1. Credit quality and arrears - consolidated 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Lending Activity in Israel Public - Commercial Unaudited March 31, 2015 Problematic Non- problematic Unimpaired Impaired Total Unimpaired debts additional information In Arrears of 90 Days or More In Arrears of 30 to 89 Days In NIS millions For footnotes see page 153. Israel Discount Bank Limited and its Subsidiaries B. Debts (continued) 1. Credit quality and arrears - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Lending Activity in Israel Public - Commercial Unaudited March 31, 2014 Problematic Non- problematic Unimpaired Impaired Total Unimpaired debts additional information In Arrears of 90 Days or More In Arrears of 30 to 89 Days In NIS millions For footnotes see next page. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 B. Debts (continued) 1. Credit quality and arrears - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Footnotes: (1) Impaired, substandard or under special mention credit risk, including housing loans for which an allowance according to the extent of arrears exists and including housing loans in arrears for ninety days or over for which an allowance according to the extent of arrears does not exist. (2) As a general rule, interest income is not accrued in respect of impaired debts. For information regarding impaired debt restructured under problematic debt restructuring, see B.2. c. below. (3) Classified as unimpaired problematic debts. Accruing interest income. (4) Debts in arrears for between 30 and 89 days which accrue interest income, in amount of NIS 98 millions (March 31, 2014 - NIS 106 million, December 31, 2014 - NIS 119 million) are classified as unimpaired problematic debts. (5) Including housing loans in amount of NIS 10 million (March 31, 2014 - NIS 6 million, December 31, 2014 - NIS 10 million) with an allowance according to the extent of arrears, for which an arrangement was made for the repayment of overdue amounts, which included a change in the repayment schedule for the balance of the loan not yet due. Audited December 31, 2014 Problematic Non- problematic Unimpaired Impaired Total Unimpaired debts additional information In Arrears of 90 Days or More In Arrears of 30 to 89 Days In NIS millions Israel Discount Bank Limited and its Subsidiaries B. Debts (continued) 2. Additional information regarding impaired debts - consolidated A. Impaired debts and specific allowance 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Balance of impaired debts in respect of which specific allowance exist Balance of specific allowance Balance of impaired debts for which specific allowance do not exist Total balance of Impaired Debts Contractual principal amount of impaired debts Unaudited March 31, 2015 In NIS millions Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. Additional information regarding impaired debts - consolidated (continued) A. Impaired debts and specific allowance (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Public - Commercial Balance of impaired debts in respect of which specific allowance exist Balance of specific allowance Balance of impaired debts for which specific allowance do not exist Total balance of Impaired Debts Contractual principal amount of impaired debts Unaudited March 31, 2014 In NIS millions Israel Discount Bank Limited and its Subsidiaries 2. Additional information regarding impaired debts - consolidated (continued) A. Impaired debts and specific allowance (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Debts under troubled debt restructurings Footnotes: (1) Recorded amount. (2) Specific allowance for credit losses. (3) The contractual balance of the principal amount includes accrued unpaid interest at date of the initial implementation of the instruction in respect of impaired debts, not yet written off or collected. (4) Reclassified due to changes in the data of a subsidiary company. Lending Activity in Israel Public - Commercial Audited December 31, 2014 Balance of impaired debts in respect of which specific allowance exist Balance of specific allowance Balance of impaired debts for which specific allowance do not exist of Impaired Debts Total balance Contractual principal amount of impaired debts In NIS millions Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 B. Debts (continued) B. Average balance and interest income 2. Additional information regarding impaired debts - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Lending Activity in Israel Public - Commercial Recorded Interest Income Unaudited Three months ended March 31, 2015 Average balance of Impaired Debts In NIS millions Of which: recorded on cash basis For footnotes see next page. Israel Discount Bank Limited and its Subsidiaries 2. Additional information regarding impaired debts - consolidated (continued) B. Average balance and interest income (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Footnotes: (1) Average recorded amount of Impaired debts during the reported period. (2) Interest income recognized in the reported period, in respect of the average balance of impaired debts, during the time period in which these debts had been classified as impaired. (3) Total interest income that would have been recognized had such credit accrued interest according to its original terms is in amount of NIS 30 million and NIS 48 million for the three months ended March 31, 2015 and March 31, 2014, respectively. (4) Reclassified due to changes in the data of a subsidiary company. Recorded Interest Income Unaudited Three months ended March 31, 2014 Average balance of Impaired Debts In NIS millions Of which: recorded on cash basis Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Not accruing interest income Accruing debts ,in arrears for 90 days or more Unaudited March 31, 2015 Recorded amount Accruing debts , in Arrears for 30 to 89 Days In NIS millions Accruing debts not in arrears Total Footnotes: (1) Accruing interest income. (2) Included in impaired debts. Israel Discount Bank Limited and its Subsidiaries 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Public - Commercial Not accruing interest income Accruing debts ,in arrears for 90 days or more Unaudited March 31, 2014 Recorded amount Accruing debts , in Arrears for 30 to 89 Days In NIS millions Accruing debts not in arrears Total Footnotes: (1) Accruing interest income. (2) Included in impaired debts. (3) Reclassified due to changes in the data of a subsidiary company. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Not accruing interest income Accruing debts ,in arrears for 90 days or more Audited December 31, 2014 Recorded amount Accruing debts , in Arrears for 30 to 89 Days In NIS millions Accruing debts not in arrears Total Footnotes: (1) Accruing interest income. (2) Included in impaired debts. Israel Discount Bank Limited and its Subsidiaries 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Public - Commercial amount before restructuring Unaudited Three months ended March 31, 2015 Debt restructuring performed Recorded Number of contracts In NIS millions Recorded amount after restructuring Footnote: (1) An amount lower than NIS 1 million. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Number of contracts Unaudited Three months ended March 31, 2014 Debt restructuring performed Recorded amount before restructuring In NIS millions Recorded amount after restructuring Footnote: (1) Reclassified due to changes in the data of a subsidiary company. Israel Discount Bank Limited and its Subsidiaries 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) Lending Activity in Israel Public - Commercial Construction and Real Estate - Construction Construction and Real Estate - Real Estate Activity Financial Services Commercial - Other Total Commercial Private Individuals - Other Total Public - Activity in Israel Banks in Israel Government of Israel Total Activity in Israel Lending Activity Outside of Israel Public - Commercial Construction and Real Estate Commercial - Other Total Commercial Private Individuals Total Public - Activity Outside of Israel Total Activity Outside of Israel Total For footnotes see next page. Foreign banks Foreign governments Unaudited Three months ended March 31, 2015 Failure of restructured debts Number of contracts Recorded amount In NIS millions - - 240 1 - - 3 4 236 - - 240 - - - - - - 240 2 1 - - - 1 1 - - 2 - - - - - - - - 2 Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) B. Debts (continued) Lending Activity in Israel Public - Commercial Construction and Real Estate - Construction Construction and Real Estate - Real Estate Activity Total Commercial Private Individuals - Other Total Public - Activity in Israel Banks in Israel Government of Israel Total Activity in Israel Lending Activity Outside of Israel Public - Commercial Commercial - Other Total Commercial Total Public - Activity Outside of Israel Foreign banks Foreign governments Total Activity Outside of Israel Total Financial Services Commercial - Other Unaudited Three months ended March 31, 2014 Failure of restructured debts Number of contracts In NIS millions 1 - - 25 26 484 510 - - 510 Recorded amount - - - 1 1 3 4 - - 4 - - - - - - 510 - - - - - - 4 Footnotes: (1) Debts, which in the reported year turned into debts in arrears for 30 days or over, which had been restructured under troubled debt restructurings during the period of twelve months prior to their having become debts in arrear. (2) An amount lower than NIS 1 million. 2. Additional information regarding impaired debts - consolidated (continued) C. Restructured troubled debts - consolidated (continued) Israel Discount Bank Limited and its Subsidiaries 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) Sensitivity to the domestic economic cycle in Israel. In addition, in view of material overseas investments by large Israeli corporations, the level of exposure to global crises increased; Sensitivity to private consumption; Exposure to foreign competition; In view of the high concentration of the ownership and control structure of corporations in the Israeli market - credit is typified by high concentration at the large borrower groups' level. Furthermore, the structure of the holding groups and their indebtedness at several levels within the holding corporations, increase the credit risk and the vulnerability of these corporations. Loans involving a high finance ratio carry risk in the event of impairment in the value of collateral below the balance of the loan. The Bank's underwriting policy limits the ratio of finance when granting a loan. Exposure to retail credit is affected by macro-economic factors. Intensification of competition in the banking system in recent years may lead to erosion in margins, decline in quality of borrowers with a resultant increase in credit risk. The credit policy does not allow at the present time the granting of credit to customers having a low internal credit rating, thus moderating such risks. - - - - (2) Credit to private individuals - housing loans - (3) Credit to private individuals - other - - (B) Indication of credit quality December 31, 2014 Total Commercial March 31, 2015 Private Individuals Housing Loans Other Loans Total Commercial Private Individuals Housing Loans Other Loans B. Debts (continued) 3. Additional disclosure regarding the quality of credit (A) Risk characteristics according to credit segments (1) Business credit Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) The period in arrears of debt is a central factor in determining the classification of the Bank's debts, and accordingly affects the allowance for credit losses and the accounting write-offs. A debt examined on a specific basis is classified as impaired when payments of principal or interest in respect thereof are in arrears of ninety days or over, except where the debt is well secured and is in the process of collection. A principal indication for the quality of the Bank's credit portfolio is the ratio of problematic debts at the Bank. During the first three months of 2015, the rate of performing credit to the public increased, stemming mainly from the commercial sector. This increase was accompanied by a decline in unimpaired problematic credit. B. Debts (continued) 3. Additional disclosure regarding the quality of credit (continued) 4. Additional information regarding housing loans - consolidated Balances for the period end, according to Loan-to-Value (LTV)() ratio, manner of repayment and type of interest: Total Balance of housing loans Of which: Bullet and Balloon debts In NIS millions Of which: variable interest Total Off- Balance Sheet Credit Risk Footnotes: (1) The ratio between the authorized credit line at the time the credit line was granted and the value of the asset, as confirmed by the Bank at the time the credit line was granted. The LTV ratio is another indication of the bank as to the assessment of the customer risk when the facility was granted. (2) Reclassified due to changes in the data of a subsidiary company. Unaudited Israel Discount Bank Limited and its Subsidiaries 3. CREDIT RISK, CREDIT TO THE PUBLIC AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED) A. Type of deposits according to location of raising the deposit and type of depositor Loans acquired Loans sold Credit to the public Commercial Housing Other Credit to governments Total Credit to the public Commercial Housing Other Credit to governments Total For the three months ended March 31, 2015 - - 102 614 - - For the three months ended March 31, 2014 - - 79 - - - In NIS millions 3 181 105 795 8 - 87 - For details regarding net profits (losses) on the sale of loans, see Note 12 below. Minimum total capital adequacy ratio required by the Supervisor of Banks Footnotes: (1) The data in this item was computed in accordance with the rules mandatory in the U.S.A. (2) Beginning on January 1, 2015, IDB Bank became subject to new Basle III capital rules based on the final rules published by the Federal Reserve Board in July 2013. Capital ratios as of January 1, 2015 are as follows: 4.5% CET1 to risk-weighted assets; 6.0% Tier 1 capital to risk-weighted assets; and 8.0% Total capital to risk-weighted assets. (3) In view of the approach by the Supervisor of Banks, ICC is required to maintain a total capital ratio of not less than 15%, starting from December 31, 2010. (4) For details regarding the requirement for the raising of the Common equity tier 1 target, at a rate reflecting 1% of the outstanding balance of housing loans see item (b) above. 3. Ratio of capital risk assets 2015 March 31, Unaudited 2014 Audited December 31, 2014 Israel Discount Bank Limited and its Subsidiaries 5. CAPITAL ADEQUACY IN ACCORDANCE WITH INSTRUCTIONS OF THE SUPERVISOR OF BANKS (CONTINUED) 4. The effect of the transitional instructions on the ratio of common equity tier 1 Ratio of common equity tier 1 to risk assets before implementation of the effect of the provisional instructions in directive No.299. (1)8.9 0.5 9.4 2015 March 31, (1)7.4 1.7 9.1 In % 2014 December 31, 2014 (1)8.4 1.0 9.4 Effect of the provisional instructions Ratio of common equity tier 1 to risk assets after implementation of the effect of the provisional instructions in directive No.299. Footnotes: (1) Including the anticipated effect of the initial application of U.S. GAAP in the matter of employee rights, according to data expected as of January 1,2015. (2) Reclassified in order to include the effect of the transitional instructions regarding employee rights. (1) The liability of the Bank and its subsidiaries for severance pay to their employees, based on the customary one month's salary for each year of employment, is fully covered by deposits with severance pay funds, by insurance policies and pension funds and by a provision recorded in the Bank`s books. (2) Members of the Bank's Management are entitled to the customary severance payments, while several of whom are entitled also to an \"adjustment\" bonus of between 4 to 8 months' salary upon retirement, pursuant to individual agreements signed with them, and in respect of which adequate provisions have been included. The pension liability of foreign subsidiaries, based on actuarial computations, is covered by current deposits into a recognized foreign pension fund. (3) In certain consolidated banking subsidiaries, several officers are entitled to \"adjustment\" bonus\" equal to 6 to 9 months' salaries, and in respect of which adequate provisions have been included. (4) The Bank and its subsidiaries are not permitted to withdraw these deposits except for the purpose of making severance payments. (5) A number of the Bank's employees and those of its consolidated banking subsidiaries in Israel are entitled to long-service bonuses equal to a certain number of monthly salaries, and to a certain number of additional vacation days, upon completing 20, 30 and 40 years of employment in the Bank. In accordance with instructions of the Supervisor of Banks the provision in respect of this liability is computed on an actuarial basis and stated at its present value. The future payroll increase used to compute the amount of the liabilities for employee rights, in respect of the Bank's employees, is 1.8% per year (December 31, 2014: 2.5% per year). An agreement with the representatives of the employees was signed in 2007, regarding the \"Jubilee vacation\" days, according to which, among other things, the entitlement of new employees to \"Jubilee vacation\" was abolished. In 2011, the Bank signed with the representative committee of the employees a \"grades and stages\" agreement, according to which, among other things, new employees engaged or moved to the position of regular employees as from January 1, 2012, shall not be entitled to a \"jubilee award\". (6) Employees of the Bank and its consolidated subsidiaries in Israel are entitled to annual vacation as provided by labor agreements in force, and subject to the guidelines of the Annual Vacation Law - 1951. The liability for vacation pay is recognized over the period of employment in which the right to paid vacation accumulates. The liability is determined on the basis of the most recent salary in the reporting period with the addition of related payments. (7) Employees of the Bank and its subsidiaries are entitled to certain benefits after retirement. The said liability is computed on an actuarial basis and is recognized over the period of employment of the employee. In addition, some of the employees who accepted early retirement exchanged their retirement award with a pension for a determined period. This liability is presented at its discounted value. B. Details regarding the benefits March 31 Unaudited December 31 C. Defined benefit plan 1. Commitment and financing status 1.1 Change in commitment in respect of anticipated benefits Unaudited December 31 2014 Severance pay, retirement and pension December 31 2014 Post retirement retiree benefits 2013 2013 March 31 2015 March 31 2015 in NIS millions Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) C. Defined benefit plan (continued) 1. Commitment and financing status (continued) 1.2 Change in fair value of the plan's assets and financing status of the plan 1.4 Plans in which the commitment in respect of cumulative benefits and anticipated benefits exceeds the plan's assets * Included in the item \"other liabilities\" 1.3 Amounts recognized in accumulated other comprehensive income, before tax effect Unaudited December 31 2014 Severance pay, retirement and pension December 31 2014 Post retirement retiree benefits 2013 2013 March 31 2015 March 31 2015 in NIS millions * Stems from the change in the discount rate used in calculating the provisions in respect of employee rights. Unaudited December 31 2014 Severance pay, retirement and pension in NIS millions 2013 March 31 2015 Unaudited December 31 2014 Severance pay, retirement and pension in NIS millions 2013 March 31 2015 Israel Discount Bank Limited and its Subsidiaries 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) C. Defined benefit plan (continued) 2.1 Components of net benefit costs recognized in the statement of income 2. Expense for the period Unaudited For the year ended December 31, 2013 2014 Severance pay, retirement and pension payments 2013 For the year ended December 31, 2014 Post retirement retiree benefits in NIS millions Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) C. Defined benefit plan (continued) 2.1 Components of net benefit costs recognized in the statement of income (continued) 2. Expense for the period (continued) Severance pay, retirement and pension payments Cost of service Cost of interest Anticipated return on assets of the plan Amortization of unrecognized amounts: 2014 For the three months ended March 31, 2015 Unaudited in NIS millions 54 30 (27) 91 33 (48) Post retirement retiree benefits Cost of service Footnote: (1) Amount lower than NIS 1 million. Israel Discount Bank Limited and its Subsidiaries 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) 2. Expense for the period (continued) C. Defined benefit plan (continued) 2.2 Changes in assets of the plan and in the commitment for benefits recognized in other comprehensive income (loss), before tax effect Unaudited Net actuarial loss (income) for the period Amortization of actuarial income (loss) Amortization of credit (cost) in respect of prior service Amortization of net liability (asset) in respect of the transition Changes in foreign currency exchange rates Other 2.3 Estimate of amounts included in accumulated other comprehensive income expected to be amortized from accumulated other comprehensive income to the statement of income in 2015 as an expense (income), before tax effect Footnotes: (1) Amount lower than NIS 1 million. (2) See item 2.1 above. For the three months ended on March 31, 2015 For the year ended December 31, 2013 2014 Severance pay, retirement and pension payments For the three months ended on March 31, 2015 2013 For the year ended December 31, 2014 Post retirement retiree benefits in NIS millions Net actuarial loss (income) Net cost in respect of prior service Footnote: (1) Amount lower than NIS 1 million. Total amount expected to be amortized from other comprehensive income 2 Unaudited 2015 Severance pay, retirement and pension payments Post retirement retiree benefits in NIS millions (2) 1 (1) 2 - Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) 3. Assumptions C. Defined benefit plan (continued) 3.1 Assumptions on the basis of a weighted average used in determining the commitment in respect of the benefit and in measuring the net cost of the benefit Discount rate Anticipated long-term return on the plan's assets Remuneration growth rate Footnote: (1) In the financial statements as of June 30, 2014, the Bank has changed the estimate of the rate of real term increase in salary from a rate of 2.5% to a - - - - - - 5.19% 7.14% 2.16% - 2.75% 3.24% - 3.24% December 31 Severance pay, retirement and pension payments March 31 March 31 Post retirement retiree benefits December 31 December 31 Severance pay, retirement and pension payments March 31 Post retirement retiree benefits December 31 March 31 3.1.2 Principal assumptions used in measuring the net cost of benefit for the period Unaudited Severance pay, retirement and pension payments December 31 2014 1.70%-2.46% 2.26% - 2.54% 2.68%- 3.00% 2013 March 31 2015 Post retirement retiree benefits December 31 2014 1.42%-2.47% 2.03%-3.13% 1.93%-3.32% 2013 March 31 2015 rate of 1.8%. 3.2 Effect of a one percentage point change on the commitment for anticipated benefits, before the tax effect Unaudited Increase of one percentage point Decrease of one percentage point 3.1.1 Principal assumptions used in determining the commitment in respect of the benefit Unaudited Severance pay, retirement and pension payments Post retirement retiree benefits The said sensitivity test relates to the Bank, MDB and to ICC, which comprise over 90% of the liability in respect of an anticipated benefit. Israel Discount Bank Limited and its Subsidiaries 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) C. Defined benefit plan (continued) 4.2 Composition of the fair value of the plan's assets 4. The plan's assets level 1 Unaudited December 31, 2014 level 2 in NIS millions level 3 Total 4.2 Fair value of the plan's assets by type of asset and allotment target for the year 2015 Unaudited Allocation 5. Cash flow 5.1 Deposits Deposits *Estimate of deposits expected to be paid in 2015. Forecast* Unaudited Actual deposits For the three months ended March 31, 2014 Severance pay, retirement and pension payments in NIS millions 22 2015 2015 2013 For the year ended December 31, 2014 39 9 46 23 Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 6. EMPLOYEE BENEFITS - CONSOLIDATED (CONTINUED) C. Defined benefit plan (continued) 5.2 Benefits expected to be paid by the Bank in the future 5. Cash flow (continued) Year Unaudited Severance pay, retirement and pension payments In NIS millions Israel Discount Bank Limited and its Subsidiaries Footnotes: (1) Includes those linked to foreign currency. (2) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E (1). Assets Israeli currency Non-linked Linked to the CPI In US$ December 31, 2014 Foreign currency In Euro in NIS millions In other currencies Non monetary items Total Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 B. Contingent liabilities and other special commitments (continued) The Bank responded to the motion to approve the claim as a class action suit. On May 15, 2008, the Court decided to stay the proceedings until a ruling is given in the appeal filed by the banks with respect to the action described in item 4.1 above. A decision was given on January 21, 2014, instructing the transfer of the hearing of the motion for approval of the claim as a class action in this case, to the District Court hearing the lawsuit described in item 4.1 above. The parties to the case conducted negotiations for reaching a compromise in the matter, which were unsuccessful. For details regarding the opposition by the Plaintiffs in this proceeding to the compromise arrangement discussed in item 4.1 above, see item 4.1 above. On March 15, 2015, the Plaintiff in these proceedings filed his response to questions raised by the Court in the proceedings described in item 4.1 above. The Attorney General of the Government submitted his position on March 24, 2015, according to which the hearing of the lawsuits should not be combined (in this item and item 4.1 above). Alternatively, in the event that the Court decides to combine the hearings, it is the opinion of the Attorney General that it would not be possible to reach a compromise if certain of the parties oppose it. The decision of the Court was given on March 25, 2015, as detailed in item 4.1 above. 4.3 Note 19 C 12.4 to the financial statements as of December 31, 2014, described an action together with a motion to approve the action as a class action suit, filed on April 27, 2009, against the Bank, Bank Leumi, Bank Hapoalim, Mizrahi-Tefahot Bank and the First International Bank. The Claimants argue that a binding arrangement had existed between the said banks with respect to commission rates charged by these banks and that the banks established a coordinated policy, which, as alleged by the claimants, was typified by prohibited cooperation and exchange of information. The class defined in the action constitutes all customers of the defendant banks, both private and business customers, in the period from 1990 to 2004. The total damage for all the defendant banks is assessed for the purpose of the action at approx. NIS 1 billion, with no allocation between them. On October 7, 2009, the District Court instructed that the hearing of this claim should be incorporated with the claim discussed in item 4.4 below. A motion for approval of a compromise arrangement between the parties was filed with the Court on November 16, 2014. The Court instructed the publication of an announcement regarding the filing of a motion for approval of a compromise arrangement and the submission of the motion to the Attorney General of the Government, to the Antitrust Commissioner and to the Courts Administrator. On November 27, 2014, a notice was published regarding the filing of a motion for approval of a compromise agreement. The response of the Attorney General to the Government was submitted on April 15, 2015, according to which the compromise arrangement should not be approved, and within the framework of which, among other things, the Attorney General expressed reservations as to the amount of compensation to the Plaintiffs and as to the lawyers' fees. He also suggested to the Court to consider the appointment of an examiner who would assess the value of the claim as against the value of an arrangement to the group and would assist the Court in evaluating the fairness of the proposed compromise. A preliminary hearing was held on April 16, 2015, within the framework of which it has been decided that the banks would submit an amended version of a compromise arrangement, and that the Attorney General for the Government would submit what possibilities are available to an examiner in order to assess the damage. The Attorney General for the Government submitted to the Court on May 3, 2015, his position, as stated above. The Banks shall submit their response as well as an amended version of a compromise arrangement until May 21, 2015. The payment to be made in accordance with the compromise arrangement, if and when approved, shall be made out of funds transferred in accordance with the agreed Order, see item 6 hereunder. 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) Israel Discount Bank Limited and its Subsidiaries 4.4 Note 19 C 12.5 to the financial statements as of December 31, 2014, described an action together with a motion for the approval of the action as a class action suit, filed on June 30, 2008, against the Bank, Bank Hapoalim and Bank Leumi, submitted to the Tel Aviv District Court. The core issue of the suit rests on the Plaintiffs' claim that, since the end of the 1990's and possibly even earlier, the three defendant banks created a cartel coordinating the prices of commissions charged to their customers. The Plaintiffs further claim that the banks have created an unlawful restrictive business practice regarding the rates of the various commissions charged to customers. As alleged by the Plaintiffs, as a result of the cartel, the price paid by the public is higher than the price that would have been paid had competition not been prevented by the cartel. The Plaintiff estimates the gap between commissions actually charged and the commissions that would have been charged had the banks not acted as they did, at 25%. Based on this assessment, the Plaintiffs claim an overall damage for all member of the group of NIS 3.5 billion. The Bank's share in the claimed amount is 22% (namely an amount of approx. NIS 770 million). According to the decision of the District Court of October 7, 2009, the claim will be heard together with the claim described in item 4.3 above. For details regarding a compromise arrangement submitted for approval of the Court, regarding the position of the Attorney General to the Government submitted to the Court and with respect to decisions made at the preliminary hearing held on April 16, 2015, see item 4.3 above. The payment to be made in accordance with the compromise arrangement, if and when approved, shall be made out of funds deposited in accordance with the agreed Order (see item 6 hereunder). 4.5 Note 19 C 12.7 to the financial statements as of December 31, 2014, described a lawsuit submitted on October 11, 2012, to the Tel Aviv District Court, against the Bank, FIBI, Leumi Bank and Mizrahi Bank together with a motion for approval of the suit as a class action suit. The matter of the lawsuit is the value date attributed by the banks to payments made by debtors directly to their account at the Debt Execution Office. As alleged by the Claimants, the practice of the banks is to determine the date on which payments have been received as the value date for these payments from the Debt Execution Office. In respect of the said time difference, the banks charge the debtors with interest in arrears. The Claimants argue that at this stage it is not possible to assess the amount of the claim, since in order to do so, specific examinations would have to be made at the banks. On March 10, 2014 the Bank`s response was filed. A preliminary hearing in the case was held on September 14, 2014. In view of the standpoint of the Respondents, according to which the issue of the delay in the transfer of the funds lies with the Debt Execution Office, the Court decided that the claims briefs would be delivered to the Attorney General of the Government and to the Supervisor of Banks, in order to obtain their position in this matter. The Attorney General for the Government submitted his position on February 2, 2015, according to which a winning bank may not charge the account of a customer with interest in respect of the period from date of deposit of a payment with the Execution Office and until it is transferred over to the bank. At a preliminary hearing held on April 19, 2015, the Court proposed to the banks to appoint a neutral public accountant, who would make a sample test of closed files of the Debt Execution Office, in order to determine whether any damage had been caused. The Court further proposed to the banks to consider submission of a third party notice against the Enforcement and Collection Authority. A further preliminary hearing was fixed for June 21, 2015. 4.6 Note 19 C 12.12 to the financial statements as of December 31, 2014, described a lawsuit filed on August 28, 2013, with the Tel Aviv District Court, against the Bank, Bank Hapoalim, Bank Leumi, Mizrahi-Tefahot Bank, the First International Bank and against the General Managers of the said banks, as well as a motion for the approval of the lawsuit as a class action suit. The Claimants allege that the respondent banks unlawfully charge a commission on the conversion and transfer of foreign currency with no proper disclosure to their customers. They claim that a customer who wishes to convert foreign currency is being charged an additional commission to that listed on the transaction price list, which, as alleged, is the difference between the rate at which the respondents buy foreign currency on the inter-bank market and the rate at which they sell the foreign currency to the customer. The Claimant stated the amount of the claim from all the Respondents and for all class members at NIS 10.5 billion. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) On January 26, 2014, the Court admitted the preliminary motions submitted in this case, including the motion by the Appellants for withdrawal of the suit against the general managers of the banks. An amended motion for the approval of the suit as a class action suit, was filed on February 4, 2014 and the amount of the claim was set at NIS 11.15 billion. On May 4, 2014, the Court decided that this motion will be heard together with the motion described in item 12.16 in the financial statements as of December 31, 2014. The Bank submitted on December 23, 2014, its response to the motion for approval of the claim as a class action suit. On August 10, 2014, a motion was filed for the consolidation of the hearing of this case with that of the case described in item 5.2 below. The response of the bank to the motion for the merger of the hearings was filed on January 8, 2015. A preliminary hearing has been set for March 8, 2015. At a preliminary hearing of the case, held on March 8, 2015, the Court ruled that the Appellants in this case and in the case described in item 5.2 below, shall submit within sixty days new motions for approval. Within sixty days following the submission of the new motions, the Respondents have to file a response. Following the filing of the claims briefs, the Court will rule in the matter of combining the hearing of the case with the proceedings described in item 5.2 below. A further preliminary hearing was fixed for October 25, 2015. 4.7 Note 19 C 12.14 to the financial statements as of December 31, 2014, described a lawsuit lodged on October 30, 2013, with the Jerusalem District Court together with a motion for its approval as a class action suit, against the Bank, Mercantile Discount Bank, Bank Hapoalim, Union Bank and FIBI. The Plaintiffs argue that the respondent banks charge their customers upon renewal of credit facilities, with a commission in respect of credit and collateral handling, despite the fact that the collateral in respect of the credit facility remains unchanged. The Plaintiffs assess the cumulative amount of the claim against all respondent banks for all class members at NIS 2 billion, and estimated the Bank's share at NIS 498 million and share of MDB at NIS 195 million. On March 5, 2015, a verdict was given according to which the motion for approval of the suit as a class action suit was dismissed. On May 13, 2015, the Bank received information as regards an appeal that had been submitted against the said Court ruling. At date of bringing the report to print, the appeal brief had not yet been delivered to the Bank or to MDB. 4.8 Note 19 C 13.2 to the financial statements as of December 31, 2014, described a lawsuit against Mercantile Discount Bank together with a motion for its approval as a class action suit which were filed with the Tel Aviv District Court on January 5, 2014. The Appellant claims that following the entry into effect of Proper Conduct of Banking Business Directive No. 325, MDB has unilaterally raised the interest rate on credit granted to its customers within the approved credit facility that had been agreed with the customers, and this after the customer had already borrowed funds from MDB within the framework of the credit facility allotted to him and on its basis. The group which the Appellant wishes to represent is defined as \"all customers of Mercantile Discount Bank Ltd., who have a credit facility renewable on a quarterly basis, and which, between the years 2007 to 2013, were charged with interest for utilizing the credit facility at a rate exceeding the rate agreed with them according to the last credit facility agreement signed by them with the bank\". The Appellant states the amount of the claim in respect of all group members at NIS 139 million. The response of MDB was submitted on July 24, 2014. The Appellant filed a response to the Bank's response, which may be seen as expanding the case matter. MDB has filed a motion for the dismissal of this response. On February 22, 2015, the Court decided that in view of the position of the Appellant, that there is no need for an amendment of the claims briefs, the contents of the claims briefs shall remain as-is. MDB is entitled to file a response to the counter response and all the arguments of the parties shall remain intact and shall be heard within the framework of the hearing of the motion for approval of the suit as a class action suit. The parties agreed to refer the case to mediation and therefore hearing of the evidence has been deferred to October 11, 2015. 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) Israel Discount Bank Limited and its Subsidiaries 4.9 Note 19 C 12.15 to the financial statements as of December 31, 2014, described a lawsuit filed with the Tel Aviv-Jaffa District Court on January 30, 2014, against the Bank and against ICC together with a motion for approval of the lawsuit as a class action suit. The Appellant claims that ICC charges on a monthly basis the accounts of holders of \"Active\" credit cards, in respect of charge amounts accumulated through use of the card, with a minimum amount only determined by ICC. The remainder of the said charge amounts turns into a loan carrying especially high interest rates. It is further alleged that upon the marketing of the plan, ICC refrained from emphasizing to the customers that cancellation of the credit requires an explicit request by the customer as well as from stating the cost of the credit granted. The Appellant claims that operating a revolving credit mechanism with respect to the customers and charging them with interest, has been made with no effective contractual basis and with the impairment of the customers' autonomy. The Appellant stated the amount of the claim in respect of all group members at NIS 2,225 million. A decision dismissing the claim against the Bank was given on August 19, 2014. The case against ICC continues. On October 21, 2014, an appeal was filed with the Supreme Court against the decision of the District Court to dismiss in limine the motion for approval against the Bank. The appeal has been fixed for oral complementary arguments on October 8, 2015, following the submission of summing-up briefs by the parties. ICC submitted its response to the motion on November 10, 2014. On December 21, 2014, the Appellant submitted his response to the comments of ICC. On October 29, 2014, ICC motioned for the stay of proceedings at the District Court until a ruling is given by the Supreme Court in an appeal filed by the Appellant. The preliminary hearing of the case was fixed for June 28, 2015. Within the framework of this hearing, the Court will also consider the request of ICC to stay the proceedings until a ruling is given in the appeal filed with the Supreme Court. 4.10 Note 19 C 13.3 to the financial statements as of December 31, 2014, described a lawsuit filed on March 4, 2014, against the Bank with the Central-Lod District Court, together with a motion for its approval as a class action suit. According to the Appellant, the Bank allows customers to deviate from their approved credit facility in contradiction of Proper Conduct of Banking Business Directive No. 325, thus causing them to pay high and the maximum interest rates in respect of the deviation from their approved credit facility. It is further claimed that the Bank charges the customers account with a commission in respect of notice as to the deviation and/or a warning letter regarding such deviation. The Appellant notes that he is unable to quote an exact amount in respect of the damage caused, but in his opinion this amounts to hundreds of millions of NIS. The Claimant has filed additional class actions on similar grounds and, in accordance with the Court's ruling from June 12, 2014, the additional lawsuits will be heard together with the claim described in this item. The Bank filed its response on October 5, 2014. In a preliminary hearing held on March 26, 2015, the case was deferred for an additional preliminary hearing on October 15, 2015, in presence of the Declarers on behalf of the parties, and within the framework of which, the factual disputes would be discussed by the parties. 4.11 Note 19 C 12.17 to the financial statements as of December 31, 2014, described a lawsuit filed on April 28, 2014, with the District Court Central Region against ICC and others, together with a motion for its approval as a class action suit. The above motion raises the allegation for two binding arrangements in the field of immediate debit cards (\"debit\") and pre paid cards (\"prepaid\"), which, as alleged by the Plaintiffs, constitute \"a systematic and continuous deceit\" of customers of the credit card companies. The Plaintiffs claim that the first binding arrangement is an arrangement for the charging of a cross commission in respect of transactions made through the use of debit or pre paid cards. As regards the second binding arrangement, the Plaintiffs claim that it involves the unlawful withholding of monies due to trading houses, in respect of transactions made by debit cards and pre-paid cards, for a period of twenty days, following the date of collection of the money by the credit card companies. The class of those directly affected, whom the Plaintiffs wish to represent, is defined as \"all trading houses in Israel which accept debit cards\". The class of those indirectly affected, whom the Plaintiffs wish to represent, is defined as \"anyone who purchased goods or services at trading houses that accept debit cards, including the Plaintiffs\". The Plaintiffs assess the amount of the claim against all defendants and in respect of all class members at NIS 1,736 million. On February 24, 2015, a motion for withdrawal from the claim was filed. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) A motion was filed with the Court on April 19, 2015, requesting the replacement of the parties applying for a withdrawal and their representatives by the Appellant and his representatives and to instruct the continuation of the proceedings by the Appellant and his representatives. The Court had instructed the submission of an amended withdrawal motion, which was filed on May 11, 2015. 5. Class action suits and requests to approve certain actions as class action suits as well as other actions are pending against the Bank and its consolidated subsidiaries, which, in the opinion of the Bank's Management, based on legal opinions and/or on the opinion of managements of its consolidated subsidiaries, which are based on the opinions of their legal counsels, respectively, as the case may be, it is not possible at this stage to evaluate their prospects of success, and therefore no provision have been included in respect therewith. 5.1 Note 19 C 13.1 to the financial statements as of December 31, 2014, described a petition for approval of an action as a class action suit filed with the Tel Aviv District Court On June 19, 2000 by two borrowers of DMB against DMB and against the Israel Phoenix Insurance Co. Ltd., where the properties of the borrowers are insured. The action is for the amount of NIS 105 million (on June 28, 2012, Discount Mortgage Bank was merged with and into the Bank). The borrowers claim, inter alia, that DMB has insured their properties for amounts which exceed their reinstatement value, and that the sum insured was increased in excess of the increase in the Consumer Price Index. On December 25, 2000, the Court decided that whereas the arguments in this case are similar to those argued in another class action suit, as described in item 12.1 to Note 19 C to the financial statements as of December 31, 2014, the hearing of the said case will be postponed until a decision is given in the other case. On December 5, 2011, the Court that hears the other motion, gave the compromise agreement the validity of a Court verdict between the parties. 5.2 Note 19 C 13.4 to the financial statements as of December 31, 2014, described a claim together with a motion for its approval as a class-action suit, filed on August 5, 2014, with the Tel Aviv-Jaffa District Court, against the Bank, against MDB and against other banks. The Appellant is alleging that the respondent banks charge foreign currency transfer and handling commissions contrary to the Banking Rules and contrary to the Antitrust Law. The banks, it is alleged, charge the aforesaid commissions on a graded scale, with the grade being determined according to the size of the amount transferred. The Appellant alleges that this is a binding agreement \"tacitly\" agreed to by the banks; in addition, it is alleged that some of the respondent banks do not disclose the amount of the commission and/or the way it is calculated. The group that the Appellant is seeking to represent is defined as \"persons or entities that have made use of bank services for the transfer of foreign currency and/or other dealings in foreign currency and the entire Israeli public, who have been directly and indirectly harmed by the infringements\". The Appellant has set the aggregate amount of the claim against all respondent banks at NIS 3 billion or, alternatively, at an amount of at least NIS 1.5 billion. Moreover, a motion has been filed to unite the hearing of this motion with the motions described in item 4.6 above. The response of the banks to the motion for the merger of the hearings was filed on January 8, 2015. The response of the banks to the motion for approval was submitted on February 25, 2015. At a preliminary hearing of the case, held on March 8, 2015, the Court ruled that the Appellants in this case and in the case described in item 4.6 above, shall submit within sixty days new motions for approval. Within sixty days following the submission of the new motions, the Respondents have to file a response. Following the filing of the claims briefs, the Court will rule in the matter of combining the hearing of the case with the proceedings described in item 4.6 above. An amended motion for approval of the suit as a class action suit was filed on April 27, 2015. A further preliminary hearing was fixed for October 25, 2015. 5.3 Note 19 C 13.5 to the financial statements as of December 31, 2014, described a lawsuit filed against the Bank on October 19, 2014, with the Central-Lod District Court, together with a motion for its approval as a class action suit. Israel Discount Bank Limited and its Subsidiaries 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) The Claimant argues that in violation of the law, the Bank charges its customers an excessive early repayment commission in respect of loans which are not housing loans. It is being argued that the Bank acts in contravention of Proper Conduct of Banking Business Directive No. 454. It was also argued that despite the fact that the Bank is permitted to charge customers with an early repayment commission in an amount reflecting only the damage caused to the Bank, it is the Bank's practice to charge commission fees reflecting considerable profit. The Claimant stated that it is unable to estimate the amount of the damage caused. An agreed motion for a procedural agreement was filed on February 18, 2015, according to which, the Appellant will file a motion for amendment of the motion for approval. The Bank's response to the original motion or to the amended motion shall be filed within 90 days from date of the ruling by the Court in the matter of the motion for amendment. 5.4 A lawsuit was filed against the Bank on May 4, 2015, with the Tel Aviv District Court together with a motion for its approval as a class action suit. The subject of the motion is the alleged charging of excess interest on housing loans. The Claimant argues that the Bank computes the monthly interest by dividing the agreed annual interest by twelve. According to the Claimant, this method of computation leads to the charging of higher interest than the interest that would have been charged had the Bank made a correct calculation. The interest charged by the Bank, as argued by the Claimant, reflects compound interest in contradiction to the law and to agreements signed with customers. The Claimant assesses the amount of the claim for all class members at NIS 80 million. 6. Note 19 C 14 to the financial statements as of December 31, 2013, described the decision of the Antitrust Commissioner regarding binding arrangements between banks, following an investigation conducted since 2004 by the Antitrust Authority. On April 26, 2009, the Antitrust Commissioner (\"the Commissioner\") issued a statement under Section 43(a)(1) of the Antitrust Act, 1988, according to which binding arrangements existed between Bank Hapoalim B.M., Bank Leumi Le-Israel B.M., Mizrahi-Tefahot Bank, the First International bank of Israel Ltd. and the Bank (hereinafter: \"the banks\"), in the matter of communication of information regarding commissions (\"the Commissioner's Statement\"). Under Section 43(e) of the Antitrust Law, the Commissioner's statement serves as prima facie evidence for its contents in any legal proceedings. In the wake of the publication of the Statement, the Bank and the other banks submitted appeals against the Commissioner's statement. On June 16, 2014 the Antitrust Tribunal approved the agreed order signed between the banks and the Commissioner (\"the agreed order\"), whereby it is determined that the banks would pay an amount of NIS 70 million, of which an amount of NIS 14 million to be paid by Discount Bank (\"the payment\"), and this without the banks admitting their liability under the provisions of the law or admitting a violation on their part of the provisions of the law. In view of the approval of the agreed order by the Antitrust Tribunal and to the deposit of the payment by the banks, the Commissioner's statement was cancelled and no enforcement measures would be taken against the banks in connection with the investigation that had led to the publication of the decision. It has been determined, within the framework of the agreed order, that the payment may be used for compromise arrangements that might be reached by the banks as regards class actions that are pending against them, and which are detailed in the agreed order. The balance of the payment, which would remain at the end of twenty-four months from date of approval of the agreed order, shall be assigned to the State's Treasury. 7. Agreement between the Swiss Authorities and the U.S. Department of Justice. On August 29, 2013, an agreement between the Swiss Authorities and the U.S. Department of Justice regarding the program for the settlement of disputes was published regarding deposits of U.S. citizens with Swiss banks (Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks). The program differentiates between a number of categories. Category No. 1 includes banks being under investigation or proceedings with the U.S. Department of Justice. According to publications, this category includes fourteen banks and such banks are not permitted to participate in the program. It should be noted that IDB (Swiss) is not under investigation or other proceedings by the U.S. Department of Justice. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) Category No. 2 is designed for banks that assume the existence of a possibility of effecting violations as detailed in the program. According to the program, banks wishing to be included in this category, could have applied to the U.S. Department of Justice until December 31, 2013, for an agreement for avoiding criminal charges against the bank (Non-Prosecution Agreement), and this only after the Justice Department receives and studies a report of an independent examiner submitted by the applying bank, and subject to the consent of the applying bank to pay a fine in an amount derived from the amount of funds deposited with it by its U.S. customers during the period relevant to the program. Category No. 3 is designed for banks that declare and commit that they had not effected violations as detailed in the program. Banks that wished to be included in this category had to apply to the U.S. Department of Justice from July 1, 2014 to December 31, 2014, for conformation that they are not targeted for enforcement actions by it (Non-Target letter). As stated in the program, if it is found retroactively that the examination report does not support the original declaration, the case would be handled at the discretion of the U.S. Department of Justice. The said alternatives of the program require the delivery to the U.S. Department of Justice of information of various scopes, where in the case of Category No. 2 (non-prosecution agreement) detailed information regarding the said accounts will be required. Following an examination of the plan and relying, among other things, on outside legal advice rendered to IDB (Swiss) Bank, the Bank and IDB (Swiss) Bank decided not to join the plan. To the extent that IDB (Swiss) Bank would have elected to participate in the program under category No. 2, than the maximum fine computed in accordance with the approach detailed in the Swiss program with respect to all accounts of U.S. persons held by it, would have been reduced in relation to accounts that would have been recognized under the program as tax compliant, or as such which joined the voluntary disclosure program with the encouragement of IDB (Swiss) Bank, or as such that are out of scope of the program. According to the examination of IDB (Swiss), with the assistance of an external consultant, and considering the deductions detailed above, the worst case scenario does not amount to a material sum to the Bank. It is emphasized that in any event, the result of the said review is considered a crude assessment only, due to the fact that the formula in question is not a simple one but a formula requiring specific and complex discussions with the U.S. Justice Department, mostly due to the fact that different reliefs exist under the program, the effect of which is difficult to assess beforehand. The Bank informed IDB (Swiss) Bank that as long as it maintains the control thereof, it is the Bank`s intension to secure the financial ability of IDB (Swiss) Bank to comply with the regulatory requirements in Switzerland, as required for its business activity. Examination and investigation actions by the U.S. Authorities. It has been publicized recently, that Israeli banks find themselves in various stages of examination and investigation processes on the part of the U.S. authorities. It was published on December 22, 2014, that the Bank Leumi Group had reached an arrangement of the \"Deferred Prosecution Agreement\" type with the U.S. Department of Justice, and also reached an additional arrangement with the Financial Services Authority of the State of New York (hereinafter - \"the Leumi arrangement\"). According to the arrangement, Bank Leumi admitted conducting a series of operations, the aim of which, according to the publication, was assisting tax evasion by its U.S. customers. According to the arrangement, the U.S. Department of Justice agreed to defer the filing of an indictment against the Bank Leumi Group for a period of twenty-four months, during which Bank Leumi is required to abide by the commitments detailed in the agreement. Moreover, various sanctions have been imposed on the Bank Leumi Group, including the payment of a fine in the amount of US$400 million. 8. CONTINGENT LIABILITIES AND SPECIAL COMMITMENTS (CONTINUED) B. Contingent liabilities and other special commitments (continued) Israel Discount Bank Limited and its Subsidiaries The Bank Leumi arrangement has been presented and discussed at the Bank following its publication. This arrangement is based on specific facts dealing with many and continuous operations attributed to different companies in the Bank Leumi Group and as far as can be discerned from the publications, the agreement had been prepared and formed over a long period of time, with considerable investment of resources and of work time of consultants, the data itself remaining undisclosed. The agreement does not detail the formula for the fine, which determines the amounts that the Bank Leumi Group has agreed to pay, except with respect to the operations of Leumi in Switzerland. It would seem that in part, the amount of the fine had been based on agreements as to the amounts of tax evasion by customers, deriving from and in respect of activities attributed to the Bank Leumi Group. According to the published arrangement, the fine paid by Bank Leumi in respect of its operations in Switzerland, is derived from the formula detailed in the program with respect to category No.2. The Bank has no knowledge of investigative actions taken against the Bank or against any of its extensions by the U.S. authorities, as regards U.S. customers who had not complied with their obligations according to U.S. tax laws. Furthermore, as published, IDB (Swiss) Bank is not one of the corporations included in the category No. 1 of the Swiss program (namely, banks under investigation, which, therefore, may not participate in the Swiss program). The Bank is adopting a series of measures for the management of the risk involved in its operations with its U.S. customers. However, in view of the said enforcement actions and due to the uncertainty existing in this matter, it is not possible to assess to assess the risk involved in these operations. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 1. Par value of derivative instruments A. Volume of activity on a consolidated basis SPOT foreign currency swap contracts Footnotes: (1) Excluding credit derivatives and SPOT foreign currency swap contracts. (2) Derivatives comprising a part of the Bank's asset and liability management system, which were not designated for hedging relations. (3) An amount lower than NIS 1 million. A. Hedging derivatives Swaps Shekel/CPI Interest rate contracts Audited December 31, 2014 Other Foreign currency contracts Contracts on shares Commodities and other contracts in NIS millions Total Israel Discount Bank Limited and its Subsidiaries 2. Gross fair value of derivative instruments A. Volume of activity on a consolidated basis (continued) 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) Shekel/CPI Interest rate contracts Unaudited March 31, 2015 Other Foreign currency contracts Contracts on shares Commodities and other contracts in NIS millions Total Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 2. Gross fair value of derivative instruments (continued) A. Volume of activity on a consolidated basis (continued) 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) Shekel/CPI Interest rate contracts Unaudited March 31, 2014 Other Foreign currency contracts Contracts on shares Commodities and other contracts in NIS millions Total Of which: Balance sheet balance of liabilities in respect of derivative instruments not subject to net settlement arrangement or similar arrangements For footnotes see next page. Israel Discount Bank Limited and its Subsidiaries 2. Gross fair value of derivative instruments (continued) A. Volume of activity on a consolidated basis (continued) 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) Footnotes: (1) Derivatives comprising a part of the Bank's asset and liability management system, which were not designated for hedging relations. (2) Of which: NIS 26 million (March 31, 2014: NIS 48 million; December 31, 2014: NIS 27 million) positive gross fair value of assets stemming from embedded derivative instruments. (3) Of which: NIS 34 million (March 31, 2014: NIS 14 million; December 31, 2014: NIS 35 million) negative gross fair value of liabilities stemming from embedded derivative instruments. (4) An amount lower than NIS 1 million. (5) Reclassified - following improvement of the data. Shekel/CPI Interest rate contracts Audited December 31, 2014 Other Foreign currency contracts Contracts on shares Commodities and other contracts in NIS millions Total Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) B. Derivative Instruments credit risk based on the counterparty to the contract, on a consolidated basis Stock Exchange Governments and central banks Others Total Banks Dealers/ brokers In NIS millions For footnotes see next page. Israel Discount Bank Limited and its Subsidiaries 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) B. Derivative Instruments credit risk based on the counterparty to the contract, on a consolidated basis (continued) Footnotes: (1) The difference, if positive, between the total amount in respect of derivative instruments (including derivative instruments with a negative fair value) included in the borrower's indebtedness, as computed for the purpose of limitation on the indebtedness of a borrower, before credit risk mitigation, and the balance sheet amount of assets in respect of derivative instruments of the borrower. (2) Of which: a balance sheet balance of standalone derivative instruments in the amount of NIS 5,159 million included in the item assets in respect of derivative instruments (March 31, 2014: NIS 3,576 million; December 31, 2014: NIS 4,596 million). (3) Of which: a balance sheet balance of standalone derivative instruments in the amount of NIS 5,249 million included in the item liabilities in respect of derivative instruments (March 31, 2014: NIS 4,124 million; December 31, 2014: NIS 4,475 million). Others Total Stock Exchange Banks Audited December 31, 2014 Dealers/ brokers In NIS millions Governments and central banks Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 9. DERIVATIVE INSTRUMENTS ACTIVITY - VOLUME, CREDIT RISK AND DUE DATES (CONTINUED) C. Due dates - Par value: consolidated period end balances 86,526 62,441 Audited December 31, 2014 54,817 22,841 226,625 Total Israel Discount Bank Limited and its Subsidiaries A. Composition - consolidated (continued) Footnotes: (1) Level 1 - fair value measurements using quoted prices in an active market. Level 2 - fair value measurements using other significant observable inputs. Level 3 - fair value measurements using significant unobservable inputs. (2) For further details of the stated balance sheet amount and the fair value of securities, see Note 2. (3) Of which: assets and liabilities in the amount of NIS 53,728 million and NIS 73,731 million, respectively, the stated balance sheet amounts of which are identical to their fair value (instruments stated in the balance sheet at their fair value). For additional information regarding instruments measured at fair value on a recurrent basis and on a non-recurrent basis, see Notes 10 B - 10 C. (4) See Note 18. (5) Reclassified - classification between levels. Financial assets Cash and deposits with banks Total Book value Level 1 Audited December 31, 2014 Level 2 in NIS millions Fair value Level 3 Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) Assets Available for sale securities Of the Israeli Government Of foreign governments Of Israeli financial institutions Of foreign financial institutions Mortgage-backed-securities or Assets -backed-securities Of others in Israel Of others abroad Shares Total available-for-sale securities Trading Securities Of the Israeli Government Of foreign governments Of Israeli financial institutions Of foreign financial institutions Mortgage-backed-securities or Assets -backed-securities Of others in Israel Of others abroad Shares Total trading securities Credit to the public in respect of securities loaned Assets in respect of derivative instruments Shekel/CPI Interest Rate Contracts Other Interest Rate Contracts Foreign Exchange Contracts Shares Contracts Commodity and other Contracts Total assets in respect of derivative instruments Other Assets in respect of the \"Maof\" market operations 2,778 1,891 - - 50 - - 12 20,719 13,366 1,104 290 - 528 - - 573 15,861 Quoted prices in an active market (level 1) 1,988 - 1 4,722 26 - 2,733 1 3,883 - - - Fair value measurements using - Other significant observable inputs (level 2) 924 225 40 2,001 7,402 203 117 - 10,912 2,440 239 3 - - 59 5 - 90 - 6 67 2 1 2 - 2,170 1,682 30 127 177 26 - 14,890 1,348 - - 127 51 - 178 Total assets 2,248 127 1 5,249 1,374 140 2,733 1,893 122 2,346 2,533 157 2,845 14,290 1,329 330 2,001 7,402 731 117 573 - - - - - - - - - 26,773 26,773 - 2,440 239 - - 3 5 - - 59 90 - - 2 7 - - - - - - - 1 5,159 - - - 26 12 - - 36,708 36,708 - - - - - - - 14,290 1,329 330 2,001 7,402 731 117 573 2,440 239 3 5 59 90 2 7 2,845 1,893 122 2,346 2,533 157 1 5,159 26 12 1,374 140 2,733 2,248 127 1 5,249 Significant unobservable inputs (level 3) Influence of deduction agreements In NIS millions - - - - - - - - - - - - - - - - - - - 122 176 801 - 1,099 - - - 1,099 - 140 - 209 - - 349 Total fair value Balance sheet balance 1. Items measured at fair value on a recurring basis B. Items measured at fair value - Consolidated Unaudited March 31, 2015 - - - - - - Liabilities Deposits from the public in respect of securities borrowed Liabilities in respect of derivative instruments Shekel/CPI Interest Rate Contracts Other Interest Rate Contracts Foreign Exchange Contracts Shares Contracts Commodity and other Contracts Total liabilities in respect of derivative instruments Other Commitments in respect of the \"Maof\" market operations Short sales of securities - - - Total liabilities 1,854 4,782 - 6,985 6,985 1. Items measured at fair value on a recurring basis (continued) B. Items measured at fair value - Consolidated (continued) 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) Israel Discount Bank Limited and its Subsidiaries Quoted prices in an active market (level 1) Fair value measurements using - Other significant observable inputs (level 2) Unaudited March 31, 2014 Significant unobservable inputs (level 3) Influence of deduction agreements In NIS millions Total fair value Balance sheet balance Assets Available for sale securities Of the Israeli Government Of foreign governments Of Israeli financial institutions Of foreign financial institutions Mortgage-backed-securities or Assets -backed-securities Of others in Israel 1. Items measured at fair value on a recurring basis (continued) B. Items measured at fair value - Consolidated (continued) 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 Quoted prices in an active market (level 1) Fair value measurements using - Other significant observable inputs (level 2) Audited December 31, 2014 Significant unobservable inputs (level 3) Influence of deduction agreements In NIS millions Total fair value Balance sheet balance Notes: (1) Reclassified - classification between levels. Israel Discount Bank Limited and its Subsidiaries 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) Other Impaired credit the collection of which is collateral dependent Level 1 - - Unaudited March 31, 2015 - 4 Level 2 Level 2 - - Level 3 In NIS millions 2,101 16 Unaudited March 31, 2014 Level 3 In NIS millions 2,052 11 Audited December 31, 2014 Total fair value Profit (Loss) for the three months ended March 31, 2014 2,101 16 (74) 2 2,052 15 (67) - Total fair value Profit (Loss) for the three months ended March 31, 2015 - - Level 2 Level 3 In NIS millions 1,478 13 (116) 2 Total fair value Profit (Loss) for the year ended December 31, 2014 1,478 13 Level 1 - - Level 1 - - Impaired credit the collection of which is collateral dependent Other Impaired credit the collection of which is collateral dependent Other 2. Items measured according to fair value not on a recurring basis B. Items measured at fair value - Consolidated (continued) Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) C. Changes in items measured at fair value on a recurring basis included in level 3 - Consolidated 1. For a period of three months ended March 31, 2015: Unaudited 2. For a period of three months ended March 31, 2014: Unaudited Footnotes: (1) Included in the statement of income in the item \"Non-interest financing income\" (2) An amount lower than NIS 1 million. Israel Discount Bank Limited and its Subsidiaries 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) C. Changes in items measured at fair value on a recurring basis included in level 3 - Consolidated (continued) 3. For the year ended December 31, 2014: Audited Immaterial transfers to or from level 3 were made in the first quarter of 2015, due to a clarification of the Supervisor of Banks, according to which, derivative instruments, the credit risk thereof is determined on the basis of unobservable inputs, shall be included in level 3. Footnotes: (1) Included in the statement of income in the item \"Non-interest financing income\". (2) An amount lower than NIS 1 million. D. Transfers between hierarchy levels of fair value Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) E. Additional details regarding significant unobservable inputs and valuation techniques used for the measurement of fair value of items classified to level 3 Fair value as at March, 2014 Valuation Techniques Unobservable inputs Range (Weighted Average) 1. Quantitative information regarding the measurement of fair value at level 3 Fair value as at March, 2015 Valuation Techniques Unaudited Unobservable inputs Range (Weighted Average) Israel Discount Bank Limited and its Subsidiaries 10. BALANCES AND FAIR VALUE ESTIMATES OF FINANCIAL INSTRUMENTS (CONTINUED) E. Additional details regarding significant unobservable inputs and valuation techniques used for the measurement of fair value of items classified to level 3 (continued) Significant unobservable inputs, which were used to measure the fair value of derivative financial instruments, are expectations of inflation up to one year, and adjustments regarding counterparty credit risk (CVA). As the inflation forecasts rise (fall) and the Bank commits to pay the index-linked amount, so the fair value falls (rises). As the inflation forecasts rise (fall) and the counterparty to the transaction is obligated to pay the Bank the index-linked amount, so the fair value rises (falls). The counterparty credit risk coefficient (CVA) expresses the probability of credit default of the counterparty to the transaction. A rise in the default probability reduces the fair value of the transaction, and vice versa. 2. Qualitative information regarding the measurement of fair value at level 3 1. Quantitative information regarding the measurement of fair value at level 3 (continued) Fair value as at December 31, 2014 Valuation Techniques Audited Unobservable inputs Range (Weighted Average) Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 11. INTEREST INCOME AND EXPENSES - CONSOLIDATED 2014 For the three months ended March 31, 2015 in NIS millions Financing income generated by mortgage backed securities (MBS) - in US $ millions Financing income generated by mortgage backed securities (MBS) - in NIS millions (2) Including the effective component of hedging relationships. (3) Details of the effect of hedge derivative instruments on subsection A. (4) An amount lower than NIS 1 million. Israel Discount Bank Limited and its Subsidiaries Unaudited Financial Households Small Businesses Corporate Banking Middle Market Banking Private Banking in NIS millions For the three months ended March 31, 2015 Non- Financial Companies Financial management Total Consolidated Footnotes: (1) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E(1). (2) Restated, see B above. (3) Reclassified - Inclusion of the average balance of credit excluding interest in the average balance of assets. (4) Reclassified - improvement in the format of allocating the average balance of assets and the average balance of liabilities among the different operating segments and the financial management segment, considering the data of one of the subsidiary, see C (3). Interest income, net - From external sources For the three months ended March 31, 2014 Interest income, net - From external sources Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 13. BUSINESS SEGMENTS - CONSOLIDATED (CONTINUED) Households Small Businesses Corporate Banking Middle Market Banking Private Banking Non- Financial Companies Financial management Total Consolidated Footnotes: (1) Restated, in respect of the retroactive implementation of the guidelines of the Supervisor of Banks in the matter of employee rights, See Note 1 E(1). (2) Restated, see B above. Audited Financial Israel Discount Bank Limited and its Subsidiaries B. Changes in other comprehensive income (loss)() (continued) Before taxes March 31, 2015 Tax effect Unaudited For the three months ended After taxes Before taxes Audited For the year ended After taxes Before taxes Tax effect After taxes Before taxes Tax effect After taxes 2014 2013 March 31, 2014 Tax effect in NIS millions Israel Discount Bank Limited and its Subsidiaries (1) Including financial statements translation adjustments of a consolidated subsidiary - Discount Bancorp Inc., the functional currency of which is different from that of the Bank. (2) The pre-tax amount is reported in the statement of income in the item non-interest financing income. For further details see the note on non-interest financing income. (3) For details regarding the restatement, see Note 1 E (1). The pre-tax amount is reported in the statement of income in the item Salaries and related expenses. Footnotes: Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 15. THE INVESTMENT IN THE FIRST INTERNATIONAL BANK (\"FIBI\") B. An agreement with FIBI Holdings - 2010 On March 31, 2015 the Bank's holdings in FIBI were 9.28% in the equity and in the voting rights. The cost of the shares in the Bank's books amounted to NIS 527 million as of March 31, 2015. The market value of the Bank's holdings in FIBI totaled on March 31, 2015: NIS 509 million. The market value of this investment at May 17, 2015: NIS 492 million. The Bank and FIBI Holdings signed an agreement on March 28, 2010, which, among other things, limited the period in which Discount Bank shall have the right by which FIBI Holdings shall continue to support the appointment of one quarter of the directions of FIBI from among candidates recommended by Discount Bank. Details regarding the highlights of the agreement and regarding the approvals of the Supervisor of Banks and the Antitrust Commissioner with respect to the agreement, including the timetable determined by the Antitrust Commissioner for the reduction in the interest held by Discount Bank in FIBI, were brought in Note 6 D (1) to the financial statements as of December 31, 2014. C. Sale of shares in February 2015. On February 19, 2015, the Bank sold 7,054,625 shares of FIBI, comprising approx. 7% of the share capital of FIBI. The balance of the shares in the First International Bank held by the Bank comprises 9.28% of the share capital of FIBI. The sale was made in an offmarket transaction, at a price of NIS 0.4951 per share, reflecting a discount of 2.5% on the base price for the February 19 trading day. The total consideration amounted to NIS 349 million. In consequence of this sale and the decrease in the Bank's rate of holdings in the shares of FIBI to below 10%, the exceptional impact of the investment in these shares on capital adequacy has been removed, a fact that brought about an improvement in capital adequacy already in the first quarter of 2015. Completion of this move constitutes the Bank's attainment of a relevant milestone in the sale outline determined by the Antitrust Commissioner, prior to the final date that had been fixed for this sale. In respect of the above, a loss on impairment of a nature other than temporary (OTTI) in the amount of NIS 47 million, net, was recorded in the financial statements as of December 31, 2014. A. Data regarding the investment in FIBI Agreement with Bank Otsar Ha-Hayal. An agreement was signed on March 31, 2015, between ICC and Diners and Bank Otsar Ha-Hayal Ltd. (hereinafter: \"Otsar Ha-Hayal\"; \"the agreement\"). The agreement is for a period of five years since date of signature, and would be extended for further periods of five years each, unless one of the parties informed the other party, six months prior to the end of the agreement period, of his wish not to extend the agreement for an additional period. Within the framework of the agreement, ICC and Diners would issue credit cards to Otsar Ha-Hayal customers and would provide them with the services involved in the issue of the cards and inherent in the use thereof. The agreement establishes the rights of the parties as well as the operating arrangements and the provision of services by ICC and/or Diners in respect of the charge cards issued in terms of the agreement and the remaining terms relating thereto. B. (1) Events regarding the clearing of international electronic trade transactions and other matters. In the second half of 2009 and in the beginning of 2010, ICC faced allegations made by VISA Europe and the Global MasterCard Organization (hereinafter: \"the international organizations\") with respect to prima facie violations of the rules of these organizations pertaining to the clearing of international electronic trade, in transactions effected by a subsidiary of ICC, ICC International (which had in the meantime been merged with and into ICC). In this framework, fines have been imposed on ICC and its activity in this field of operations has been restricted for a period of several months. ICC has immediately implemented a reduction plan in order to comply with the requirements of the international organizations, in the framework of which it applied various measures, including changes in the company's management. A number of trading houses and clusterers had raised demands regarding the burden of monetary sanctions applying to them and the reduction in electronic trade clearing operations conducted with them, which as alleged by them, resulted in heavy damage. stated in the full pricelist in respect of a transfer by the RTGS system would apply to a transfer of amounts of over NIS 1 million; No commission may be charged in respect of a direct channel operation in respect of charge transaction using an immediate debit card; - - Commission regarding the handling of cash by a teller - in the case of providing service which includes a combination of two or more of the transactions included in the service, the Bank would be entitled to charge one commission only, the higher of the commissions in respect of these transactions; A commission may be charged for the issue of an ownership confirmation starting with the second confirmation in a calendar year; - - Housing loan ledger fees and collection fees in respect of non-housing loans granted immediately prior to the application of the new rules, will be made by debit cards and discounting services for trading houses. For this purpose, a business of a private individual or of a corporation during the first year since the beginning of its operations, or which the clearing turnover of transactions by debit cards made on its behalf by the banking corporation does not exceed NIS 3 million, shall be considered a small business. Examination of the clearing turnover shall be performed in accordance with the data existing in the hands of the banking corporation; - A definition of \"change\" has been added - the handing of a note or coins or a combination of the two in exchange for receiving a note or coins or a combination of the two in a value equal to the amount denominated therein, excluding the exchange of an old legal tender for a new legal tender; - An addendum to the definition of \"the start of obtaining the service\" as regards the clearing of debit cards - upon the signing by the customer of the - Excluding the commission in respect of clearing services for debit transactions from the rule, according to which, a commission which a banking corporation is entitled to charge for a service included in the pricelist for small businesses shall not exceed that determined in the pricelist for a large business. This instruction will take effect on July 1, 2015; - The duty has been set for the presentation of a summarized pricelist also to customers obtaining from the corporation clearing services for debit card - In Part 6, the part of credit cards in the full pricelist: the deferred payment commission shall be abolished; changes were made with respect to the commission in respect of foreign currency transactions and in respect of the withdrawal of foreign currency abroad. On March 23, 2015, an update was published in respect of the effective date of these changes. The changes will take effect on July 1, 2015 (instead of April 1, 2015); - Section 12 of the full list price includes a list of services regarding the clearing of debit card transactions field, in respect of which commissions are - - - Entering into effect of Sections 12 and 13 of the pricelist, presentation of the summarized pricelist to customers receiving clearing services, and the change in the definition of a \"small business\" as regards Sections 12 and 13 of the pricelist, shall take effect on July 1, 2015. Draft Amendment of the Banking Rules (Customer service) (Commissions), 2008. An updated draft was published on March 9, 2015, within the framework of which it is proposed as follows: - - to apply control to \"notices\" commission, the intention of the Supervisor of Banks being to determine a maximum price for such a commission, in - - to determine that \"card fees\" shall not be charges in respect of an immediate debit card issued to a customer who has already a credit card issued by abolished; clearing agreement. The change takes effect on February 1, 2015; transactions, and also an addendum to the rules regarding the format of the summarized pricelist has been added; chargeable in accordance with the price list; Section 13 of the pricelist has been added - \"discounting services for trading houses\"; A summary price list was added for customers receiving from the bank clearing services for debit card transactions; to abolish the commission charged to the depositor in respect of a dishonored check; accordance with the direct cost involved therein; to eliminate the possibility of charging a commission in respect of delivery of follow-up letters; that same banking corporation; - Changing the definition of \"credit card\" to \"debit card\"; Israel Discount Bank Limited and its Subsidiaries - Requiring the banking corporation to publish on its Internet website agreements of the certain types stated in the rules, and which are considered 17. REPORT OF THE TEAM FOR EXAMINING THE INCREASE IN COMPETITION IN THE BANKING INDUSTRY (CONTINUED) Amendments to Part 6 to the First Addendum (\"debit cards\") and to the pricelist of debit cards (the addition of the possibility for the presentation of the price of services in the foreign currency pricelist, cancellation of card fees for immediate debit cards issued to customers holding a credit card issued by the same corporation, amendments relating to commissions in respect of foreign currency transactions and the withdrawal of foreign currency abroad). Banking Order (Customer service) (Supervision over notices or warning service), 2015. The Order was published on May 10, 2015, and declares the \"notices or warning service\" as a service under supervision. The maximum commission amount that may be charged for such service would be NIS 5. The Order will take effect on July 1, 2015. Banking Rules (Customer service) (Proper disclosure and delivery of documents) (Amendment), 2014. The Amendment to the Rules was published on October 7, 2014. The principal elements of the Amendment are: - A banking corporation has to publish also on its Internet website, various data that under these rules have to be published on a notice board in the - Requiring a banking corporation to provide to anyone wishing to open an account for business purposes, an explanatory paper, in a separate paper, that includes, among other things, clarifications regarding the practical meaning of the classification of an account as a \"small business\" account with respect to the services price list; Requiring the banking corporation to provide to each customer wishing to join this lane, prior to his joining, information in writing regarding commission amounts charged to him during the quarter before the quarter preceding the date of submission of the joining application, in respect of services included in this lane, in the manner detailed in the Amendment; Authorization of The Supervisor of Banks to determine various instructions as regards the information to be provided to a customer, as above. - The Amendment entered into effect in full on November 7, 2014. Amendment of Banking Rules (Customer service) (Proper disclosure and submission of documents), 1992. The Amendment was published in the Official Gazette on December 30, 2014. The principal provisions of the Amendment are: - Granting the Commissioner the power to determine types of account and terms, which, if in existence, the signature of the customer on certain - Requiring the banking corporation to deliver to the customer or to present in the account of the customer on the website of the banking corporation a copy of an agreement or a document of the types detailed in the rules, which did not required the customers signature, proximately after obtaining his approval to their contents or alternatively present it in the account of the customer on the bank's website or their delivery by Email, subject to allowing him the possibility of printing and keeping the agreement/document, as stated. With respect to an agreement or document prepared in the presence of the customer, the possibility has been added of presenting it in the account of the customer on the bank's website or of delivery thereof by Email, subject to obtaining in writing the specific agreement of the customer to the delivery in the said manner. - Determining various changes relating to the notices which a banking corporation has to deliver to customers regarding changes in the terms of - Determining an additional exception to the instruction with respect to the non-delivery of notices under the rules to a customer residing abroad, and who has not provided an address in Israel for delivery of notices, and this in case where the customer has asked to receive notices via the Internet website of the banking corporation; - Determination that a banking corporation is required to inform the data that has to be delivered under the rules, in respect of a loan for a period The rules enter into effect of January 1, 2015, except for the sections dealing with types of accounts and terms under which certain agreements with the customer shall not require his signature and by presenting agreements or documents in the customer's account on the bank's website or delivering them by Email. - bank's branches; - types of agreements stated in the rules, would not be required; uniform contracts, as defined in the law; managing their accounts; exceeding one year, which is repayable in installments, once in each year and no later than February 28. Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 17. REPORT OF THE TEAM FOR EXAMINING THE INCREASE IN COMPETITION IN THE BANKING INDUSTRY (CONTINUED) The amendment regarding notices to certain customers pertaining to changes in the terms of management of their accounts will enter into effect on April 1, 2015. Proper Conduct of Banking Business Directive No. 414 in the matter of disclosure of services in securities costs. The instruction was published by the Supervisor of Banks on April 3, 2014. The principal items of the directive are: the duty to present to a customer who was charged with Israeli and/or foreign securities commission, within the framework of the semi-annual statement of commissions. Comparative data regarding commissions paid by customers holding deposits of similar value to that of the deposit held by the customer, this in the manner as detailed in the instruction; the duty to present on the Internet website of the Bank the said comparative data relating to the data for a period of six months; the duty to present to the customer, within the framework of the semiannual statement of commissions, detailed data relating to securities commission charged to him during a period of six months in the manner detailed in the directive. The directive will become effective on January 1, 2015. The Bank is implementing the requirements in accordance with the directive. Proper Conduct of Banking Business Directive No. 421 in the matter of reduction or addition to interest rates. The Directive was published by the Supervisor of Banks on September 9, 2013. Its main topics are: maintaining the reduction or addition to the basic interest rate granted to the customer upon granting credit, loan, credit facilities or upon depositing funds with the bank, also in the case of a change in interest rates or upon renewal of the deposit. The Directive will become effective on January 1, 2014. The Supervisor of Banks has deferred to July 1, 2014, the date on which the instruction is to take effect regarding deposits. Proper Conduct of Banking Business Directive No. 425 in the matter of \"Annual reports to customers of banking corporations\". The Supervisor of Banks published on November 19, 2014, a Proper Conduct of Banking Business Directive in the matter of \"annual reports to customers of banking corporations\", comprising the implementation of the Zaken Committee recommendations in the matter of \"bank identity card\". The directive is designed to regularize the annual reporting duty of the corporation for customers matching the definition of \"individual\" and \"small business\", as regards all assets and liabilities of the customer with the banking corporation, including his total income and expenses during the year regarding assets, liabilities and current operation in his account. The annual report is intended to assist customers in making educated consumer decisions, to improve the ability of customers to follow their activity in the account and to increase their ability to compare various banking products and services. The Supervisor of Banks stated that the directive requires indirect amendments and certain adjustments of the proper disclosure rules, which shall be made further on. It should be noted that the implementation of the various procedures as described above, will require the Bank to make wide range computerized preparations, training of staff and determination and absorption of work procedures, at a financial cost that cannot be assessed at this stage, and all this within a relatively short period of time. The Directive takes effect on February 28, 2016, with respect to the 2015 annual report. However, it is further stated in the directive that the data regarding the credit rating will not be presented until an explicit instruction is issued by the Supervisor of Banks, though the banks must be ready to present this data starting with the said date. Amendment of Proper Conduct of Banking Business Directive No. 439 in the matter of account charging authorization. On September 1, 2014, the Supervisor of Banks published the amendment to the Directive. The object of the amendment is to face the difficulties involved in the process of transferring a charge authorization relating to an existing account with one bank to a new account with another bank, a matter identified as a central barrier facing customers wishing to change banks. The principal items of the amendment are: a new chapter \"Submitting an application for establishment of an authorization to charge an account\" has been included, which regularizes the process of submitting an application for authorization to charge an account, directly by the customer or by the beneficiary (subject to obtaining a written consent of the customer). Israel Discount Bank Limited and its Subsidiaries 17. REPORT OF THE TEAM FOR EXAMINING THE INCREASE IN COMPETITION IN THE BANKING INDUSTRY (CONTINUED) Among other things, this chapter determines a mechanism for the transfer of a list of items from the customer or from the beneficiary to the bank, using each one of the communication means defined in the amendment; instructions have been determined regularizing the response to the customer and to the beneficiary within five business days, and stating that where the response is positive, the bank has to establish the authorization within the said time period; the chapter \"Application for a change of account charged by authorization\" has been updated and a new process has been determined, within the framework of which, for the transfer of authorization to charge an account from one bank to another, which includes several stages: submission of an application by the customer for the transfer of charges by authorization, examination of the authorization data and the establishment and transfer of information to the beneficiary. The effective date for the amendment has been fixed for October 1, 2015. Proper Conduct of Banking Business Directive No. 418 in the matter of the opening of accounts via the Internet. On July 15, 2014, the Supervisor of Banks published the Directive, constituting an additional layer in the adoption of the Zaken Committee recommendations. The Directive details the matters required from banking corporations, which are interested in allowing the opening online of bank accounts for customers, and determines limitations on operations in such accounts, designed to reduce the risks involved in conducting an online account. According to the Directive, an account may be opened on the basis of a copy of an identity card, a copy of an additional identification document, and an online signature on a declaration under the Prohibition of Money Laundering Order. In addition, identification of the customer shall be made by a visual meeting as part of performing a broader \"know your customer\" process. Accounts of this type would be limited in scope of their monetary operations. In addition, it would not be possible to appoint an \"authorized signatory\" for such an account, and checks issued to the owner of such an account shall be limited in endorsement. These limitations would be withdrawn only after a full face to face identification of the customer is made at the branch, in accordance with the provisions of the Prohibition of Money Laundering Order (Duties of identification, reporting and maintenance of records by banking corporations for the prevention of money laundering and terror financing), 2001. Implementation of the Directive has been postponed until the amendment to the proper disclosure rules of December 30, 2014 takes effect (see above), and to the publication of the circular of the Supervisor of Banks dated January 4, 2015, in the matter of types of accounts and terms under which an agreement with the customer shall not require his signature. Circular of the Supervisor of Banks in the matter of types of accounts and terms under which an agreement with the customer shall not require his signature. Further to the amendment of proper disclosure rules (see above), the circular was published on January 4, 2015, taking effect on date of publication, and stated that with respect to agreements as detailed below, the customer's signature would not be required, on condition that the customer would be able to confirm on the website of the banking corporation that he had been given the possibility of reviewing the agreements: Agreements regarding general business terms or the opening and managing of a current account, including an agreement which includes general terms for the provision of various banking services as detailed in the proper disclosure rules, to be opened online as prescribed in Proper Conduct of Banking Business Directive No. 418; an agreement for the deposit of funds for a specified period exceeding one year; agreement in the matter of telephonic instructions. Amendment of Proper Conduct of Banking Business Directive No. 432 in the matter of \"transfer of activity and closing down a customer's account\". The Amendment was published by the Supervisor of Banks on December 15, 2014, with the aim of simplifying the process of transferring the activity or the closing of an account of a customer. The essence of the Amendment is as follows: - The bank shall provide to a customer considering the feasibility of transferring to another bank or the closing of his account, a detailed annual report (\"banking identity card\") in a uniform format and easy to understand, updated to the month preceding the date of application, as well as a manual assisting the customer in understanding the actions involved in transferring the operations or in closing the account; - A customer may apply for the closing of his account or for the transfer of activity from his account, not only by visiting the bank branch but also by the bank's Internet website, by e-mail, by telephone and by any additional means of communication in accordance with the bank's decision; Financial Statements CONDENSED FINANCIAL STATEMENTS AS AT MARCH 31, 2015 - Emphasis has been given to the possibility given to the new bank to act on behalf of the customer in all actions required to transfer the customer's - The process of transferring operations shall be concluded within five business days since the date on which the customer submitted the application. 17. REPORT OF THE TEAM FOR EXAMINING THE INCREASE IN COMPETITION IN THE BANKING INDUSTRY (CONTINUED) The process of closing an account shall be concluded within five business days from the date on which the customer completed the actions which he had to execute in order to close the account. The process of transferring an Israeli securities portfolio shall be concluded within five business days from date of the instruction given by the customer, and the transfer of a foreign securities portfolio - within fourteen business days from date of the instruction. The Directive states that on date of closing the account, the account management agreement shall expire and it would be classified as a \"closed account\"; - A banking corporation shall not cancel benefits and rebates granted to the customer, only on grounds of his request for the transfer of activity or for - Guidelines has been determined in respect of cases where the customer applies for the transfer of current operations to another bank, though The Directive partly took effect on January 1, 2015, though most of the material amendments in the Directive will take effect on July 1, 2015. The amendments relating to the summarized and detailed information to be provided to the customer with respect to the operations in his account (\"banking identity card\") shall take effect on the date the Proper Conduct of Banking Business Directive No. 425 (\"annual statements to customers of banking corporations\") takes effect, namely, on February 28, 2016. Amendment of Proper Conduct of Banking Business Directive No. 435 in the matter of telephonic instructions. The amendment to the Directive was published on January 4, 2015, and took effect upon the publication thereof. In accordance with the amendment, it is possible to present to a customer on the Internet website an agreement for the giving of telephonic instructions, and the confirmation by the customer on the said website, that he had been given the possibility of reviewing the agreement and that this will serve instead of his signature on the agreement. Licensing and the establishment of banking associations in Israel. The Supervisor of Banks published on May 5, 2015, an outline for the establishment of banking associations in Israel. The outline details the threshold terms for the establishment of banking associations in Israel, and the stages required for their establishment. The outline comprises an infrastructure for increasing the number of players within and outside the banking industry and forms an additional step towards the adoption of the recommendation of the team examining the intensification of competition in the banking sector. Law Memorandum - Regulation of Off-Banking Loans Act (Amendment No. 3) (Institutional lenders, maximum interest and penalties), 2014. In February 2014, the Ministry of Justice published for public comment the Law Memorandum prepared in the wake of the recommendations of the Zaken Committee. In the framework of the Memorandum it is proposed to apply also to banks the limitation existing in the law in respect of off-banking entities. At this stage it is not yet possible to assess the effect of the Amendment upon the Bank. Details regarding Banking Rules (Customer service)(Commissions)(Amendment), 2012, and the Letter of the Supervisor of Banks regarding the re-pricing of commissions in respect of securities operations, which entered into effect in the beginning of 2013, were brought in the 2013 Annual Report. At this stage, prior to the completion of the required legislation and regulation amendment process, it is not possible to evaluate the impact of the various moves. The Bank estimates that the income of the Group will be adversely affected by an amount assessed at approx. NIS 100 million per year. the closing of an account; remaining in the account are rights or liabilities which are not yet due; operations from his old account to his account with the new bank and to close the account with the old bank. "
}

ES Query

POST /test/chapter/_search

{
    "fields": "title",
    "query": {
        "match_phrase": {
            "content": {
                "query": "a credit card",
                "slop": 20
            }
        }
    },
    "highlight": {
        "fields": {
            "content": {
                "fragment_size": 10,
                "number_of_fragments": 1,
                "type": "plain"
            }
        }
    }
}

If you try this out, you'll see that the highlight returned is as big as the _source.content, it just doesn't care about the "fragment_size": 10.

Thank you for investigating this issue!

[clintongormley]

To add to this:

• plain highlighter highlights the whole body
• postings highlighter returns a fragment but ignores the fragment size (documented to always return a sentence)
• fvh does the right thing

[szroland]

I think there is an issue with how spans are calculated for higlighting in the plain highlighter when using the span fragmenter and multiple phrases, in this case it seems to lose track of spans and practically collects a huge fragment at the end, which, having multiple matches and as such higher score, will be the top "match" to highlight.

@paulintrognon, I guess while the root cause is fully established, you could try using "fragmenter" : "simple" explicitly, which will not try to be smart about keeping matches of various parts of your search together.

E.g. try this:

POST /test/chapter/_search

{
    "fields": "title",
    "query": {
        "match_phrase": {
            "content": {
                "query": "credit card",
                "slop": 0
            }
        }
    },
    "highlight": {
        "fields": {
            "content": {
                "fragment_size": 50,
                "number_of_fragments": 5,
                "type": "plain",
                "fragmenter" : "simple"

            }
        }
    }
}

I think this provides relatively useful matches respecting the fragment size.

[clintongormley]

@markharwood you were looking at the plain highlighter recently. Could you investigate this one too please?

[markharwood]

Will do

[markharwood]

Looking deeper the SimpleSpanFragmenter is prioritizing accuracy of match-reporting over delivering the requested sizes of fragments. It is not possible to both summarize and reflect all query logic accurately and this is an example case where the trade-off being made is questionable - in the pursuit of accurately reporting phrase matches this fragmenter temporarily overrides the fragment size limit to try and tie together reported sightings of phrase components which otherwise would straddle fragments introduced by summarization logic.

I can see from the code there is a deliberate policy of ignoring fragment sizes while connecting phrase elements in this query/doc so the override of your choice of fragment size is "working as designed" but arguably not doing a fantastic job.

For the record - the wikimedia foundation's "experimental-highlighter" plugin that they use on Wikipedia looks to do a decent job of summarising this text and is known to be significantly faster than the plain highlighter. See https://github.com/wikimedia/search-highlighter

[paulintrognon]

OK, this is very interesting.

I have used the simple fragmenter to get arround this issue, and it worked for me. Thank you all!

[clintongormley]

This appears to be fixed in 5.0 or before