International investment giant recommends Bank Hapoalim shares
Investment bank Citi has issued a review of Bank Hapoalim's results, maintaining a "buy" recommendation with a target price of 88 shekels. Analysts estimate the bank will exceed its targets for the coming year, noting that excluding the special tax, the return on equity would have reached 16.4%.
American investment giant Citi has published its first commentary on Bank Hapoalim's second-quarter results. Citi notes that the increase in return on equity to 15%—despite the special tax imposed on bank profits—represents "significant progress, supported by a strong revenue growth engine."
Citi reiterates a "buy" recommendation with a target price of 88 shekels per share for Bank Hapoalim (a 16% premium over the current market price), describing the quarterly results as a "strong quarter, with a recovery in the financial margin and an impressive volume of operational expenses."
In its report, Citi highlights that Bank Hapoalim posted a net profit of 2.49 billion shekels. Analysts point out that the special tax on banks reduces the return on equity by approximately 1.3%–1.4% annually; therefore, the "real" return for the quarter stands at about 16.4%, exceeding the bank's medium-term targets.
"This is a high-quality bank that is performing well against a backdrop of challenging macro conditions and taxation," the report stated.
Financials and Efficiency
Total revenue (net of provisions for credit losses) amounted to 6.6 billion shekels, a 20% increase from the previous quarter and a 2% rise compared to the same period last year. Citi explains that most of the revenue growth stems from the contribution of the Consumer Price Index (464 million shekels), which offset the decrease in the Bank of Israel interest rate and a moderate erosion in credit margins. The bank's financial margin (NIM) rose to 2.7%, compared to 2.49% in the previous quarter.
Operational expenses remained stable at 2 billion shekels (a 4.4% year-over-year decrease), which improved the efficiency ratio to 30.6%, compared to 36.6% in the first quarter. Citi describes this as the best efficiency level recorded by the bank in several quarters.
Bank management has reiterated its 2026 targets: a net profit of 8.5–9.5 billion shekels, a return on equity of 13%–14%, 8%–9% growth in the credit portfolio, and a 50%–60% profit distribution. Citi estimates that the bank will exceed these targets, citing high asset quality and a strong capital position.
