Diamond News

Financial advisory house Merrill Lynch is optimistic about Israel's Bank Hapoalim shares and has reiterates its "Buy" recommendation with a target price of NIS 20.80, Globes reported.

Merrill Lynch analyst Micha Goldberg told the paper that Bank Hapoalim remains his preferred bank in Israel, and that he sees substantial upside potential with only limited downside risk.

Merrill Lynch said it was "optimistic that the new team is committed to getting the bank back on track to achieve pre-crisis levels of profitability, rebuild investor confidence and improve transparency. New management is refocusing on the domestic market while putting the bank’s international expansion strategy on hold. Internal ROE targets have been adjusted for higher capital requirements and lower risk appetite, so we expect ROE to remain below 13-14% for the next couple of years."

Goldberg added that, "We believe Bank Hapoalim’s growth will mainly be driven by a more aggressive domestic stance. Management aims to increase its below-average market share in the small and mid-sized enterprise and mortgage sectors by opening some 30-40 new points of sale. However, the bank claims it will not increase its work force, but rather retrain existing employees, as the centralization of its back office operations allows it to reassign staff from other operations."