UBS (SWX:UBS) published its first assessments for Bank Hapoalim (LSE:BKHD; TASE:POLI) and Bank Leumi (TASE:LUMI) today. The assessments reflect disappointment by the banks' results for 2003.
UBS Israel office head Stephen Levey is less impressed by the public criticism in Israel about the banks' profits, stating that both Bank Hapoalim and Bank Leumi's net profits were less than expected, because both banks' allowances for doubtful debts were higher than expected.
What differentiates Israel's top two banking groups is the low 15% tax rate paid by Bank Hapoalim. Levey writes, "While Bank Hapoalim's bottom line this quarter was saved by a low tax rate, Bank Leumi was not so fortunate. This aside, the two banks results were more or less in-line."
Despite his disappointment over the banks' financial reports, Levey kept his "Buy 2" recommendations awarded in March 2003.
Levey also kept the target share for both banks: NIS 14.20 for Bank Hapoalim, and NIS 10.40 for Bank Leumi. Both target prices are 20% above the shares' current market prices.
Levey's disappointment over the banks' reports is reflected in his lower profit forecasts for both banks for 2004-05. He reduced his profit forecast for Bank Hapoalim from NIS 1.7 billion to NIS 1.6 billion for 2004, and predicted that it would increase to NIS 1.88 billion for 2005.
Levey reduced his profit forecast for Bank Leumi from NIS 1.4 billion to NIS 1.33 billion for 2004, and from NIS 1.58 to NIS 1.52 billion for 2005.
Published by Globes [online] - www.globes.co.il - on April 4, 2004