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Bank Hapoalim BM (BKHYY)
OTHER OTC:BKHYY
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Bank Hapoalim BM
(OTC:BKHYY)
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Rating:70Outperform
Price Target:
$139.00
â–²(17.38% Upside)
Action:ReiteratedDate:03/07/26
The score is driven primarily by solid underlying profitability and a constructive, guidance-up earnings outlook, supported by an attractive valuation. Offsetting these positives are the recent revenue decline, meaningfully higher leverage, and only mixed near-term technical signals.
Positive Factors
Strong Profitability & ROE
Sustained high profitability and ROE signal the bank’s ability to generate internal capital across business cycles. Robust net income supports dividend capacity, organic capital build, and reinvestment for growth while providing a buffer against credit or macro shocks over the medium term.
High Asset Quality & Reserves
Very low NPLs and sizeable collective reserves reduce credit loss volatility and protect capital in downturns. A conservative provisioning posture enhances loss-absorbing capacity and supports lending resilience and regulatory ratios, underpinning long-term franchise stability.
Digital Scale & AI Momentum
Large digital footprint and GenAI adoption offer durable customer-acquisition and efficiency levers. Bit’s multi-bank user base is a structural growth channel for deposits, fees and cross‑sell, while AI automation can sustainably lower servicing costs and improve product delivery over time.
Negative Factors
Sharply Higher Leverage
A near tripling of leverage reduces financial flexibility and raises solvency sensitivity to shocks. Higher debt burdens constrain capital management options, increase funding risk and elevate the bank’s exposure to rate or liquidity stress during economic downturns.
Recent Revenue Decline
A meaningful drop in top-line growth after prior gains weakens the sustainability of earnings improvements. Persistent revenue pressure can compress margins, limit reinvestment and heighten reliance on cost cuts or one‑off gains to meet profit targets over the medium term.
Volatile Cash Generation
Intermittent negative operating and free cash flows across recent years indicate weaker predictability of internal funding. This volatility can constrain capacity to sustain dividends, invest in tech initiatives or absorb shocks without resorting to higher leverage or external funding.
Bank Hapoalim BM (BKHYY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$32.47B
Dividend Yield2.71%
Average Volume (3M)112.00
Price to Earnings (P/E)11.0
Beta (1Y)0.18
Revenue Growth25.15%
EPS Growth25.32%
CountryUS
Employees8,480
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)2.56
Shares Outstanding262,528,300
10 Day Avg. Volume0
30 Day Avg. Volume112
Financial Highlights & Ratios
PEG Ratio0.56
Price to Book (P/B)1.53
Price to Sales (P/S)2.50
P/FCF Ratio6.14
Enterprise Value/Market Cap3.15
Enterprise Value/Revenue2.59
Enterprise Value/Gross Profit4.84
Enterprise Value/Ebitda6.80
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)11.61
Revenue Forecast (FY)$7.63B
Bank Hapoalim BM Business Overview & Revenue Model
Company DescriptionBank Hapoalim B.M., together with its subsidiaries, provides various banking and financial products and services in Israel and internationally. It operates through Corporate Banking, Retail Banking, and Financial Markets and International Banking divisions. The company offers account-management services, credit for various purposes, deposits, and savings plans, and capital-market service; securities, and currencies and derivatives trading services; securities custody services; research, consulting, and advisory services; pension advisory and retirement planning services; and housing loans. It also provides credit for routine operations and investment financing, guarantees, letters of credit, foreign trade, and transactions in financial and derivative instruments, as well as investment services in various channels, such as foreign currency, shekels, securities, etc. In addition, the company offers financing for infrastructure projects, foreign trade and international trade financing, and project financing services; foreign trade transactions and transactions in financial derivatives; financing of working capital; syndication; credit-risk sales; financing of construction projects; dealing-room services; federal deposit insurance; and credit cards services. Further, it provides clearing of payment, asset management, investment portfolio management, investment banking, underwriting, and issuance management services. The company serves households, private-banking customers, foreign residents, small businesses, financial-asset managers, middle-market business clients, and large corporations through 175 branches, 601 external and 131 internal automatic teller machines, 126 external and 216 internal check-deposit machines, 30 information stations, 316 self-service stations, and 119 night safes. Bank Hapoalim B.M. was founded in 1921 and is based in Tel Aviv, Israel.
How the Company Makes MoneyBank Hapoalim generates revenue primarily through interest income from loans and credit facilities extended to customers, which constitutes a significant portion of its earnings. The bank also earns income from fees and commissions related to its banking services, including account management, transaction processing, and wealth management services. Additionally, investment income from its trading and investment portfolios contributes to its revenue. The bank has established strategic partnerships with various financial service providers, enhancing its product offerings and customer reach, which further supports its revenue generation. Economic conditions, regulatory changes, and interest rate fluctuations are significant factors influencing the bank's overall financial performance.
Bank Hapoalim BM Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 25, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive performance for 2025: robust profitability (ILS 9.8bn), high ROE (15.9%), broad-based loan growth (+13.4%), low NPLs (0.48%) and strong capital allowing meaningful shareholder distribution. Management emphasized digital and AI progress (Bit and Danit), efficiency programs and higher 2026–27 targets, and flagged a material one-off pipeline (real estate gains of ILS 800–900m from 2027). Key risks discussed were temporary Q4 one-offs (labor provision and CPI-driven volatility), elevated collective provisions (conservative reserves), ongoing technology costs, and geopolitical uncertainty that could slow activity if prolonged. On balance, the positives — notably profitability, asset quality, capital strength and clear strategic momentum — substantially outweigh the noted challenges.Q4-2025 Updates
Positive Updates
Strong Profitability and ROE
Net profit of ILS 9.8 billion for 2025 (ILS 9.4 billion adjusted for ILS 380m insurance reimbursement); return on equity of 15.9% for the year (15.3% adjusted); EPS ILS 7.43 — both metrics comfortably above prior targets.
Accelerated Loan Growth Across All Segments
Total credit grew 13.4% in 2025 (4.9% in Q4), exceeding previous target of 7%; corporate credit +25.8%, commercial (middle market) +11.3%, retail/mortgages/small business growth ~7%–12%.
Revenue Expansion — Financing Income and Fees
Financing income increased ~9.6% year-on-year driven by higher business activity and portfolio repositioning; total fees grew 11.3% in 2025 (notably securities and account management fees, and one-off international card fees).
Strong Asset Quality and High Reserves
NPL ratio improved to 0.48%; allowance-to-loans ratio high at 1.72%; NPL coverage rose to more than 3x (over 300%); provision for credit losses ILS 421 million (0.31% of credit book) reflecting a conservative reserve posture.
Capital Strength and Shareholder Returns
CET1 ratio 11.98% with CET1 capital growth of 11.2% year-over-year; 2025 shareholder distribution totaled 50% of net profit (ILS 4.1 billion cash dividend, ILS 0.79 per share — ~4.6% yield) plus an additional ILS 200 million declared in Q4.
Digital / Innovation Momentum — Bit & GenAI
Bit reached 3.5 million active users and annual P2P volume of ILS 30 billion; two-thirds of Bit users bank with other banks (large customer acquisition opportunity). Launched AI bot 'Danit' which handled thousands of calls and completed the share distribution process end-to-end; bank reports material progress on GenAI and data initiatives.
Efficiency and Cost Discipline
Reported cost-income ratio below 35% and adjusted cost-income in the mid-to-low 30s; nearly 8% reduction in other operating expenses in 2025; productivity metrics (income per employee and credit per employee) improved.
Guidance and Upside from Real Estate
Updated 2026–27 targets: net profit ILS 9.0–10.0 billion, ROE 14%–15%, loan growth 8%–9%, payout ratio 50%–60%. Expected pretax gains from planned property sales tied to Poalim Center relocation of ILS 800–900 million starting 2027.
Negative Updates
Q4 One-Offs and CPI Volatility Impact
Quarterly profitability affected by negative CPI dynamics and a one-time ILS 200 million provision related to a labor dispute; CPI volatility produced over ILS 650 million gap in financing income between Q3 and Q4, contributing to reported Q4 ROE of 13% (below annual level).
Labor Dispute and Workforce Reduction Uncertainty
Provisioned ILS 200 million in anticipation of labor settlement; announced voluntary reduction program (770 employees over 4 years, ~ILS 300 million target savings by 2028) but negotiations with employee representatives are ongoing and not finalized, creating execution/timing risk.
High Collective Provisions (Conservative Positioning)
A large portion (>95%) of total allowance is collective, raising the allowance-to-loans ratio to 1.72% and driving provisions of ILS 421 million. While prudent, elevated reserves could weigh on near-term reported profitability until potential releases occur.
Competitive Pressure on Margins and Near-Term Tech Costs
Management acknowledged ongoing competitive pressure on spreads; technology and talent costs are high today and AI benefits are expected in the medium term rather than immediately — near-term P&L impact from tech spend remains elevated.
Deposit Mix and Moderate Deposit Growth
Retail deposits declined during the year (still 54% of total deposits); total deposit growth modest at 3.2% year-on-year, exposing some funding/mix dynamics to monitor.
Macroeconomic & Geopolitical Uncertainty
Ongoing regional conflict introduces downside risk and potential temporary slowdown (management cites possible contraction similar to Q2 2025 if operations are prolonged). Market-implied interest rates and inflation for the near term are lower than a year ago, creating sensitivity in targets and income dynamics.
Interest-Rate Sensitivity and AFS Volatility
Management discloses about ILS 800 million sensitivity to a 1% interest-rate move (equity impact ~ILS 1 billion in sensitivity table). AFS unrealized gains exist but fair-value sensitivity to yield moves creates potential volatility to equity and OCI.
Company Guidance
The bank updated its 2026–27 guidance to target net profit of ILS 9.0–10.0 billion, return on equity of 14–15%, accelerated loan growth of 8–9% and a higher payout ratio of 50–60%; management also expects to recognize pretax real‑estate gains of ILS 800–900 million starting in 2027. These targets build on strong 2025 results (net profit ILS 9.8bn, ILS 9.4bn excl. ILS 380m insurance income; ROE 15.9% / 15.3% excl.; EPS ILS 7.43; credit growth 13.4%; deposits +3.2% y/y) and rest on a solid balance sheet (CET1 11.98%), high efficiency (cost/income below 35%, adjusted mid–low 30s), strong asset quality (NPLs 0.48%, allowance to loans 1.72%, NPL coverage ~310%), provisions of ILS 421m (0.31% of the book) in 2025, a 2025 cash dividend of ILS 4.1bn (ILS 0.79/share) and total distribution ILS 4.9bn (50% payout), and a reported sensitivity to a 1% interest‑rate move of roughly ILS 800m.Bank Hapoalim BM Financial Statement Overview
Summary
Strong profitability and improved operating margin with rising TTM net income support the score, but it is held back by a recent revenue decline, a sharp increase in leverage (debt-to-equity rising materially vs 2024), and historically volatile cash flow despite a strong TTM rebound.Income Statement
Profitability is strong with healthy TTM (Trailing-Twelve-Months) net margin (~23%) and rising net income versus prior years (TTM ~9.0B vs 2024 ~7.6B and 2023 ~7.4B). Operating profitability also improved from 2023–2024 levels (TTM operating margin ~35% vs ~30% in 2024). The main weakness is growth: revenue declined in the most recent year (TTM revenue growth about -7.7%) after solid growth in 2022–2024, and margins are below the unusually high levels seen in 2021–2022.78
Positive
Balance Sheet
The bank generates solid returns on shareholders’ capital (TTM return on equity ~14%), consistent with 2022–2024 levels. However, leverage increased meaningfully: debt relative to equity moved from ~0.36 in 2024 to ~0.99 in TTM (Trailing-Twelve-Months), which raises balance-sheet risk and reduces flexibility if the operating environment weakens. Asset base is large and growing (assets up from ~539B in 2020 to ~763B in TTM), but the sharp step-up in debt is a key offset.60
Neutral
Cash Flow
Cash generation in TTM (Trailing-Twelve-Months) looks strong, with operating cash flow (~17.1B) and free cash flow (~16.1B) covering net income well (free cash flow about 0.94x net income). That said, cash flow has been volatile across years (negative operating and free cash flow in 2023, negative free cash flow in 2022), and the reported free cash flow growth rate is sharply negative in TTM, pointing to inconsistency despite the current-year rebound.55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 39.50B | 40.48B | 38.20B | 23.63B | 16.22B |
| Gross Profit | 21.15B | 21.93B | 21.31B | 17.87B | 14.30B |
| EBITDA | 14.30B | 13.02B | 12.07B | 10.70B | 8.41B |
| Net Income | 9.01B | 7.63B | 7.36B | 6.53B | 4.91B |
Balance Sheet | |||||
| Total Assets | 762.84B | 720.84B | 686.53B | 665.35B | 638.78B |
| Cash, Cash Equivalents and Short-Term Investments | 94.75B | 117.05B | 107.73B | 133.42B | 189.28B |
| Total Debt | 63.91B | 20.75B | 22.36B | 27.47B | 26.27B |
| Total Liabilities | 698.49B | 662.69B | 634.10B | 618.85B | 596.03B |
| Stockholders Equity | 64.35B | 58.15B | 52.43B | 46.50B | 42.73B |
Cash Flow | |||||
| Free Cash Flow | 16.09B | 8.85B | -1.41B | -568.00M | 4.29B |
| Operating Cash Flow | 17.07B | 9.83B | -437.00M | 132.00M | 5.18B |
| Investing Cash Flow | -82.85B | -27.01B | -27.15B | -67.97B | -45.87B |
| Financing Cash Flow | 26.17B | 26.47B | 1.96B | 10.55B | 91.97B |
Bank Hapoalim BM Technical Analysis
Neutral
118.42
Price Trends
126.17
Negative
117.06
Positive
104.46
Positive
Market Momentum
-0.49
Positive
44.13
Neutral
28.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKHYY, the sentiment is Neutral. The current price of 118.42 is below the 20-day moving average (MA) of 128.67, below the 50-day MA of 126.17, and above the 200-day MA of 104.46, indicating a neutral trend. The MACD of -0.49 indicates Positive momentum. The RSI at 44.13 is Neutral, neither overbought nor oversold. The STOCH value of 28.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BKHYY.
Bank Hapoalim BM Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $25.90B | 11.79 | 19.28% | 4.82% | 8.72% | 27.70% | |
70 Outperform | $32.47B | 10.95 | 15.13% | 2.71% | 25.15% | 25.32% | |
69 Neutral | $35.31B | 8.02 | 9.81% | 2.79% | -4.64% | 24.98% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $28.05B | 18.46 | 8.70% | 2.86% | -4.88% | 4.84% | |
64 Neutral | $35.09B | 8.31 | 13.55% | 2.48% | 5.89% | 34.68% | |
61 Neutral | $20.89B | 12.03 | 9.94% | 0.37% | -3.18% | -3.10% |
* Financial Sector Average
BKHYY
Bank Hapoalim BM
123.70
54.36
78.40%
BBD
Banco Bradesco SA
3.53
1.44
69.22%
BAP
Credicorp
325.68
144.89
80.14%
FCNCA
First Citizens BancShares
1,768.04
-60.93
-3.33%
KB
Kb Financial Group
99.47
44.08
79.58%
SHG
Shinhan Financial Group Co
58.79
26.20
80.39%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.