Bank of America on Wednesday initiated coverage of Israel's four largest banks with "buy" ratings, saying they are well leveraged and positioned to benefit from post-Gaza war economic momentum.
Analyst David Taranto set a price target of 89.5 shekels for Hapoalim, one of Israel's two largest banks, implying an 18% upside to its current price. The target for rival Leumi was 85.0 shekels, a 16% upside.
Mizrahi-Tefahot was set at 265.0 shekels, while Israel Discount Bank was set at 40.3 shekels.
"Buy them all," Taranto wrote in a report.
He said Israeli banks had languished in a no-man 's-land for years after the Tel Aviv Stock Exchange was upgraded to developed-market status from emerging-market status. They were excluded from emerging indexes but barely represented in global benchmarks.
"This disconnect kept them under the radar for many international investors," Taranto said. "After a strong rally, we see them shifting from overlooked to favored as fundamentals point to further gains."
He cited strong, conservative balance sheets; excess capital; high efficiency; and attractive valuations, with banks offering generous dividend policies.
Banks should be able to weather softer inflation, lower interest rates, extra government-imposed taxes, geopolitical volatility, and real estate exposure, he added.
Israel's main banking index was up 0.7% on Wednesday. It has gained 6% so far in 2026 after rising 61% in 2025.
On Wednesday, Israel successfully completed a $6 billion public offering of dollar-denominated bonds, attracting overwhelming international interest, the Finance Ministry announced. This indicates that the State is returning to its pre-war spread levels.
Results indicate 'high level of investor confidence' in Israel economy
The offering included three bond series with maturities of five, 10, and 30 years, priced at 90, 100, and 125 basis points above comparable US Treasury yields. The weighted spread averaged 102 basis points, a 34% improvement compared to Israel’s 2024 dollar bond issuance.
“The successful fundraising process of the State of Israel in international markets, which has received high demand from institutional investors from all over the world, reflects the resilience of the Israeli economy and the responsible economic management that we have been implementing in recent years and has earned the trust of the markets,” Finance Minister Bezalel Smotrich said.
Accountant General Yali Rotenberg, who led the issuance, emphasized the significance of the results amid global uncertainties.
“The results of the offering reflect a return to the levels of margins that preceded the war, and indicate a high level of investor confidence in the Israeli economy. The scope of the offering supports the financing needs of the State of Israel for 2026 and is also a significant tailwind for the local market,” said Rotenberg.
The bonds were underwritten by Bank of America, Citi, Deutsche Bank, Goldman Sachs, and JPMorgan, following extensive investor meetings in the US, Asia, and Europe.
Pesach Benson contributed to this report.