Investment bank Nessuah Zannex reiterates its Buy rating for Bank Hapoalim (TASE:POLI) and set its target price at NIS 10.78, 16% above its price on the TASE. Analyst Ronit Goodman says the update followed news the bank would have to increase its provision for doubtful debt.

Goodman thinks the bank will make a NIS 20 million to NIS 90 million provision in Q1, depending on the instructions of the Banks Supervisor and Partner Communications's (Nasdaq, TASE:PTNR, LSE:PCCD) debt repayment capability. Partner is scheduled to repay NIS 440 million by the end of the month.

Goodman said that if Bank of Israel raises the credit ceiling for parties associated with the bank through cross ownership from 10% to 15% of the bank's shareholders equity, then the bank's Q1 provision for doubtful debt will total the less imposing NIS 20 million. She believes the provisions the bank will make are not due to problematic credit per se, but to directives from the Supervisor of Banks.

Goodman lowered the bank's 2002 profit forecast by about NIS 90 million to NIS 1.01 billion. She believes that if the provision totals NIS 20 million, the bank will post a 8% return on capital, whereas a higher NIS 90 million provision will lead to a 7.8% return on capital.

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