Menorah Gaon Investment House analyst Miron Katzap predicts that Hapoalim will remain Israel's leading bank in the next few years.

But Hapoalim's management will have to strive harder after the privatization of Bank Leumi, and takeover by a foreign entity, Katzap writes.

Although competition by foreign banks over Israeli customers will intensify, Katzap does not foresee any substantial change in Israel's banking environment.

Menorah Gaon surmises that one way the foreign banks could gain a foothold in the Israeli market is to buy controlling interests in Bank Leumi, Hapoalim's arch-rival in the Israeli market, or Israel Discount Bank. Both face privatization.

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Katzap rates Bank Hapoalim a Buy and sets a price target at NIS 14.66, 41% above the bank's price on the market. He writes that Hapoalim is traded at 7.4 times its expected 2001 earnings, and at an equity multiple of 1.02.

The investment house estimates that Hapoalim's 2001 profits will reach NIS 1.748 billion, up 7.4% from 2000.