The Analyst Who Dared: Micha Goldman Predicts Banks Will Provision NIS 100m for Fishman Losses

Excellence-Nessuah analyst rates Mizrahi at Neutral

Three months have passed since the market learned of Eliezer Fishman's massive losses from speculating on the Turkish lira. He apparently lost somewhere in the region of NIS 1.5 billion to NIS 2 billion on an NIS 15 billion position. The banks were responsible for allowing him to go that far out on a limb and took fire for risking public money on the real estate and media tycoon's speculation. But none of the banks issued a warning about increased provision for doubtful debt, or suggested what his gamble might do to their second-quarter profits.

Analysts covering the banks also avoided speculating on the subject, or even so much as estimating roughly what their exposure might be. At most they issued vague asides, such as "Mizrahi will have the highest exposure to Fishman, while FIBI will have the least."

None of that fog for analyst Micha Goldberg of Excellence-Nessuah, who dared to name figures. He predicts that Bank Hapoalim will provision between NIS 40 million to NIS 50 million, Bank Discount will set aside NIS 15 million to NIS 20 million, and that Bank Leumi and Mizrahi will each be booking NIS 10 million to NIS 15 million in Fishman-related provisions.

He also wrote that the question will be whether the Bank of Israel forces the banks to provision for the losses, or if there is sufficient collateral that has not yet been exercised.

"Since the Supervisor of Banks has not given any such order, as of the last week, the numbers could be entirely different," Goldberg added.

Mizrahi will be publishing its report on August 17, this Thursday. Goldberg predicts that third-quarter provisions will be offset by the NIS 16 million drop in provision for doubtful debt that Mizrahi posted in the first quarter (when it set aside NIS 36 million).

His recommendation for Mizrahi is Neutral, but he did not set a target price, noting unclarity about the return on equity it might achieve subsequent to its merger with Tefahot.