March has been a brutal month for banking stocks. In the U.S., roiled by the one-two-punch collapse of Silicon Valley Bank (US:SIVB) and New York’s Signature Bank (US:SBNY), bank shares are down more than 26% with just a few days left in the month.

It’s not much better in Europe, where the troubles at Credit Suisse (US:CS, CH:CSGN) forced the Swiss government to intervene and bring in a savior, in the form of rival UBS (US:UBS, CH:UBSG). And last week, German leader Deutsche Bank (US:DB, DE:DBK) unnerved investors with concerns that a contagion was spreading. All told, global banks are down 14% so far this month, as reflected in the KBW Nasdaq Global Bank Index.

Is there anywhere that bank stocks have been delivering for investors?

Yes. In Israel, where the Tel Aviv-traded shares of the country’s five main banks are up near 7% through March 27. And if analysts are correct, there’s 50% more upside in several of the stocks.

Rate Hike Help

A quick primer on the country’s banks: The main banking index, the TA-Banks5,  is made up of the country’s biggest lender, Bank Leumi (IL:LUMI, US:BLMIF), followed by Bank Hapoalim (IL:POLI), Discount Bank (IL:DSCT, US:ISDAY), Mizrachi Tefahot (IL:MZTF) and First International Bank of Israel (IL:FIBI).

March has seen reports from all five banks show the impact of central bank rate hikes since this time last year. The Bank of Israel has issued a series of rate increases that brought the key lending rate this month to 4.5% from 0.1% last April. The result has been strong financing income for the lenders.

Hapoalim kicked off the earnings season, with reported fourth quarter 2022 net profit that was nearly double the year-earlier period. The country’s second-biggest lender earned a net 1.76 billion Israeli shekels ($487 million) in the three months ended Dec. 31, 2022, versus 934 million shekels a year earlier. The bank is paying investors 30% of its Q4 net profit in a 525 million shekel dividend.

A week later, Leumi said net profit for the quarter rocketed 60% to 2.3 billion shekels versus 1.5 billion shekels in 2021’s comparable quarter.

Discount Bank posted a record 2022, as net interest income grew 33%. Helping that increase was credit growth that topped 13%. Operating efficient, represented by the bank’s return on equity, came in at 15.1%.

First International, or FIBI, reported similar results, as Q4 net income reached 536 million shekels. That bank’s board opted to return 50% of net earnings to investors in a dividend.

So, despite the uproar over Prime Minister Benjamin Netanyahu’s efforts to “reform” the country’s judiciary and the resulting general strike and protest that pretty much brought the country to a halt on Monday, the bank stocks traded in Tel Aviv are looking quite attractive. Why?

Global Resistance

Analysts at Barclays earlier this month published a very positive assessment of Israel’s banks, seeing 50% upside for shares of LUMI, POLI and DSCT.

Loan growth will increase further in the next few years. The country’s general ability to resist global economic shocks should help the banks see return on equity in the range of 13-17% this year. That is one reason why investors should take note.

That report followed S&P Global Israeli banks outlook, published last month, that posited the country’s economy will remain “more dynamic than peers” and banks “will benefit from the economy performing better than that of most global peers, despite a slowdown in 2023.”

What supports S&P’s thesis?

For one thing, banks’ underlying profitability is solid, due to efficiency improvements and rising interest rates.  The banking system’s capitalization could improve in 2023 as earnings increase, “but we expect dividends and growth to largely consume new capital generation.”

As for risks, the analysts cite high exposure to real estate  — construction, mortgages, and real estate activities  — as a key risk, but expect sound credit underwriting to partly mitigate potential concerns. Also, default rates are likely to rise over the next year, “albeit to relatively low levels, as customers’ repayment ability could be pressured.”

Four of the five bank stocks are among the top 10 holdings in the two broad index exchange-traded funds focused on Israel-domiciled companies; FIBI shows up further down in the holdings lists of the VanEck Israel ETF (US:ISRA) and iShares MSCI Israel ETF (US:EIS).

This article originally appeared on Fintel

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