Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>With Singapore bank's negative credit growth now at -4.7% YoY in the latest available month of October, there is increased risk of worsening net interest income growth.</li>
<li>Over the past several months the severity of worsening domestic credit growth in Singapore is acute moving from +8% YoY in May to -5% YoY in October. </li>
<li>OCBC and DBS saw net interest income delta essentially flat YoY, while for UOB net interest income delta was well lower. 2H23 can be far worse for all. </li>
</ul>


With Singapore bank's negative credit growth now at -4.7% YoY in the latest available month of October, there is increased risk of worsening net interest income growth.
Over the past several months the severity of worsening domestic credit growth in Singapore is acute moving from +8% YoY in May to -5% YoY in October. 
OCBC and DBS saw net interest income delta essentially flat YoY, while for UOB net interest income delta was well lower. 2H23 can be far worse for all. 


Singapore - Domestic Credit Growth Negative Past Four Consecutive Months | Core Income Delta Risk

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>A few large placements in India, along with <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> pricing, kept the market ticking this week.</li>
<li>In the IPO space, India saw a flurry of launches, as companies and banker try to cash-in on the market frenzy.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
A few large placements in India, along with Denso Corp (6902 JP) pricing, kept the market ticking this week.
In the IPO space, India saw a flurry of launches, as companies and banker try to cash-in on the market frenzy.


ECM Weekly (17th Dec 2023) - Toyota, Denso, Mankind, Axis, Merdeka, DOMS, India Shelter, Inox

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> (RB),  the online banking arm of <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a>, raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.</li>
<li>RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Rakuten Bank (5838 JP) (RB),  the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
In this note, we will talk about the lock-up dynamics and updates since our last note.


Rakuten Bank IPO Lock-Up - Parent and Company Will Come Out of Lockup

Equity Bottom-Up

<ul>
<li>OCBC has seen its mkt cap RISE by ~4% YTD. This is stark contrast to the ~6.5% lower mkt cap at DBS and around 10% lower mkt cap at UOB.</li>
<li>Net interest income had been strong, and this likely slows, a lot. Other areas are far from strong. Credit costs are up 103% YoY at 9M23.</li>
<li>Profit from insurance is down 12% YoY and down 16% QoQ, in 3Q23 (Great Eastern). Profit from associates is -1% YoY in the quarter and only +1% YoY</li>
</ul>


OCBC has seen its mkt cap RISE by ~4% YTD. This is stark contrast to the ~6.5% lower mkt cap at DBS and around 10% lower mkt cap at UOB.
Net interest income had been strong, and this likely slows, a lot. Other areas are far from strong. Credit costs are up 103% YoY at 9M23.
Profit from insurance is down 12% YoY and down 16% QoQ, in 3Q23 (Great Eastern). Profit from associates is -1% YoY in the quarter and only +1% YoY


OCBC - Market Capitalization Rising, Unlike Peers | Insurance Is Lack Luster | Credit Costs Seem Low

National Australia Bank / Equity Bottom-Up

<ul>
<li>NAB holds significantly more maturing debt in the coming year than its largest 3 peer banks in Australia and also more than the 3 banks in Singapore, by comparison</li>
<li>The bank has grown its business loans aggressively, which can see lumpy bad loans in a poor economy, with high unseasoned loans, yet its HoH credit costs were flat</li>
<li>CRE loans are meaningful at NAB, adding another risk to maturing debt at the top of the rate cycle with what appears to optimistic credit costs in recent results</li>
</ul>


NAB holds significantly more maturing debt in the coming year than its largest 3 peer banks in Australia and also more than the 3 banks in Singapore, by comparison
The bank has grown its business loans aggressively, which can see lumpy bad loans in a poor economy, with high unseasoned loans, yet its HoH credit costs were flat
CRE loans are meaningful at NAB, adding another risk to maturing debt at the top of the rate cycle with what appears to optimistic credit costs in recent results


NAB - Maturing Debt AUD40bn | At Top of Rate Cycle | With High Unseasoned Loans, CRE Loans

Singapore

United Overseas Bank Limited provides a wide range of financial services including personal financial services, wealth management, private banking, commercial and corporate banking, transaction banking, investment banking, corporate finance, capital market activities, treasury services, futures broking, asset management, venture capital management and insurance.

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UOB (UOB SP)

Singapore - Domestic Credit Growth Negative Past Four Consecutive Months | Core Income Delta Risk

Singapore banks are seeing another negative month of credit growth YoY and its pace is worsening. Net interest income risk is also amplified by...

Daniel Tabbush

ECM Weekly (17th Dec 2023) - Toyota, Denso, Mankind, Axis, Merdeka, DOMS, India Shelter, Inox

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Rakuten Bank IPO Lock-Up - Parent and Company Will Come Out of Lockup

Rakuten has just announced that it will selldown some of its stake in Rakuten Bank in order to fund redemption of some of its bonds.

Sumeet Singh

OCBC - Market Capitalization Rising, Unlike Peers | Insurance Is Lack Luster | Credit Costs Seem Low

OCBC may see its net interest income slow dramatically, exposing the worsening other line items, where credit costs can especially surprise,...

Daniel Tabbush

NAB - Maturing Debt AUD40bn | At Top of Rate Cycle | With High Unseasoned Loans, CRE Loans

NAB has more maturity debt than large peers, which can mean worse NIM impact when refinancing at the top of the rate cycle. Business loan growth...

Daniel Tabbush

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