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>Granular data at Hang Seng Bank suggests a greater deterioration in both HK and China than is readily visible in headline numbers</li>
<li>The bank's China pre-tax profit is down 70% YoY in 1H24 and its total stage 3 loans are up 84% YoY in 1H24</li>
<li>The bank's credit-impaired loans for Hong Kong CRE rose from HKD1,081m to HKD13,485m, from 2H23 to 1H24</li>
</ul>


Granular data at Hang Seng Bank suggests a greater deterioration in both HK and China than is readily visible in headline numbers
The bank's China pre-tax profit is down 70% YoY in 1H24 and its total stage 3 loans are up 84% YoY in 1H24
The bank's credit-impaired loans for Hong Kong CRE rose from HKD1,081m to HKD13,485m, from 2H23 to 1H24


Hang Seng Bank - China Profit -70% YoY, Stage 3 Loans +84% YoY, HK CRE Impaired Loan +12.5x (Times)

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

<ul><li>Chinese banks are under strain as their deposits shrink in the wake of a regulatory crackdown on offering deposit rates higher than regulatory caps.</li><li>In the first half of the year, many Chinese mainland-listed commercial banks saw a decline in their net cash flow generated from operating activities — a key indicator of lenders’ liquidity — Caixin calculations based on their interim reports show.</li><li>Among China’s “Big Six” state-owned banks by assets, only Postal Savings Bank of China Co.</li></ul>

Chinese banks are under strain as their deposits shrink in the wake of a regulatory crackdown on offering deposit rates higher than regulatory caps.In the first half of the year, many Chinese mainland-listed commercial banks saw a decline in their net cash flow generated from operating activities — a key indicator of lenders’ liquidity — Caixin calculations based on their interim reports show.Among China’s “Big Six” state-owned banks by assets, only Postal Savings Bank of China Co.

Chinese Banks’ Cash Flow Plummets After Crackdown on High Deposit Rates 

<ul>
<li>With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. </li>
<li>Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.</li>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a> shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans</li>
</ul>


With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. 
Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.

Bank Of Communications Co H (3328 HK) shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans


China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

Cross Asset Strategy

<ul><li>Sora / In Depth: China’s dwindling AI chip stockpile leaves little room for Sora copycats</li><li>Corruption /: China targets ‘political swindlers’ in anti-graft campaign</li><li>PE /: IDG Capital partner accused of providing info in insider trading case</li></ul>

Sora / In Depth: China’s dwindling AI chip stockpile leaves little room for Sora copycatsCorruption /: China targets ‘political swindlers’ in anti-graft campaignPE /: IDG Capital partner accused of providing info in insider trading case

CX Daily: China’s Dwindling AI Chip Stockpile Leaves Little Room for Sora Copycats 

<ul>
<li>The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.</li>
<li>There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. </li>
<li>Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?</li>
</ul>


The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.
There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. 
Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?


Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

China

Agricultural Bank of China is a Chinese multinational banking and financial services corporation. It offers a diverse portfolio of corporate and retail banking products and services, including deposits, loans, wealth management, and investment banking, with a strong focus on rural development and supporting the real economy. The bank was founded in 1951 and is headquartered in Beijing, China.

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Agricultural Bank of China (1288 HK)

Hang Seng Bank - China Profit -70% YoY, Stage 3 Loans +84% YoY, HK CRE Impaired Loan +12.5x (Times)

Granular data for Hang Seng Bank provides a good window of underlying credit metrics in both Hong Kong and China, which may not be well visible in...

Daniel Tabbush

Chinese Banks’ Cash Flow Plummets After Crackdown on High Deposit Rates

Chinese banks are under strain as their deposits shrink in the wake of a regulatory crackdown on offering deposit rates higher than regulatory...

Caixin Global

China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

There are losses at China developers and some of this is new or losses are much higher. This is not fully reflected in headline figures at China...

Daniel Tabbush

CX Daily: China’s Dwindling AI Chip Stockpile Leaves Little Room for Sora Copycats

Sora / In Depth: China’s dwindling AI chip stockpile leaves little room for Sora copycats Corruption /: China targets ‘political swindlers’ in...

Caixin Global

Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

Bank of Jiujiang announced that its profit would be at least 30% lower for FY23 due to worsening credit metrics. This is incredibly rare to see...

Daniel Tabbush

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