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.

Equity Bottom-Up

Bendigo And Adelaide Bank / Equity Bottom-Up

<ul>
<li>In any economy with persistently high interest rates, high living costs and decelerating loan growth, the risk is generally greater for bad corporate loans, not mortgage loans. </li>
<li>BEN is nearly only residential mortgage loans, highly different to CBA, NAB, WBC, ANZ and MQG. This is also clear in long-term low levels of credit costs. </li>
<li>NIM has moved up for BEN in FY23. There is limited risk of maturing debt to hurt its NIM in FY24, very much unlike large peer banks, especially NAB, MQG. </li>
</ul>


In any economy with persistently high interest rates, high living costs and decelerating loan growth, the risk is generally greater for bad corporate loans, not mortgage loans. 
BEN is nearly only residential mortgage loans, highly different to CBA, NAB, WBC, ANZ and MQG. This is also clear in long-term low levels of credit costs. 
NIM has moved up for BEN in FY23. There is limited risk of maturing debt to hurt its NIM in FY24, very much unlike large peer banks, especially NAB, MQG. 


2024 High Conviction - BEN - Almost All Mortgages | NPLs in Decline | Credit Costs Can Move Lower

Thematic (Sector/Industry)

<ul>
<li>Australia Securities &amp; Investment Commission produces high-frequency data on insolvencies, which is valuable data for analyzing banks. There is pronounced deterioration in at least 3 sectors.</li>
<li>In construction, total appointments rose to 829 YTD to 10 Sept 2023 from 588 a year ago and from 250 in the preceding comparable period. </li>
<li>Hotel &amp; food services and retail trade are also seeing high growth of insolvencies. Australia's banks will likely face more defaults, NPLs and credit costs. </li>
</ul>


Australia Securities &amp; Investment Commission produces high-frequency data on insolvencies, which is valuable data for analyzing banks. There is pronounced deterioration in at least 3 sectors.
In construction, total appointments rose to 829 YTD to 10 Sept 2023 from 588 a year ago and from 250 in the preceding comparable period. 
Hotel &amp; food services and retail trade are also seeing high growth of insolvencies. Australia's banks will likely face more defaults, NPLs and credit costs. 


Australia - New Insolvencies Data: Construction Appointments at 829 Vs 588 YoY | Credit Risk Worsens

<ul>
<li>Newly released data in Australia suggests worsening earnings for banks in the coming 1-2 quarters at least, from both less credit volume and higher credit costs.</li>
<li>Retail sales figures are just out with the YoY change continuing to grind lower, now at only 1.45% with implications for credit card transactions and consumer underlying strength.</li>
<li>General Business Situation survey for next 6 months is now lower than its trough in year 2020. New median house price data shows negative growth for 3 consecutive quarters.</li>
</ul>


Newly released data in Australia suggests worsening earnings for banks in the coming 1-2 quarters at least, from both less credit volume and higher credit costs.
Retail sales figures are just out with the YoY change continuing to grind lower, now at only 1.45% with implications for credit card transactions and consumer underlying strength.
General Business Situation survey for next 6 months is now lower than its trough in year 2020. New median house price data shows negative growth for 3 consecutive quarters.


Australia Banks - New Data Suggests Weaker Profit, Primarily from Loan Volume & Credit Costs

<ul>
<li>Bankruptcy data through May suggests that credit metrics are worsening dramatically</li>
<li>Australia's banks report on an interim basis, providing only trading updates quarterly</li>
<li>There are very specific concerns with worsening credit metrics for Suncorp and ANZ</li>
</ul>


Bankruptcy data through May suggests that credit metrics are worsening dramatically
Australia's banks report on an interim basis, providing only trading updates quarterly
There are very specific concerns with worsening credit metrics for Suncorp and ANZ


Australian Banks - High Frequency Data Suggests Major Deterioration Not Yet Visible In Interims

<ul>
<li>ACCC issued a new letter asking ANZ for 2 more weeks, for its decision to takeover Suncorp</li>
<li>ACCC appears to be taking seriously the Stark Report which is very much against takeover</li>
<li>Specifically, the ACCC indicates it needs more time to review ANZ's rebuttal to the report </li>
</ul>


ACCC issued a new letter asking ANZ for 2 more weeks, for its decision to takeover Suncorp
ACCC appears to be taking seriously the Stark Report which is very much against takeover
Specifically, the ACCC indicates it needs more time to review ANZ's rebuttal to the report 


ANZ/Suncorp - Another ACCC Deal Delay, Increasingly Seems Like It Will Not Get Approval

Australia

Australia and New Zealand Banking Group Limited provides banking services. The Bank offers accounts checking, savings  deposits, money market, mortgage, and term loans services, as well as card facilities and Internet  banking services. Australia and New Zealand Banking Group serves customers in New Zealand and Australia.

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Australia & New Zealand Bankin (AN3 AU)

2024 High Conviction - BEN - Almost All Mortgages | NPLs in Decline | Credit Costs Can Move Lower

BEN is unlike peers, with almost all mortgage loans, less of a problem with high rates, slowing economy. Its LT credit costs show this. NPLs are...

Daniel Tabbush

Australia - New Insolvencies Data: Construction Appointments at 829 Vs 588 YoY | Credit Risk Worsens

New insolvencies data is weakest in construction sector, but also there is major deterioration in accommodations, food, retail trade. The HFD...

Daniel Tabbush

Australia Banks - New Data Suggests Weaker Profit, Primarily from Loan Volume & Credit Costs

New data is of concern for bank profit. Housing prices, business index, retail sales, suggest a worsening backdrop. Banks' credit costs in the most...

Daniel Tabbush

Australian Banks - High Frequency Data Suggests Major Deterioration Not Yet Visible In Interims

High frequency data in Australia may be more valuable than many other regions, since banks only report on an interim basis. The data is not good,...

Daniel Tabbush

ANZ/Suncorp - Another ACCC Deal Delay, Increasingly Seems Like It Will Not Get Approval

Further delay by ACCC in its consideration for the ANZ takeover of Suncorp, appears to rest on Stark report, showing how there would be significant...

Daniel Tabbush

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