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

<ul><li>We tend to focus on loan risk as the most critical for banks. </li><li>And this is generally correct across most of Asia.  Even in Japan it is the correct way to consider impairment risk, where most other assets for Japan’s banks are Japanese Government Bonds.</li><li>But in China, beware.  </li><li>There are plenty of loan-like risks classified as investments. We start with a look at Harbin Bank.</li></ul>

We tend to focus on loan risk as the most critical for banks. And this is generally correct across most of Asia.  Even in Japan it is the correct way to consider impairment risk, where most other assets for Japan’s banks are Japanese Government Bonds.But in China, beware.  There are plenty of loan-like risks classified as investments. We start with a look at Harbin Bank.

Loans Are Not the Only Asset Risk for China Banks

Transport Sector, China and Asia-focused Research

Charles De Trenck

Thematic (Sector/Industry)

Short answer: We get more Larry Summers editorials.Long answer…Larry Summers, a key accidental architect of Wall Street’s GFC of 2008-09 and neo-Keynesian piece of work, wants to do away with the $100 bill based on evidence most big bills are used for criminal purposes.Citing work by Harvard colleagues from <a href="http://www.hks.harvard.edu/centers/mrcbg/publications/awp/awp52" target="_blank"> Harvard Study</a>, Summers is fully armed, failing of course to realize that criminals were around before him and will continue to launder money for a long time to come, even if they have to do…

Short answer: We get more Larry Summers editorials.Long answer…Larry Summers, a key accidental architect of Wall Street’s GFC of 2008-09 and neo-Keynesian piece of work, wants to do away with the $100 bill based on evidence most big bills are used for criminal purposes.Citing work by Harvard colleagues from  Harvard Study, Summers is fully armed, failing of course to realize that criminals were around before him and will continue to launder money for a long time to come, even if they have to do…

Keynesian Brain Twister: What Happens When We Get Inflation & Negative Rates?

It’s as if the bank had no idea about the credit cycle in the first few quarters of last year. HSBC was expensing about US$700 million a quarter very steadily – which is also curious. It feels to us the bank was caught out, trying to keep profit respectable, but the economics of its clients made it impossible to continue.

It’s as if the bank had no idea about the credit cycle in the first few quarters of last year. HSBC was expensing about US$700 million a quarter very steadily – which is also curious. It feels to us the bank was caught out, trying to keep profit respectable, but the economics of its clients made it impossible to continue.

BEA is showing us all too clearly how credit costs for China bad loans can accelerate and impact profit. The risk is ultimately highest with China’s banks, but also foreign banks operating in China. This includes BEA, DBS and StanChart, to name but a few. The acceleration of credit costs in 2H15 for BEA’s China business is testimony to the continued deterioration in the Mainland, despite all the concerns flagged for so long.It has not run its course yet, the China bad loan cycle.<figure class="editor-figure"><figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/612/original/BEA%20loan%20loss%20reserve.PNG?1455524922" class="editor-image img-responsive" data-smartkarma-image-id="5612"><figcaption class="figcaption">BEA - Loan loss</figcaption></figure></figure>…

BEA is showing us all too clearly how credit costs for China bad loans can accelerate and impact profit. The risk is ultimately highest with China’s banks, but also foreign banks operating in China. This includes BEA, DBS and StanChart, to name but a few. The acceleration of credit costs in 2H15 for BEA’s China business is testimony to the continued deterioration in the Mainland, despite all the concerns flagged for so long.It has not run its course yet, the China bad loan cycle.BEA - Loan loss…

BEA Shows How Credit Costs Can Ratchet Up

Beside the fact that small banks in Hong Kong rarely, if ever, sell out at low multiples or in any period, other than a raging bull market, it is worthwhile to examine Bank of East Asia more closely.Does anybody remember DBS’s acquisition of Dao Heng Bank in the early 1990’s at over 3x price to book? Since Wing Hang was sold already to OCBC a few years ago, overpaying-Singaporean banks are now few and far between.One primary consideration that any suitor may have, following the Elliott letter prompting a sale, is the bank’s underlying book value. And the first place any due diligence team may look is BEA’s China exposure, both on and off-balance sheet.

Beside the fact that small banks in Hong Kong rarely, if ever, sell out at low multiples or in any period, other than a raging bull market, it is worthwhile to examine Bank of East Asia more closely.Does anybody remember DBS’s acquisition of Dao Heng Bank in the early 1990’s at over 3x price to book? Since Wing Hang was sold already to OCBC a few years ago, overpaying-Singaporean banks are now few and far between.One primary consideration that any suitor may have, following the Elliott letter prompting a sale, is the bank’s underlying book value. And the first place any due diligence team may look is BEA’s China exposure, both on and off-balance sheet.

Before Diving Headlong into BEA, We Examine It More Closely

Hong Kong

The Bank of East Asia, Limited and its subsidiaries provide general banking, related financial, business corporate, and investor services.

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Bank of East Asia (23 HK)

Loans Are Not the Only Asset Risk for China Banks

We tend to focus on loan risk as the most critical for banks. And this is generally correct across most of Asia. Even in Japan it is the correct...

Daniel Tabbush

Keynesian Brain Twister: What Happens When We Get Inflation & Negative Rates?

Short answer: We get more Larry Summers editorials.Long answer…Larry Summers, a key accidental architect of Wall Street’s GFC of 2008-09 and...

Charles De Trenck

Spectacular Loss for HSBC

It’s as if the bank had no idea about the credit cycle in the first few quarters of last year. HSBC was expensing about US$700 million a quarter...

Daniel Tabbush

BEA Shows How Credit Costs Can Ratchet Up

BEA is showing us all too clearly how credit costs for China bad loans can accelerate and impact profit. The risk is ultimately highest with...

Daniel Tabbush

Before Diving Headlong into BEA, We Examine It More Closely

Beside the fact that small banks in Hong Kong rarely, if ever, sell out at low multiples or in any period, other than a raging bull market, it is...

Daniel Tabbush

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