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)

Fringe financial companies often reveal underlying credit metrics before mainstream banks.This is the case across Asia in several cycles, as well as in the US during its subprime loan crisis. This is why it is illustrative to understand the near 40% profit decline at Zhejiang Xiaoshan Rural Cooperative Bank (ZGX).Thus far, only CCCR has shown worse profit growth, although many third tier banks have yet to report full-year numbers.<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/007/265/original/net%20profit%20zgx.png?1460871073" class="editor-image img-responsive" data-smartkarma-image-id="7265"><figcaption class="figcaption">Source: SNL Financial</figcaption></figure>As can be expected it has suffered fromhigher…

Fringe financial companies often reveal underlying credit metrics before mainstream banks.This is the case across Asia in several cycles, as well as in the US during its subprime loan crisis. This is why it is illustrative to understand the near 40% profit decline at Zhejiang Xiaoshan Rural Cooperative Bank (ZGX).Thus far, only CCCR has shown worse profit growth, although many third tier banks have yet to report full-year numbers.Source: SNL FinancialAs can be expected it has suffered fromhigher…

A China Cooperative Bank with near 40% Profit Contraction Is Illustrative

China Commercial Credit is a specialty lender in China, although it is a listed entity in the US. What is interesting here is how its financials have deteriorated so dramatically. Where all are focused on the near zero profit growth of China’s banks, CCR shows how losses can mount to considerable levels. It is making big losses now for the past two years. It also reminds us of finance companies in Thailand in the late 1990’s and in the US subprime crisis more recently, which were the best…

China Commercial Credit is a specialty lender in China, although it is a listed entity in the US. What is interesting here is how its financials have deteriorated so dramatically. Where all are focused on the near zero profit growth of China’s banks, CCR shows how losses can mount to considerable levels. It is making big losses now for the past two years. It also reminds us of finance companies in Thailand in the late 1990’s and in the US subprime crisis more recently, which were the best…

Devastating Losses at Little Known China Specialty Lender Has Negative Implications for Bank Sector

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

China Bank Profit on the Way to Contraction

Equity Bottom-Up

<ul>
<li>There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. </li>
<li>This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  </li>
</ul><div class="content-highlight">The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.   </div><h2>Ping An</h2>…


There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. 
This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  
The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.   Ping An…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA 

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

China

Bank of Qingdao Co., Limited operates as a commercial bank. The Company provides public deposits, loans, domestic settlements, foreign exchanges, discounting bills, financial bonds, government bonds, and other products.

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Bank of Qingdao (3866 HK)

A China Cooperative Bank with near 40% Profit Contraction Is Illustrative

Fringe financial companies often reveal underlying credit metrics before mainstream banks.This is the case across Asia in several cycles, as well...

Daniel Tabbush

Devastating Losses at Little Known China Specialty Lender Has Negative Implications for Bank Sector

China Commercial Credit is a specialty lender in China, although it is a listed entity in the US. What is interesting here is how its financials...

Daniel Tabbush

China Bank Profit on the Way to Contraction

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We...

Daniel Tabbush

China Is Frantic About NPLs

There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. This is also talk that the...

Daniel Tabbush

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks. Bill-financing frauds seen at both the...

Morningstar, Inc.

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