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>A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ &nbsp;combine to create a world of worry in markets and bank stocks in particular. The way this usually plays out is first with liquidity.&nbsp; </li><li>Banks pull credit lines from weaker banks (and weaker companies).&nbsp; </li><li>If a bank has a loan to deposit ratio (LDR) above 100%, it is often difficult to repay the redeemed credit line, as it means disposing of an asset, a loan – immediately. &nbsp; </li></ul>

A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ &nbsp;combine to create a world of worry in markets and bank stocks in particular. The way this usually plays out is first with liquidity.&nbsp; Banks pull credit lines from weaker banks (and weaker companies).&nbsp; If a bank has a loan to deposit ratio (LDR) above 100%, it is often difficult to repay the redeemed credit line, as it means disposing of an asset, a loan – immediately. &nbsp; 

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Negara is our top pick in the Indonesian banks, based on our proprietary scorecard; it scores well based on attractive valuations, sound credit quality metrics and potential for improved returns</li>
<li>The PB value in Negara is especially apparent relative to Permata; Negara trades at a 50%+ PBV ratio discount to Permata, which we believe is not warranted by the fundamentals</li>
<li>We downgrade Mandiri from a buy to a neutral rating; it is no longer, in our view, compelling based on PBV ratio and now looks expensive in PEG ratio terms</li>
</ul>


Negara is our top pick in the Indonesian banks, based on our proprietary scorecard; it scores well based on attractive valuations, sound credit quality metrics and potential for improved returns
The PB value in Negara is especially apparent relative to Permata; Negara trades at a 50%+ PBV ratio discount to Permata, which we believe is not warranted by the fundamentals
We downgrade Mandiri from a buy to a neutral rating; it is no longer, in our view, compelling based on PBV ratio and now looks expensive in PEG ratio terms


Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

<ul>
<li>Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term</li>
<li>We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains</li>
<li>Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling</li>
</ul>


Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term
We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains
Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling


Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

<ul>
<li>Negara’s attractive valuations, its low PEG ratio, its improving returns and efficiency ratio stand out; pre- and post-provision returns edged higher, combined with high NPL coverage and healthy CET1 ratio</li>
<li>We remain positive on Mandiri for its attractive PE multiples, its premium returns, and its robust credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia</li>
<li>Rakyat’s high structural cost of risk continues to weigh on its pre- and post-provision returns, with the latter being eroded further to 3Q24</li>
</ul>


Negara’s attractive valuations, its low PEG ratio, its improving returns and efficiency ratio stand out; pre- and post-provision returns edged higher, combined with high NPL coverage and healthy CET1 ratio
We remain positive on Mandiri for its attractive PE multiples, its premium returns, and its robust credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
Rakyat’s high structural cost of risk continues to weigh on its pre- and post-provision returns, with the latter being eroded further to 3Q24


Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

<ul>
<li>Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage</li>
<li>We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia</li>
<li>Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward</li>
</ul>


Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward


Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Indonesia

PT Bank Permata Tbk is a leading Indonesian commercial bank offering a comprehensive range of financial services, including retail and corporate banking products such as savings accounts, loans, credit cards, investments, and digital banking platforms. The bank provides solutions in conventional and Sharia-compliant formats, encompassing consumer banking, commercial banking, and wholesale banking segments. Headquartered in Jakarta, Indonesia, the company was founded in 1954.

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Bank Permata (BNLI IJ)

Be Wary of High LDR Banks at Present

A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ combine to create a world of worry in markets and bank...

Daniel Tabbush

Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

We rank Indonesian banks based on our proprietary scorecard; Negara is top due to good value, credit quality, return potential and at a deep PBV...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Negara is our top pick, Mandiri remains a buy; both banks have big valuation differentials with quality play BCA and they have lower structural...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Be Wary of High LDR Banks at Present

A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ combine to create a world of worry in markets and bank...

Daniel Tabbush

Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

We rank Indonesian banks based on our proprietary scorecard; ​Negara is top due to good value, credit quality, return potential and at a deep PBV...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

​Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

​We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Negara is our top pick, Mandiri remains a buy; both banks have big valuation differentials with quality play BCA and they have lower structural...

Victor Galliano

We rank Indonesian banks based on our proprietary scorecard; Negara is top due to good value, credit quality, return potential and at a deep PBV...

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...