Asian bank research and consultancy, Tabbush Report

Daniel Tabbush

Asian bank 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

<ul>
<li>AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions</li>
<li>AUD610m of returned capital in past 12 months will see AUD140m added by October</li>
<li>AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages</li>
</ul>


AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions
AUD610m of returned capital in past 12 months will see AUD140m added by October
AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages


AMP - Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Australia & New Zealand Bankin / Event-Driven

<ul>
<li>This morning, ACCC <a href="https://www.accc.gov.au/media-release/accc-seeks-further-views-on-anzs-proposed-acquisition-of-suncorp-bank" target="_blank" rel="noopener">announced</a> that it had released a "<a href="https://www.accc.gov.au/system/files/public-registers/documents/Statement%20of%20preliminary%20views%20-%2004.04.23%20-%20PR%20-%20MA1000023%20ANZ%20Suncorp.pdf" target="_blank" rel="noopener">Statement of Preliminary Views</a>" on the ANZ/Suncorp deal and sought further views. </li>
<li>For now, the ACCC questions "the nature, likelihood, and extend of claimed public benefits" including synergies or claims regarding investment in Queensland. </li>
<li>Based on my reading of the document, this view is likely to carry over through the final decision due mid-June 2023. That means there's likely a trade here. </li>
</ul>


This morning, ACCC announced that it had released a "Statement of Preliminary Views" on the ANZ/Suncorp deal and sought further views. 
For now, the ACCC questions "the nature, likelihood, and extend of claimed public benefits" including synergies or claims regarding investment in Queensland. 
Based on my reading of the document, this view is likely to carry over through the final decision due mid-June 2023. That means there's likely a trade here. 


ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

<ul>
<li>Funding squeeze evident in HK's HIBOR market and reported in Australia too</li>
<li>Even where not visible, this must be expected globally, as banks reign in risk</li>
<li>MQG has low levels of deposits and high levels of securities</li>
</ul>


Funding squeeze evident in HK's HIBOR market and reported in Australia too
Even where not visible, this must be expected globally, as banks reign in risk
MQG has low levels of deposits and high levels of securities


Thematic (Sector/Industry)

<ul>
<li>Australia domestic credit growth is now at -2.2% YoY in January 2024, the worst figure since August 2021. </li>
<li>There are negative implications for the delta of net interest income for Australia's banks as loan growth moves negative.</li>
<li>Risk of rising credit costs is higher, not only from worsening insolvencies with corporates, but also with rising mortgage bad loans. </li>
</ul>


Australia domestic credit growth is now at -2.2% YoY in January 2024, the worst figure since August 2021. 
There are negative implications for the delta of net interest income for Australia's banks as loan growth moves negative.
Risk of rising credit costs is higher, not only from worsening insolvencies with corporates, but also with rising mortgage bad loans. 


Australia Banks - Negative Loan Growth Reaches August 2021 Levels

Australia

Bendigo and Adelaide Bank Limited offers a variety of banking and other financial services, including first mortgage housing finance, retail and business banking, commercial finance, funds management, treasury and foreign exchange services, superannuation and trustee services. Bendigo also offers internet banking.

Bendigo And Adelaide Bank (BEN 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

AMP - Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

AMP is now launching an online bank, and this is a real concern. A the same time, its margin pressure at its AMP Bank is not strong, new guidance...

Daniel Tabbush

ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

The ACCC has come out pretty clearly against the ANZ/SunCorp Bank deal, and seems to prefer a deal where SunCorp Bank would be merged with another...

Travis Lundy

MQG - Funding Squeeze?

Funding squeeze is evident in Hong Kong, and reports suggest the same in Australia, with other markets likely. Banks which rely more on non-deposit...

Daniel Tabbush

Australia Banks - Negative Loan Growth Reaches August 2021 Levels

Australia's domestic loan growth has just turned negative 2.2% in January 2024, the worst showing since August 2021, with negative implications for...

Daniel Tabbush