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>Weekly balance sheets to 20 September show worsening general trends for large US banks, that can point to risk aversion, and worse net interest income and profit delta. </li>
<li>Loan growth ratcheted well lower from 2.04% YoY three weeks ago, to 1.89% two weeks ago and now to 1.54% in most recent week's data. CRE loans see worsening contraction. </li>
<li>Large US banks continue to accelerating growth in Jumbo Time Deposits, now at 89.0% YoY vs 85.8% in preceding week. These are now 6.8% of deposits, 2.1% higher WoW. </li>
</ul>


Weekly balance sheets to 20 September show worsening general trends for large US banks, that can point to risk aversion, and worse net interest income and profit delta. 
Loan growth ratcheted well lower from 2.04% YoY three weeks ago, to 1.89% two weeks ago and now to 1.54% in most recent week's data. CRE loans see worsening contraction. 
Large US banks continue to accelerating growth in Jumbo Time Deposits, now at 89.0% YoY vs 85.8% in preceding week. These are now 6.8% of deposits, 2.1% higher WoW. 


US Big Banks - Wkly B/S 20 Sep, Slower Loans +1.5%, CRE -0.5%, Big Term-Deposits Up to 6.8% of Total

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.

<ul>
<li>We focus in on three key issues – unrealized losses on bond holdings, commercial real estate exposure and deposit movements – ahead of US banks’ release of 3Q23 results</li>
<li>Current US Treasury yields imply further erosion of US banks’ adjusted CET1 ratios; we estimate that accumulated unrealized securities losses accounted for 25% of system total equity to June 2023</li>
<li>Bank system deposits are declining, but not alarmingly; CRE exposure is a key potential credit risk for the US banks; we like Capital One and we are cautious on Zions</li>
</ul>


We focus in on three key issues – unrealized losses on bond holdings, commercial real estate exposure and deposit movements – ahead of US banks’ release of 3Q23 results
Current US Treasury yields imply further erosion of US banks’ adjusted CET1 ratios; we estimate that accumulated unrealized securities losses accounted for 25% of system total equity to June 2023
Bank system deposits are declining, but not alarmingly; CRE exposure is a key potential credit risk for the US banks; we like Capital One and we are cautious on Zions


US Banks -  Snapshots Ahead of 3Q23 Results

<ul>
<li>US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans</li>
<li>Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth</li>
<li>Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?</li>
</ul>


US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans
Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth
Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?


US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

<ul>
<li>De-Risking is well in place in weekly balance sheet for US banks. Cash rose USD122bn in past 2 weeks, loans rose USD31bn, and deposits rose USD113bn. CRE loans are down.</li>
<li>US banks' LDR <em>was</em> rising a lot, from 58.6% low in week of 15 December 2021 to 69.3% in the most recent week's data; they do not want the money.</li>
<li>The increase in large time deposits, which cost more than other deposits, is now 82.8% YoY in the most recent week; this YoY growth was 71.0% just 9 weeks earlier.</li>
</ul>


De-Risking is well in place in weekly balance sheet for US banks. Cash rose USD122bn in past 2 weeks, loans rose USD31bn, and deposits rose USD113bn. CRE loans are down.
US banks' LDR was rising a lot, from 58.6% low in week of 15 December 2021 to 69.3% in the most recent week's data; they do not want the money.
The increase in large time deposits, which cost more than other deposits, is now 82.8% YoY in the most recent week; this YoY growth was 71.0% just 9 weeks earlier.


US Banks - Added $122bn Cash In Past 2 Weeks | Loans up $31bn | CRE Loans Down | Deposits up $113bn

Equity Bottom-Up

<ul>
<li>Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  </li>
<li>Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23</li>
<li>Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY</li>
</ul>


Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  
Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23
Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY


Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

United States

Capital One Financial Corporation is a diversified bank. The Bank, through its subsidiaries, offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients both domestically and internationally.  Capital One has bank locations in Connecticut, Louisiana, New Jersey, New York, and Texas.

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Capital One Financial (COF US)

US Big Banks - Wkly B/S 20 Sep, Slower Loans +1.5%, CRE -0.5%, Big Term-Deposits Up to 6.8% of Total

New balance sheet data US big banks: weaker loan growth, more negative for CRE, higher big term deposits. Loan loss reserves continue to rise fast....

Daniel Tabbush

US Banks - Snapshots Ahead of 3Q23 Results

US banks face challenges with unrealized bond losses impacting adjusted CET1 ratios, CRE exposure posing credit risks and deposit outflows. We are...

Victor Galliano

US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

HFD shows risk aversion increasing at large US banks. LLR rising a lot and big fixed time deposits, can mean worsening net profit delta. With less...

Daniel Tabbush

US Banks - Added $122bn Cash In Past 2 Weeks | Loans up $31bn | CRE Loans Down | Deposits up $113bn

US banks are de-risking. Weekly balance sheet data shows almost all new deposits coming in moving into cash. Jumbo time deposits now far higher to...

Daniel Tabbush

Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

49% revenue growth 2Q23, COGS/revenue in decline. Adj EBITDA is positive, rising sharply in 2Q23 from 1Q23, 4Q22. Scale, penetration, reach, new...

Daniel Tabbush

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US Big Banks - Wkly B/S 20 Sep, Slower Loans +1.5%, CRE -0.5%, Big Term-Deposits Up to 6.8% of Total

New balance sheet data US big banks: weaker loan growth, more negative for CRE, higher big term deposits. Loan loss reserves continue to rise fast....

Daniel Tabbush

US Banks - Snapshots Ahead of 3Q23 Results

​US banks face challenges with unrealized bond losses impacting adjusted CET1 ratios, CRE exposure posing credit risks and deposit outflows. We are...

Victor Galliano

US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

HFD shows risk aversion increasing at large US banks. LLR rising a lot and big fixed time deposits, can mean worsening net profit delta. With less...

Daniel Tabbush

US Banks - Added $122bn Cash In Past 2 Weeks | Loans up $31bn | CRE Loans Down | Deposits up $113bn

US banks are de-risking. Weekly balance sheet data shows almost all new deposits coming in moving into cash. Jumbo time deposits now far higher to...

Daniel Tabbush

Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

49% revenue growth 2Q23, COGS/revenue in decline. Adj EBITDA is positive, rising sharply in 2Q23 from 1Q23, 4Q22. Scale, penetration, reach, new...

Daniel Tabbush

US banks face challenges with unrealized bond losses impacting adjusted CET1 ratios, CRE exposure posing credit risks and deposit outflows. We are...