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 data to 23 July in the US shows 30 year fixed mortgage rates hitting new highs at 7.23%</li>
<li>The past two weeks show mortgage rate increases accelerating, and up 45bps from 20 July data</li>
<li>Mortgage loan volume index is approaching 1990, weekly purchases index continues downward</li>
</ul>


Weekly data to 23 July in the US shows 30 year fixed mortgage rates hitting new highs at 7.23%
The past two weeks show mortgage rate increases accelerating, and up 45bps from 20 July data
Mortgage loan volume index is approaching 1990, weekly purchases index continues downward


US Banks - Weekly Data: Mortgage Loan Rates A New High, Loan Volume Index Approaches 1990 Further

<ul>
<li>HFD for US small banks shows USD2.6bn new CRE loans in week vs USD3.4bn new total loans</li>
<li>US small banks have CRE loans at 2.9x capital vs 2.5x in recent periods and less provisions</li>
<li>Large term deposits are up from 8.5% to 14.2% of loans from trough to most recent week </li>
</ul>


HFD for US small banks shows USD2.6bn new CRE loans in week vs USD3.4bn new total loans
US small banks have CRE loans at 2.9x capital vs 2.5x in recent periods and less provisions
Large term deposits are up from 8.5% to 14.2% of loans from trough to most recent week 


US Small Banks - New HFD Shows 76% of New Loans Are CRE in Recent Week | CRE Loans at 2.9x Capital

<ul>
<li>1Q23 earnings were 130% of consensus annualized, 2Q23 is 104% consensus annualized</li>
<li>USB saw its quarterly income/FY23 consensus move from 27% to 21% from 1Q23 to 2Q23</li>
<li>COLB, WAL are at lowest FY23 consensus achievement rates: 21% and 41% during 1H23</li>
</ul>


1Q23 earnings were 130% of consensus annualized, 2Q23 is 104% consensus annualized
USB saw its quarterly income/FY23 consensus move from 27% to 21% from 1Q23 to 2Q23
COLB, WAL are at lowest FY23 consensus achievement rates: 21% and 41% during 1H23


US Banks - Qtly Profit Falls As % Of FY23 Consensus, Some More Than Others: USB, PB, COL, WAL, AEX

<ul>
<li>High-Frequency data for US mortgage loan applications, lending and LLR are a red flag</li>
<li>US large banks' loan growth is decelerating sharply, and LLR rising fast for many weeks</li>
<li>Banks face low or negative net interest income growth, as credit costs rise substantially</li>
</ul>


High-Frequency data for US mortgage loan applications, lending and LLR are a red flag
US large banks' loan growth is decelerating sharply, and LLR rising fast for many weeks
Banks face low or negative net interest income growth, as credit costs rise substantially


US Banks - HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions

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>Credit quality risks are rising in US commercial real estate (CRE) and specifically in office property; furthermore, the prospect of increasing US Treasury bond issuance may heighten T-bond volatility</li>
<li>We screen for US banks that have strong capital ratios, that can deliver premium returns and can confront the rising credit quality challenges, especially in CRE</li>
<li>We maintain buys on M&amp;T Bank and Western Alliance, adding Capital One with its healthy capital ratios and low office exposure; we recommend profit taking on First Horizon</li>
</ul>


Credit quality risks are rising in US commercial real estate (CRE) and specifically in office property; furthermore, the prospect of increasing US Treasury bond issuance may heighten T-bond volatility
We screen for US banks that have strong capital ratios, that can deliver premium returns and can confront the rising credit quality challenges, especially in CRE
We maintain buys on M&amp;T Bank and Western Alliance, adding Capital One with its healthy capital ratios and low office exposure; we recommend profit taking on First Horizon


US Banks – A Closer Look at Office Exposure and Revisiting Capital Adequacy

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 Banks - Weekly Data: Mortgage Loan Rates A New High, Loan Volume Index Approaches 1990 Further

New weekly data for US mortgage loan applications and mortgage loan rates, suggest major deterioration in home lending for US banks during 3Q23....

Daniel Tabbush

US Small Banks - New HFD Shows 76% of New Loans Are CRE in Recent Week | CRE Loans at 2.9x Capital

New HFD shows new CRE loans at 76% of total new loans, for small US banks. Their CRE loans/capital is rising and LLR/CRE loans is low, falling. Off...

Daniel Tabbush

US Banks - Qtly Profit Falls As % Of FY23 Consensus, Some More Than Others: USB, PB, COL, WAL, AEX

US bank profit downgrades can be big, looking at FY23 consensus earnings achievement rates in 1Q23, 2Q23. Many banks are at less than 50% of FY23...

Daniel Tabbush

US Banks - HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions

High frequency data in the US suggests bank earnings will be weak in coming quarters. Weekly mtg loan vol data nearing 1990 levels, weekly loan...

Daniel Tabbush

US Banks – A Closer Look at Office Exposure and Revisiting Capital Adequacy

We screen US banks for strong core capital ratios, premium returns and for CRE and office exposure; we keep buys on M&T Bank and Western Alliance,...

Victor Galliano

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