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>There is a long period of flat lining loans for large US banks indicative of weak demand that is persistent and risk-aversion by banks. </li>
<li>Large time deposits have swelled and this should continue to 'roll through' banks' income statement with high funding cost growth.</li>
<li>We show about 30 of the largest banks in the US, their profile of high funding costs growth and weak interest income growth; flat loans will not help.</li>
</ul>


There is a long period of flat lining loans for large US banks indicative of weak demand that is persistent and risk-aversion by banks. 
Large time deposits have swelled and this should continue to 'roll through' banks' income statement with high funding cost growth.
We show about 30 of the largest banks in the US, their profile of high funding costs growth and weak interest income growth; flat loans will not help.


US Banks - Flat Loans ~USD6.7 Trillion for Almost Every Week for Nearly 2 Years

<ul>
<li>Terms of credit on US credit card loans have surged to levels well higher than any period on record, since 1972 suggesting far worse delinquencies, risk aversion by lenders. </li>
<li>There are important implications for the 2nd and 3rd order effects on consumption in the US economy, as well as obvious 1st order implications for banks, card issuers. </li>
<li>In September 2022 delinquent card loans rates bottomed at 7.6% and this delinquency rate is now at 9.7% in December 2023. </li>
</ul>


Terms of credit on US credit card loans have surged to levels well higher than any period on record, since 1972 suggesting far worse delinquencies, risk aversion by lenders. 
There are important implications for the 2nd and 3rd order effects on consumption in the US economy, as well as obvious 1st order implications for banks, card issuers. 
In September 2022 delinquent card loans rates bottomed at 7.6% and this delinquency rate is now at 9.7% in December 2023. 


US Banks - No Period on Record Since 1972 Shows Terms on Credit Card Loans so Poor

<ul>
<li>Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth</li>
<li>Mortgage loan applications index shows some of the worst figures in years in the latest weekly data</li>
<li>Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans</li>
</ul>


Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth
Mortgage loan applications index shows some of the worst figures in years in the latest weekly data
Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans


US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500</li>
<li>Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap</li>
<li>4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.</li>
</ul>


While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500
Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap
4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.


Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

<ul>
<li>New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans</li>
<li>Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs</li>
<li>None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple </li>
</ul>


New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans
Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs
None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple 


US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

United States

Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.

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Citigroup Inc (C US)

US Banks - Flat Loans ~USD6.7 Trillion for Almost Every Week for Nearly 2 Years

US loans are flat for most all weeks for nearly two years, and funding costs have surged, putting net interest income under pressure, and this...

Daniel Tabbush

US Banks - No Period on Record Since 1972 Shows Terms on Credit Card Loans so Poor

Terms of credit on card loans in the US are worse than any time since the series begins in 1972. This is not simply a following of Fed Funds rates,...

Daniel Tabbush

US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Residential mortgage loan data is dismal and worsening for US banks, which we see in weekly data of loan growth and in the Mortgage Bankers Loan...

Daniel Tabbush

Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

Shift Exposure From Growth to Value; Downgrading Tech to market weight $XLK; Upgrading Industrials $XLI to Overweight; Upgrading Utilities $XLU to...

Vermilion Research

US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

Zions bank is reporting incredibly high time deposit growth, with negative implications for forward net interest income, and both Zions and Cade...

Daniel Tabbush

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