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>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

<ul>
<li>US large banks weekly data shows loan growth now turning to negative, not a positive outlook for bank earnings or core income</li>
<li>C&amp;I loan growth is more negative than other major segments, suggesting limited demand, but also risk-aversion by banks</li>
<li>Even where Jumbo Time Deposits growth is now only 59% YoY there is still likely to be major pressure on banks' funding costs</li>
</ul>


US large banks weekly data shows loan growth now turning to negative, not a positive outlook for bank earnings or core income
C&amp;I loan growth is more negative than other major segments, suggesting limited demand, but also risk-aversion by banks
Even where Jumbo Time Deposits growth is now only 59% YoY there is still likely to be major pressure on banks' funding costs


US Banks - HFD Shows Loan Growth Turning Negative Just Now, with C&I Worsening the Most

Equity Research Analyst - Long-Short

Raj S, CA, CFA

Artoval Advisors

Art’o’val stands for Art of Valuation. Artoval Advisors LLP is a professionally run advisory firm catering to various financial advisory services including Valuation, Investment Research, Training, Accounting, CFO Services and other ancillary services.

We are passionate about what we do and strongly believe in working with our clients as their extended teams. With Artoval Advisors as their trusted partner, our clients find it easy to achieve efficiency in service delivery without compromising on quality.

True Art of Valuation

<ul>
<li>
Large regional banks in the US have been troubled in 2023 by the proposed “Basel III Endgame” regulations, asset quality issues and earning pressure in terms of the high COF</li>
<li>
We believe these factors have made the sector more cyclical and vulnerable to even a mild recession scenario in 2024-25</li>
<li>
We are particularly weary of names at regulatory risk (like USB), and those with higher exposures to CRE</li>
</ul>



Large regional banks in the US have been troubled in 2023 by the proposed “Basel III Endgame” regulations, asset quality issues and earning pressure in terms of the high COF

We believe these factors have made the sector more cyclical and vulnerable to even a mild recession scenario in 2024-25

We are particularly weary of names at regulatory risk (like USB), and those with higher exposures to CRE


Equity Strategy: US Regional Banks: Not Out of the Woods Yet

United States

Fifth Third Bancorp is a diversified financial services company that operates banking centers in the Midwestern and Southeastern regions of the United States. The Company's principal businesses include retail banking, commercial banking, investment advisory, and data processing.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Fifth Third Ban (FITB 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 - 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

US Banks - HFD Shows Loan Growth Turning Negative Just Now, with C&I Worsening the Most

Looking at HFD of US large banks we see loan growth suddenly turning negative, with C&I growth the most negative. Large time deposit growth 59% YoY...

Daniel Tabbush

Equity Strategy: US Regional Banks: Not Out of the Woods Yet

US Regional Banks have been in turmoil for the last several quarters with valuations down by 40% or more on average. We think this is may not yet...

Raj S, CA, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)