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.

Equity Bottom-Up

We are sure that most people have seen Novak Djokovic play tennis.If so, we all know that even he can not place the ball in the far corner of the court, at the baseline, all the time. There are too many variables, and he is not a robot. All the practice in the world will not change this; sometimes he will miss; sometimes other factors will overshadow his competency.But can a bank hit the shot all the time?

We are sure that most people have seen Novak Djokovic play tennis.If so, we all know that even he can not place the ball in the far corner of the court, at the baseline, all the time. There are too many variables, and he is not a robot. All the practice in the world will not change this; sometimes he will miss; sometimes other factors will overshadow his competency.But can a bank hit the shot all the time?

HDFC Bank's Profit Growth Seems Crafted To A Degree

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.

Make no mistake about this headline: the growth rate of new NPAs in 90 days at Axis Bank was 46%. There is no typo here. What matters is that this is a private bank, not a government bank. It’s loan book is not bizarre or out of line with some of the more majestic banks in India, at 47% corporate, 40% retail and 13% SME. Where SME loans are small in ticket-size, some may even say this bank is 53% retail or consumer. And yet here we are with exponential growth in NPAs.  It would be unusual to see…

Make no mistake about this headline: the growth rate of new NPAs in 90 days at Axis Bank was 46%. There is no typo here. What matters is that this is a private bank, not a government bank. It’s loan book is not bizarre or out of line with some of the more majestic banks in India, at 47% corporate, 40% retail and 13% SME. Where SME loans are small in ticket-size, some may even say this bank is 53% retail or consumer. And yet here we are with exponential growth in NPAs.  It would be unusual to see…

Axis Bank's 46% NPA Growth in Three Months Is Real

Thematic (Sector/Industry)

Only three countries in Asia Pacific are seeing NPLs in decline during over the past three to four quarters. The average rate of growth is 20%, which is not overly worrisome, but nonetheless it remains substantial.Indonesia tops the charts due to less well-known banks, and many that are subsidiaries from banks outside the country. On average NPL formation for Indonesia’s listed banks is 87% but when including only the major domestic banks the figure is less dramatic at 31%.  At the very least,…

Only three countries in Asia Pacific are seeing NPLs in decline during over the past three to four quarters. The average rate of growth is 20%, which is not overly worrisome, but nonetheless it remains substantial.Indonesia tops the charts due to less well-known banks, and many that are subsidiaries from banks outside the country. On average NPL formation for Indonesia’s listed banks is 87% but when including only the major domestic banks the figure is less dramatic at 31%.  At the very least,…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

While investors are divided in their opinions on whether the 11 newly licensed Indian payment banks will complement the existing banking infrastructure or disrupt it, we are of the opinion that payment banks will complement full-service banks.Given the limited purview of services that payment banks are allowed to offer a customer, they will miss the two most important benefits of running a banking franchise:<ol><li class="p1">a low cost of funds through large sticky customer deposits;</li><li class="p1">the ability to lend money at a rate commensurate with risk taken.</li></ol>As a result of these limitations, we believe the payment bank business model is a no-moat one, and will mainly be volume-driven on a thin margin and fees earned from additional services sold for full-service banks through a lead-generation model.Our narrow moat ratings on Indian banks therefore remain intact.Analyst: Suruchi Jain

While investors are divided in their opinions on whether the 11 newly licensed Indian payment banks will complement the existing banking infrastructure or disrupt it, we are of the opinion that payment banks will complement full-service banks.Given the limited purview of services that payment banks are allowed to offer a customer, they will miss the two most important benefits of running a banking franchise:a low cost of funds through large sticky customer deposits;the ability to lend money at a rate commensurate with risk taken.As a result of these limitations, we believe the payment bank business model is a no-moat one, and will mainly be volume-driven on a thin margin and fees earned from additional services sold for full-service banks through a lead-generation model.Our narrow moat ratings on Indian banks therefore remain intact.Analyst: Suruchi Jain

Payment Banks Will Drive Distribution Reach and Prove Complementary to Indian Banks

India

HDFC Bank Ltd. offers a wide range of services to the global corporate sector. The Bank provides corporate banking and custodial services and is active in the treasury and capital markets. HDFC also markets project advisory services and capital market products such as Global Deposit Receipts, Euro currency loans, and Euro currency bonds.

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HDFC Bank (HDFCB IN)

HDFC Bank's Profit Growth Seems Crafted To A Degree

We are sure that most people have seen Novak Djokovic play tennis.If so, we all know that even he can not place the ball in the far corner of the...

Daniel Tabbush

China and the EM Ugly Contest

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately...

John-Paul Smith

Axis Bank's 46% NPA Growth in Three Months Is Real

Make no mistake about this headline: the growth rate of new NPAs in 90 days at Axis Bank was 46%. There is no typo here. What matters is that this...

Daniel Tabbush

A Gradual NPL Cycle in Asia

Only three countries in Asia Pacific are seeing NPLs in decline during over the past three to four quarters. The average rate of growth is 20%,...

Daniel Tabbush

Payment Banks Will Drive Distribution Reach and Prove Complementary to Indian Banks

While investors are divided in their opinions on whether the 11 newly licensed Indian payment banks will complement the existing banking...

Morningstar, Inc.

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