Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Equity Bottom-Up

<ul><li>HSBC Holdings Plc Wednesday reported a $3 billion write-down on its stake in a Chinese bank, underscoring challenges the British lender faces in one of its key growth markets.</li><li>Europe’s largest bank by assets took a charge on its 19.03% holding in Bank of Communications Co. Ltd. (<a href="https://www.smartkarma.com/601328.SH" target="_blank" rel="noopener">601328.SH</a> +1.41%), one of China’s biggest state-owned banks, after a reassessment of the accounting value-in-use, the bank said in a release of its fourth quarter financial results.</li><li>The reassessment compared the future cash flow from the asset, discounted for underlying risk, with the stake’s carrying value, which measures the cost of the asset minus depreciation factors.</li></ul>

HSBC Holdings Plc Wednesday reported a $3 billion write-down on its stake in a Chinese bank, underscoring challenges the British lender faces in one of its key growth markets.Europe’s largest bank by assets took a charge on its 19.03% holding in Bank of Communications Co. Ltd. (601328.SH +1.41%), one of China’s biggest state-owned banks, after a reassessment of the accounting value-in-use, the bank said in a release of its fourth quarter financial results.The reassessment compared the future cash flow from the asset, discounted for underlying risk, with the stake’s carrying value, which measures the cost of the asset minus depreciation factors.

HSBC Takes $3 Billion Charge on BoCom Holdings 

Asian bank research and consultancy, Tabbush Report

Daniel Tabbush

Asian bank 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.

<ul>
<li>HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures. </li>
<li>The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.</li>
<li>Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC. </li>
</ul>


HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures. 
The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.
Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC. 


HSBC - Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

Thematic (Sector/Industry)

<ul>
<li>Wells Fargo has seen its net interest income growth move to -8.3% YoY in 1Q24 from +8.3% YoY in 1Q23</li>
<li>The rate of net interest income growth at JPMorgan has nearly halved in the most recent quarter, to +11.4% YoY</li>
<li>Banks' high-frequency data on balance sheets suggest that there will remain worsening growth rates of net interest income for US banks</li>
</ul>


Wells Fargo has seen its net interest income growth move to -8.3% YoY in 1Q24 from +8.3% YoY in 1Q23
The rate of net interest income growth at JPMorgan has nearly halved in the most recent quarter, to +11.4% YoY
Banks' high-frequency data on balance sheets suggest that there will remain worsening growth rates of net interest income for US banks


US Banks - Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen

<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

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Credit

<ul>
<li>European AT1s offer higher YTC compared with those of similarlyrated Asian AT1s.</li>
<li>This partly reflects the technical of European AT1s is not as strong as that of Asian AT1s.</li>
<li>The Asian AT1 space has been in net redemption over the past 2 years and local investors have a “stronger home bias”. </li>
</ul>
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


European AT1s offer higher YTC compared with those of similarlyrated Asian AT1s.
This partly reflects the technical of European AT1s is not as strong as that of Asian AT1s.
The Asian AT1 space has been in net redemption over the past 2 years and local investors have a “stronger home bias”. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

European AT1 Top Picks: BACR 6 ⅛ PERP, BACR 4 ⅜ PERP and INTNED 3 ⅞ PERP

United Kingdom

HSBC Holdings plc is the holding company for the HSBC Group. The Company provides a variety of international banking and financial services, including retail and corporate banking, trade, trusteeship, securities, custody, capital markets, treasury, private and investment banking, and insurance. HSBC Holdings operates worldwide.

HSBC Holdings (HSBC US)

HSBC Takes $3 Billion Charge on BoCom Holdings

HSBC Holdings Plc Wednesday reported a $3 billion write-down on its stake in a Chinese bank, underscoring challenges the British lender faces in...

Caixin Global

HSBC - Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

HSBC still carries its 19% investment in BoCom at a very high value compared with the market value and with a far weaker China outlook, we are not...

Daniel Tabbush

US Banks - Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen

US bank's are now reporting 1Q24 data with far worse net interest income growth, which should not surprise our readers, and this should only...

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

European AT1 Top Picks: BACR 6 ⅛ PERP, BACR 4 ⅜ PERP and INTNED 3 ⅞ PERP

European AT1s offer higher YTC compared with those of similarlyrated Asian AT1s. This partly reflects the technical of European AT1s is not as...

CMB International