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>Of the six Malaysian banks screened, we keep value play RHB Bank on the buy list and switch our prior CIMB for Maybank</li>
<li>RHB Bank is our top pick for its undemanding PE and PBV whilst being second from top in post-provision profitability; its high CET1 ratio has not held back its ROE</li>
<li>We drop CIMB from the buy list for its weaker credit quality and low NPL coverage; we upgrade quality pick Maybank to buy for its attractive valuations</li>
</ul>


Of the six Malaysian banks screened, we keep value play RHB Bank on the buy list and switch our prior CIMB for Maybank
RHB Bank is our top pick for its undemanding PE and PBV whilst being second from top in post-provision profitability; its high CET1 ratio has not held back its ROE
We drop CIMB from the buy list for its weaker credit quality and low NPL coverage; we upgrade quality pick Maybank to buy for its attractive valuations


Malaysian Banks Screener; RHB Bank and Maybank Are Buys

Thematic (Sector/Industry)

<ul>
<li>Among the large-cap EM Asia banks, we recommend CCB in China, HDFC Bank in India, Bank Mandiri in Indonesia and Hana Financial in South Korea</li>
<li>In LatAm, we turn positive on Banco do Brasil, for its big value attributes and lesser political risk; we turn cautious on Bradesco and stay cautious on Banorte in Mexico</li>
<li>Two large-cap names to watch are Credicorp in Peru and Standard Bank of South Africa; both have challenging macro-economic backdrops but sound “bottom up” credentials</li>
</ul>


Among the large-cap EM Asia banks, we recommend CCB in China, HDFC Bank in India, Bank Mandiri in Indonesia and Hana Financial in South Korea
In LatAm, we turn positive on Banco do Brasil, for its big value attributes and lesser political risk; we turn cautious on Bradesco and stay cautious on Banorte in Mexico
Two large-cap names to watch are Credicorp in Peru and Standard Bank of South Africa; both have challenging macro-economic backdrops but sound “bottom up” credentials


Large Cap GEM Bank Screener - Our Top Picks

<ul>
<li>Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; <a href="https://www.smartkarma.com/entities/public-bank-berhad" target="_blank" data-smartkarma-citation="entities:583:1" rel="noopener">PB Bank</a> and <a href="https://www.smartkarma.com/entities/malayan-banking-bhd" target="_blank" data-smartkarma-citation="entities:600:1" rel="noopener">Maybank</a> are quality but seem fully valued by comparison</li>
<li>RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples</li>
<li>CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned</li>
</ul>


Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; PB Bank and Maybank are quality but seem fully valued by comparison
RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples
CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned


Malaysian Banks December 2022 Results Screener; Sticking with Buys on CIMB and RHB

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.

<ul>
<li>Far too much volatility in credit costs, making clarity on earnings difficult</li>
<li>All core fee income items down sharply in quarter, credit cost delta main driver</li>
<li>Despite good lending growth, there is little to show for it in ROA and core income</li>
</ul>


Far too much volatility in credit costs, making clarity on earnings difficult
All core fee income items down sharply in quarter, credit cost delta main driver
Despite good lending growth, there is little to show for it in ROA and core income


<ul>
<li>The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank</li>
<li>We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned</li>
<li>We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG</li>
</ul>


The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank
We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned
We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG


Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

Malaysia

Malayan Banking Berhad operates as a bank. The Company provides financial services such as insurance, asset management, stock broking, nominee services, venture capital, leasing, and Internet banking. Malayan Banking Berhad serves customers in South East Asia.

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Maybank (MAY MK)

Malaysian Banks Screener; RHB Bank and Maybank Are Buys

RHB Bank remains a buy for its strong profitability, core capital and attractive valuations; we drop CIMB due to weak credit quality, while we...

Victor Galliano

Large Cap GEM Bank Screener - Our Top Picks

In EM Asia, we like CCB, HDFC Bank, Mandiri & Hana; in LatAm, we turn positive on Banco do Brasil, go cautious on Bradesco & remain cautious on...

Victor Galliano

Malaysian Banks December 2022 Results Screener; Sticking with Buys on CIMB and RHB

We keep RHB Bank and CIMB on the buy list for attractive PE multiples and PBV ratios as well as their improving return trends; PB Bank and Maybank...

Victor Galliano

RHB - Volatility

RHB's credit costs are characterized by a high degree of volatility, which is not something that we view as positive. Reversals hardly repeat...

Daniel Tabbush

Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

We add CIMB to the buy list, keep RHB and we remove Maybank; CIMB has positive post-provision return trends and undemanding valuations; RHB has...

Victor Galliano

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