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

SBI Sumishin Net Bank  / Equity Bottom-Up

<ul>
<li>This is not a typo: SBI Sumishin Net Bank saw loans up 21% YoY in 1Q24, operating in Japan</li>
<li>The bank has achieved cost scale, with acquisition cost per account a fraction of 2 yrs ago</li>
<li>Credit quality remains exceptional, amongst best in Japan, with 0.06% NPL ratio in 1Q24</li>
</ul>


This is not a typo: SBI Sumishin Net Bank saw loans up 21% YoY in 1Q24, operating in Japan
The bank has achieved cost scale, with acquisition cost per account a fraction of 2 yrs ago
Credit quality remains exceptional, amongst best in Japan, with 0.06% NPL ratio in 1Q24


SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Cross Asset Strategy

<ul>
<li>For the first time since 2016, the Bank of Japan has decided to raise interest rates, becoming the last country in the world to end its loose monetary policy stance, and signaling an end to the country’s deflationary cycle that has dominated policy decisions for the better part of the last decade. The impact of the BoJ’s policy move this week has led to volatility in global markets.</li>
<li>The Japanese Yen (JPY) has also depreciated against major currencies since the central bank raised its policy rate, as the policy move is suggestive of a gradual transition from accommodative policy by the central bank, rather than a hard exit into a tighter monetary environment.</li>
<li>Prior to the rate hike, the JPY has also seen a relatively softer appreciation against many developed currencies, especially the USD, as global markets priced in fewer than expected rate cuts by the Fed over the year making the interest rate differential still attractive.</li>
</ul>


For the first time since 2016, the Bank of Japan has decided to raise interest rates, becoming the last country in the world to end its loose monetary policy stance, and signaling an end to the country’s deflationary cycle that has dominated policy decisions for the better part of the last decade. The impact of the BoJ’s policy move this week has led to volatility in global markets.
The Japanese Yen (JPY) has also depreciated against major currencies since the central bank raised its policy rate, as the policy move is suggestive of a gradual transition from accommodative policy by the central bank, rather than a hard exit into a tighter monetary environment.
Prior to the rate hike, the JPY has also seen a relatively softer appreciation against many developed currencies, especially the USD, as global markets priced in fewer than expected rate cuts by the Fed over the year making the interest rate differential still attractive.


Japanese Banks Improved on Rate Hike Bets, Although True Impact Yet to Materialize

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.

<ul>
<li>The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy</li>
<li>Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy</li>
<li>Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia</li>
</ul>


The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy
Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy
Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia


Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>Murakami's entity, City Index Eleventh, <a href="https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100SXVR.pdf?sv=2020-08-04&amp;st=2024-02-28T11%3A55%3A56Z&amp;se=2029-02-28T15%3A00%3A00Z&amp;sr=b&amp;sp=rl&amp;sig=KsmAvBaNzu2rEiYRuXlPOtKaHqN1iiDtl2acvAB9gH8%3D" target="_blank" rel="noopener">reported</a> a 5.42% shareholding in <a href="https://www.smartkarma.com/entities/aozora-bank-ltd" target="_blank" data-smartkarma-citation="entities:6483:1" rel="noopener">Aozora Bank Ltd (8304 JP)</a>. Murakami started buying a day after the disastrous 3QFY23 results.</li>
<li>Murakami's average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price. </li>
<li>Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the <a href="https://www.smartkarma.com/entities/pacific-metals-co-ltd" target="_blank" data-smartkarma-citation="entities:3439:1" rel="noopener">Pacific Metals (5541 JP)</a> playbook.</li>
</ul>


Murakami's entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
Murakami's average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price. 
Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.


Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

<ul>
<li>3QFY23 results reveal losses related to Aozora’s US CRE exposure and securities portfolio; management forecasts a FY23 loss and a 50% cut in the previously forecast FY2023 dividend</li>
<li>US CRE exposure is 6.6% of total loans and Aozora’s US CRE deterioration propelled the NPL ratio to 2.87% up 162bps QoQ, the worst NPL ratio of the peer group</li>
<li>The securities portfolio hits are in US MBS and US bond ETFs; SMFG and Mizuho have large relative FX bond exposures, but they have less duration risk</li>
</ul>


3QFY23 results reveal losses related to Aozora’s US CRE exposure and securities portfolio; management forecasts a FY23 loss and a 50% cut in the previously forecast FY2023 dividend
US CRE exposure is 6.6% of total loans and Aozora’s US CRE deterioration propelled the NPL ratio to 2.87% up 162bps QoQ, the worst NPL ratio of the peer group
The securities portfolio hits are in US MBS and US bond ETFs; SMFG and Mizuho have large relative FX bond exposures, but they have less duration risk


Aozora Bank (8304 JP) – Two Bets Too Far

Japan

Mizuho Financial Group, Inc. provides comprehensive financial services through its subsidiaries. The Group provides variety of financial services such as general banking, securities brokerage, trust banking, and assets management.

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Mizuho Financial Group (8411 JP)

SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

9.6% move upward today is sizeable even with recent volatility. We continue to like this bank in Japan, which tends to have better financial...

Daniel Tabbush

Japanese Banks Improved on Rate Hike Bets, Although True Impact Yet to Materialize

For the first time since 2016, the Bank of Japan has decided to raise interest rates, becoming the last country in the world to end its loose...

Criat

Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals...

Arun George

Aozora Bank (8304 JP) – Two Bets Too Far

Aozora Bank's losses from US CRE and securities point to a projected FY23 loss and a dividend cut, with it having the highest overseas loan share...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

9.6% move upward today is sizeable even with recent volatility. We continue to like this bank in Japan, which tends to have better financial...

Daniel Tabbush

Japanese Banks Improved on Rate Hike Bets, Although True Impact Yet to Materialize

For the first time since 2016, the Bank of Japan has decided to raise interest rates, becoming the last country in the world to end its loose...

Criat

Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

​BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals...

Arun George

Aozora Bank (8304 JP) – Two Bets Too Far

​Aozora Bank's losses from US CRE and securities point to a projected FY23 loss and a dividend cut, with it having the highest overseas loan share...

Victor Galliano

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Aozora Bank's losses from US CRE and securities point to a projected FY23 loss and a dividend cut, with it having the highest overseas loan share...