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

<ul>
<li>Recently awarded "Maharatna" status, only 12 companies, FY24 is first full year for this</li>
<li>Growth is steady, with good returns, and major improvement in credit metrics</li>
<li>Its 4.77% dividend yield is incredibly high and about 3x higher than peers</li>
</ul>


Recently awarded "Maharatna" status, only 12 companies, FY24 is first full year for this
Growth is steady, with good returns, and major improvement in credit metrics
Its 4.77% dividend yield is incredibly high and about 3x higher than peers


RECL - Near Insatiable Power Credit Demand, Great NPL Trend, New Maharatna Status, 3x Avg Div Yield

National Australia Bank / Equity Bottom-Up

<ul>
<li>We turn to granular Pillar 3 disclosure of NAB seeing divergent moves in PD buckets</li>
<li>Its worst PD buckets are seeing sharp rise, while best buckets are falling, flat-ish</li>
<li>LT credit cost data, PD buckets, timely CBA data, suggests higher provision costs</li>
</ul>


We turn to granular Pillar 3 disclosure of NAB seeing divergent moves in PD buckets
Its worst PD buckets are seeing sharp rise, while best buckets are falling, flat-ish
LT credit cost data, PD buckets, timely CBA data, suggests higher provision costs


NAB - Pillar 3 Data Shows Worst PD Buckets Highest Growth, Best Buckets Down, Risk To Credit Costs

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.</li>
<li>Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.</li>
<li>Short interest has been increasing on <a href="https://www.smartkarma.com/entities/charter-hall-group" target="_blank" data-smartkarma-citation="entities:5593:1" rel="noopener">Charter Hall (CHC AU)</a> and <a href="https://www.smartkarma.com/entities/jb-hi-fi-ltd" target="_blank" data-smartkarma-citation="entities:555:1" rel="noopener">JB Hi-Fi Ltd (JBH AU)</a> and could be partially driven by potential index deletions.</li>
</ul>


There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.
Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.
Short interest has been increasing on Charter Hall (CHC AU) and JB Hi-Fi Ltd (JBH AU) and could be partially driven by potential index deletions.


MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes

Commonwealth Bank of Australia / Equity Bottom-Up

<ul>
<li>Credit cost surge in 1H23 is strangely tempered in 2H23 results, although still rising</li>
<li>Despite rising credit costs, they remain at relatively low levels compared with history</li>
<li>Data on credit metrics suggest to us that credit costs should have been higher in 2H23</li>
</ul>


Credit cost surge in 1H23 is strangely tempered in 2H23 results, although still rising
Despite rising credit costs, they remain at relatively low levels compared with history
Data on credit metrics suggest to us that credit costs should have been higher in 2H23


CBA - The Applause Over Results Seem Misplaced, Considering Credit Metrics

Australia & New Zealand Bankin / Equity Bottom-Up

<ul>
<li>The ACCC has decided not to authorize the ANZ takeover of Suncorp-Metway Bank</li>
<li>Can be positive for ANZ without executive risk, integration costs, unknown new risks</li>
<li>Differentiator ANZ to peers its islessor exposure to Australia, and better credit metrics</li>
</ul>


The ACCC has decided not to authorize the ANZ takeover of Suncorp-Metway Bank
Can be positive for ANZ without executive risk, integration costs, unknown new risks
Differentiator ANZ to peers its islessor exposure to Australia, and better credit metrics


ANZ - ACCC Denies ANZ's Takeover of Suncorp, May Be Positive for ANZ After All

Australia

National Australia Bank Limited is an international banking group which operates in Australia, New Zealand, Europe, Asia and the United States.  The Group offers banking services, credit and access card facilities, leasing, housing and general finance, international and investment banking, wealth and funds management, life insurance and custodian, trustee and nominee services.

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National Australia Bank (NAB AU)

RECL - Near Insatiable Power Credit Demand, Great NPL Trend, New Maharatna Status, 3x Avg Div Yield

High demand for power related lending can last for decades, marked improvement in credit metrics, new Maharatna status (only 12 companies have...

Daniel Tabbush

NAB - Pillar 3 Data Shows Worst PD Buckets Highest Growth, Best Buckets Down, Risk To Credit Costs

Pillar 3 data at NAB shows the worst PD buckets seeing rising EAD while the best PD buckets are flat or falling. LT credit costs are around 2-3x...

Daniel Tabbush

MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes

With a couple of weeks to review cutoff, there are two stocks in deletion zone and another two that are close to the deletion zone. Most likely, no...

Brian Freitas

CBA - The Applause Over Results Seem Misplaced, Considering Credit Metrics

CBA beat on earnings, but we believe that much of this was achieved through fairly low credit costs, despite what appears to be worsening credit...

Daniel Tabbush

ANZ - ACCC Denies ANZ's Takeover of Suncorp, May Be Positive for ANZ After All

ACCC denies ANZ takeover of Suncorp, which can be positive for ANZ. Focus now on its better credit metrics, less Australia lending than peers and...

Daniel Tabbush

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