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.

Thematic (Sector/Industry)

<ul>
<li>China insurance sector may seem like there is strong growth prospects due the population, but relatively long term data on insurance premium growth is not robust in recent years.</li>
<li>Aggregate impairment losses on assets of insurance companies have been soaring in recent years, well higher than in the GFC, which can continue with weak CRE, investments.</li>
<li>Ping An Insurance has seen sharp fall in operating income in the past 2 quarters, with levels near quarterly lows in the past five years. Lower rates may hurt further. </li>
</ul>


China insurance sector may seem like there is strong growth prospects due the population, but relatively long term data on insurance premium growth is not robust in recent years.
Aggregate impairment losses on assets of insurance companies have been soaring in recent years, well higher than in the GFC, which can continue with weak CRE, investments.
Ping An Insurance has seen sharp fall in operating income in the past 2 quarters, with levels near quarterly lows in the past five years. Lower rates may hurt further. 


Ping An Insurance - Recent Profit Growth Is Weak, Industry Aggregates Do Not Suggest a Change

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.

<ul><li>Strong savings demand propelled a double-digit growth of cum. personal life premiums, which rose by 10.2% YoY in FY23, for the first time in three years amid the prolonged low-risk appetite.</li><li>Life premiums rose by 12.8% YoY to RMB2.76tn in FY23, posting the highest growth over the past three years although curving down a bit from the 7M23 peak (+15% YoY) after the pricing rate cut.</li><li>On a monthly basis, China Life (2628 HK) and CPIC (2601 HK) were the only two listed insurers turning positive to double-digit premium growth, by +13.0%/+16.7% YoY in Dec 2023, outpacing the industry level of +1.1% YoY.</li></ul><p><em>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.</em></p>

Strong savings demand propelled a double-digit growth of cum. personal life premiums, which rose by 10.2% YoY in FY23, for the first time in three years amid the prolonged low-risk appetite.Life premiums rose by 12.8% YoY to RMB2.76tn in FY23, posting the highest growth over the past three years although curving down a bit from the 7M23 peak (+15% YoY) after the pricing rate cut.On a monthly basis, China Life (2628 HK) and CPIC (2601 HK) were the only two listed insurers turning positive to double-digit premium growth, by +13.0%/+16.7% YoY in Dec 2023, outpacing the industry level of +1.1% YoY.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.

Insurance - Life Premiums up by Double Digits for the First Time in 3 Years

<ul>
<li>There may be overly optimistic expectations for BOC HK's credit costs, which have been relatively benign for many years. </li>
<li>Worsening economic developments in Hong Kong and China suggest that BOC HK will show a dramatic deterioration in credit metrics in coming interim results. </li>
<li>Loan growth in Hong Kong is now hitting zero and funding cost growth has been extravagant, making for a poor combination to net interest income. </li>
</ul>


There may be overly optimistic expectations for BOC HK's credit costs, which have been relatively benign for many years. 
Worsening economic developments in Hong Kong and China suggest that BOC HK will show a dramatic deterioration in credit metrics in coming interim results. 
Loan growth in Hong Kong is now hitting zero and funding cost growth has been extravagant, making for a poor combination to net interest income. 


BOC HK - Credit Costs Have Flat Lined for Years, a Blow Out in 2H23 or 1H24 Can Be a Shock

<ul>
<li>The earnings decline at <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-c2975d60-47cd-4246-a7a6-25297586242b" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group of (601318 CH)</a> is well in place for the past three years and including the last 12 months and YTD. </li>
<li>A worsening China should see accelerated weakness at Ping An Insurance: bond mark downs, less product sales, lower bank contribution, falling investment returns as rates are cut.</li>
<li>Earnings risk perspective: profit RMB79bn in LTM against bond holdings of RMB2,622bn putting its bonds/profit at 33x. Bonds to capital is 2.9x: book value risk too.</li>
</ul>


The earnings decline at Ping An Insurance Group of (601318 CH) is well in place for the past three years and including the last 12 months and YTD. 
A worsening China should see accelerated weakness at Ping An Insurance: bond mark downs, less product sales, lower bank contribution, falling investment returns as rates are cut.
Earnings risk perspective: profit RMB79bn in LTM against bond holdings of RMB2,622bn putting its bonds/profit at 33x. Bonds to capital is 2.9x: book value risk too.


Ping An Insurance - Worsening Profit for Some Years, Can Accelerate with Corporate Bond Impairments

<ul>
<li>AIA will certainly define the radar for Asia's insurance company, since its market capitalization is the highest at USD94bn</li>
<li>Insurance companies can see major mark downs from corporate bonds related to China property, and from China Evergrande liquidation</li>
<li>A worsening economic outlook in China and also in Hong Kong, can mean that AIA and large insurers in the region, see bond impairments</li>
</ul>


AIA will certainly define the radar for Asia's insurance company, since its market capitalization is the highest at USD94bn
Insurance companies can see major mark downs from corporate bonds related to China property, and from China Evergrande liquidation
A worsening economic outlook in China and also in Hong Kong, can mean that AIA and large insurers in the region, see bond impairments


AIA - Largest Insurer in Asia Pacific, Risks Heightened with China Evergrande Liquidation

China

Ping An Insurance (Group) Company of China Limited provides products and services through its five ecosystems in financial services, healthcare, auto services, real estate services and Smart City solutions. The Group's insurance business writes property, casualty, and life insurance products.

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Ping An Insurance Group of (601318 CH)

Ping An Insurance - Recent Profit Growth Is Weak, Industry Aggregates Do Not Suggest a Change

Ping An Insurance demonstrates weakening profit, China insurance industry aggregates, do not suggest this will change. Rather, investment returns...

Daniel Tabbush

Insurance - Life Premiums up by Double Digits for the First Time in 3 Years

Strong savings demand propelled a double-digit growth of cum. personal life premiums, which rose by 10.2% YoY in FY23, for the first time in three...

CMB International

BOC HK - Credit Costs Have Flat Lined for Years, a Blow Out in 2H23 or 1H24 Can Be a Shock

BOC HK has seen credit costs flat line for some years, possibly making it appear as though this bank does not experience credit cycles. Long term...

Daniel Tabbush

Ping An Insurance - Worsening Profit for Some Years, Can Accelerate with Corporate Bond Impairments

Ping An Insurance can see meaningful risk to profit and book value from mark downs in its corporate bonds with a weak China economy.

Daniel Tabbush

AIA - Largest Insurer in Asia Pacific, Risks Heightened with China Evergrande Liquidation

Asia Pacific insurance companies can be at risk from mark downs due to the Evergrande liquidation and worsening property risks in China, and also...

Daniel Tabbush

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