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>Tsingshan metals has reached an agreement with bankers on nickel trade</li>
<li>There is risk of significant impairments at STAN and other counter-party banks</li>
<li>This comes at a time when STAN's impairment costs are starting off at a low level</li>
</ul>


Tsingshan metals has reached an agreement with bankers on nickel trade
There is risk of significant impairments at STAN and other counter-party banks
This comes at a time when STAN's impairment costs are starting off at a low level


Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 2Q21 results of IDR 7.4 tn, improving IDR 376 mn (5.3%) on a linked quarter basis. BCA’s positive operating results were highlighted by non-interest income growth and a decline in operating expenses; and*Credit Challenges Persist, As Credit Break Re-Accelerates: By our calculation, we find that 2Q21 net new NPLs amounted to IDR 2.4 tn for an annualized rate of increase of 92.4%, comparing very unfavorably with 1Q21’s IDR 742 bn and 28.7%, respectively. Despite the recent acceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio. Although, we worry the softness in current macro conditions.

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 2Q21 results of IDR 7.4 tn, improving IDR 376 mn (5.3%) on a linked quarter basis. BCA’s positive operating results were highlighted by non-interest income growth and a decline in operating expenses; and*Credit Challenges Persist, As Credit Break Re-Accelerates: By our calculation, we find that 2Q21 net new NPLs amounted to IDR 2.4 tn for an annualized rate of increase of 92.4%, comparing very unfavorably with 1Q21’s IDR 742 bn and 28.7%, respectively. Despite the recent acceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio. Although, we worry the softness in current macro conditions.

Bank Central Asia – Good, But New Credit Challenges Ahead

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> held an analyst call late last week to outline the bank's already well-developed digital strategy both wholesale and retail plus what really makes it stand out from competitors and what the future holds.
The bank has just launched the newest version of its BNI App which also commemorates the bank's 75th Anniversary and gets a high rating. <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a>'s strategy on its ongoing digital transformation has been to embrace the new wave of digital disruption through collaboration with third parties rather than going it alone.
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia Persero (BBNI IJ)</a> works with leading P2P lenders such as Kredivo, Amartha, and Investree, as well as the major digital payments actors such as GoPay, OVO, and Dana. 
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener"></a>BBNI bases its service on its good use case for its customers rather than burning money to acquire new customers. 
The bank is also leveraging its open API providing services for digital players and as a result, now offers 260 different services through its app with more than 3,000 partners, the most compared to any of its peers in Indonesia. 
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<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia  (BBNI IJ)</a> is linked with many different e-commerce and Fintech companies helping to facilitate payments, collections, providing liquidity, and providing audits, as examples of some services. 
The app is also very popular with younger customers with Gen x at 21% of users, Millennials 43%, and Gen C at 33% making up a large portion of tye 8.9m users.
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<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a>'s increasing integration with Indonesia's digital economy also stands it in good stead to benefit from the vibrant growth from the space. The bank's progression in building its digital capabilities and its integration with the Indonesian digital economy is not yet fully appreciated, with the bank trading on 0.7x FY21E PBV.
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Bank Negara Indonesia (BBNI IJ) held an analyst call late last week to outline the bank's already well-developed digital strategy both wholesale and retail plus what really makes it stand out from competitors and what the future holds.
The bank has just launched the newest version of its BNI App which also commemorates the bank's 75th Anniversary and gets a high rating. Bank Negara Indonesia (BBNI IJ)'s strategy on its ongoing digital transformation has been to embrace the new wave of digital disruption through collaboration with third parties rather than going it alone.
Bank Negara Indonesia Persero (BBNI IJ) works with leading P2P lenders such as Kredivo, Amartha, and Investree, as well as the major digital payments actors such as GoPay, OVO, and Dana. 
BBNI bases its service on its good use case for its customers rather than burning money to acquire new customers. 
The bank is also leveraging its open API providing services for digital players and as a result, now offers 260 different services through its app with more than 3,000 partners, the most compared to any of its peers in Indonesia. 

Bank Negara Indonesia  (BBNI IJ) is linked with many different e-commerce and Fintech companies helping to facilitate payments, collections, providing liquidity, and providing audits, as examples of some services. 
The app is also very popular with younger customers with Gen x at 21% of users, Millennials 43%, and Gen C at 33% making up a large portion of tye 8.9m users.

Bank Negara Indonesia (BBNI IJ)'s increasing integration with Indonesia's digital economy also stands it in good stead to benefit from the vibrant growth from the space. The bank's progression in building its digital capabilities and its integration with the Indonesian digital economy is not yet fully appreciated, with the bank trading on 0.7x FY21E PBV.





Bank Negara Indonesia (BBNI IJ) - Digitally Remastered in Style

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

We agree with <a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> that BBTN is a bank in Indonesia to follow.GEM investors tend to prefer expensive bank franchises within Indonesia’s innovative financial ecosystem. They should instead take a very close look at much improved BBTN which is the value “play”.Bank Tabungan Negara is today a well-managed State-controlled bank, dedicated to mainly subsidized and non-subsidized mortgages (46% and 31% of book, respectively) and to a lesser extent the construction segment, backed by source of funding from not just time deposits but from fast-expanding CASA deposits (41%).Bank Tabungan Negara will continue to benefit from the government's subsidized mortgage program for low-income first-time buyers. Mortgages are being successfully digitalized via the bank’s Proporti Portal. Management is making progress too with its mobile banking BTN which now commands more than 1.5 million users, accounting for IDR13.7tn in transaction value.The bank is fast-developing its Shariah offering as well with financings up 6% YoY.FY20/19 results show positive fundamental momentum and trends with improvement in Profitability, in Efficiency, In Liquidity, in Asset Quality, and in Provisioning while Capital Adequacy and NIM showed some erosion. Growth in “Core Income” was restrained, given the muted credit impulse and decrease in fee Income streams, added to margin/spread erosion, which was more than offset by tight OPEX-control, treasury gains, and by lower LLPs given the trends in Asset Quality and LLR level.<div class="content-highlight">
A FV of 7%, a PBV of 1.0x, and an Earnings Yield of 8.8% are not unappealing. The bank commands both a high PH Score™ (8.1) and top quartile VFM ranking.
The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage as well as a valuation variable. Scores lie between 0 and 10, with higher scores representing more positive signs. The PH Score™ was back tested over 2007-17 for global banks and conclusively shows progressively higher returns across quintiles ranked by Score. 
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We agree with Thomas J. Monaco that BBTN is a bank in Indonesia to follow.GEM investors tend to prefer expensive bank franchises within Indonesia’s innovative financial ecosystem. They should instead take a very close look at much improved BBTN which is the value “play”.Bank Tabungan Negara is today a well-managed State-controlled bank, dedicated to mainly subsidized and non-subsidized mortgages (46% and 31% of book, respectively) and to a lesser extent the construction segment, backed by source of funding from not just time deposits but from fast-expanding CASA deposits (41%).Bank Tabungan Negara will continue to benefit from the government's subsidized mortgage program for low-income first-time buyers. Mortgages are being successfully digitalized via the bank’s Proporti Portal. Management is making progress too with its mobile banking BTN which now commands more than 1.5 million users, accounting for IDR13.7tn in transaction value.The bank is fast-developing its Shariah offering as well with financings up 6% YoY.FY20/19 results show positive fundamental momentum and trends with improvement in Profitability, in Efficiency, In Liquidity, in Asset Quality, and in Provisioning while Capital Adequacy and NIM showed some erosion. Growth in “Core Income” was restrained, given the muted credit impulse and decrease in fee Income streams, added to margin/spread erosion, which was more than offset by tight OPEX-control, treasury gains, and by lower LLPs given the trends in Asset Quality and LLR level.
A FV of 7%, a PBV of 1.0x, and an Earnings Yield of 8.8% are not unappealing. The bank commands both a high PH Score™ (8.1) and top quartile VFM ranking.
The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage as well as a valuation variable. Scores lie between 0 and 10, with higher scores representing more positive signs. The PH Score™ was back tested over 2007-17 for global banks and conclusively shows progressively higher returns across quintiles ranked by Score. 


*Good Number: Bank Tabungan Negara (BBTN.IJ) [BBTN] reported 4Q20 bottom-line result of IDR 482 bn, increasing IDR 130 bn (36.9%) linked quarter. On an operating basis excluding gains (assumed in 4Q20), we calculate results improved even further – increasing IDR 98 bn or 47.3% linked quarter; and*Credit Outlook Brightens: We were also quite pleased to see that net new NPLs too have decelerated and now amount to IDR 240 bn or just 8.2% on an annualized basis. Given the deceleration of net new NPLs, mix of loans, and the strong reserve cover, BBTN’s reserves appear to right where they need to be.

*Good Number: Bank Tabungan Negara (BBTN.IJ) [BBTN] reported 4Q20 bottom-line result of IDR 482 bn, increasing IDR 130 bn (36.9%) linked quarter. On an operating basis excluding gains (assumed in 4Q20), we calculate results improved even further – increasing IDR 98 bn or 47.3% linked quarter; and*Credit Outlook Brightens: We were also quite pleased to see that net new NPLs too have decelerated and now amount to IDR 240 bn or just 8.2% on an annualized basis. Given the deceleration of net new NPLs, mix of loans, and the strong reserve cover, BBTN’s reserves appear to right where they need to be. 

Indonesia

Bank Tabungan Negara, abbreviated as BTN, is an Indonesian commercial bank primarily known as a mortgage bank, offering a range of financial products including savings, current, and fixed deposit accounts, as well as personal, business, and mortgage loans. The bank also provides Sharia-compliant banking services. It is headquartered in Jakarta, Indonesia, and was founded in 1897.

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Bank Tabungan Negara (BBTN IJ)

Standard Chartered - Nickel and Dimes

The surge in nickel prices and the wrong-way trade(s) will mean bank counter-party risk, with STAN being highlighted in reports. ROA risk can be...

Daniel Tabbush

Bank Central Asia – Good, But New Credit Challenges Ahead

BANK CENTRAL ASIA: BCA reported a 5.3% QOQ 2Q21 results increase. Despite the 92.4% net new NPLs increase, we calculate that loss reserves are...

Thomas J. Monaco

Bank Negara Indonesia (BBNI IJ) - Digitally Remastered in Style

Bank Negara Indonesia's increasing integration with Indonesia's digital economy stands it in good stead to benefit from the vibrant growth from the...

Angus Mackintosh

BBTN: Top Pick in Indonesia

BBTN shares are relatively attractive versus other banks in Indonesia. Given growth characteristics of the market, investors can pay "over the...

Paul Hollingworth

Bank Tabungan Negara – Well Managed

BANK TABUNGAN NEGARA: BBTN reported 4Q20 bottom-line result which increased 36.9% linked quarter. Net new NPLs too have decelerated at just 8.2% on...

Thomas J. Monaco

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