Asian bank research and consultancy, Tabbush Report

Daniel Tabbush

Asian bank 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>Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth</li>
<li>Mortgage loan applications index shows some of the worst figures in years in the latest weekly data</li>
<li>Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans</li>
</ul>


Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth
Mortgage loan applications index shows some of the worst figures in years in the latest weekly data
Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans


US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/remitly-global-inc" target="_blank" data-smartkarma-citation="entities:11929:1" rel="noopener">Remitly Global (RELY US)</a> , the Seattle-based all-digital financial services provider for immigrants and their families, filed for an IPO and with the most recent S-1/A, fintech unicorn plans to raise ~$285 million at midpoint of the price range at $40/share. This implies IPO valuation of ~$7.6 billion on a fully diluted basis, including options, RSUs and warrants. PayU, a payment technology leader and one of the world’s top investors in fintech, agreed to purchase a number of Remitly shares at IPO price with an aggregate purchase price of up to $25 million in a private placement. <a href="https://www.smartkarma.com/entities/remitly-global-inc" target="_blank" data-smartkarma-citation="entities:11929:1" rel="noopener">Remitly Global (RELY US)</a>  applied to list common stock on the Nasdaq Global Select Market under the symbol “RELY”. Goldman Sachs and J.P Morgan are leading the IPO.   </p>

Remitly Global (RELY US) , the Seattle-based all-digital financial services provider for immigrants and their families, filed for an IPO and with the most recent S-1/A, fintech unicorn plans to raise ~$285 million at midpoint of the price range at $40/share. This implies IPO valuation of ~$7.6 billion on a fully diluted basis, including options, RSUs and warrants. PayU, a payment technology leader and one of the world’s top investors in fintech, agreed to purchase a number of Remitly shares at IPO price with an aggregate purchase price of up to $25 million in a private placement. Remitly Global (RELY US)  applied to list common stock on the Nasdaq Global Select Market under the symbol “RELY”. Goldman Sachs and J.P Morgan are leading the IPO.   

Remitly IPO. VC-Funded Disruptor Transforming Remittances

Equity Bottom-Up

<ul>
<li>Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  </li>
<li>Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23</li>
<li>Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY</li>
</ul>


Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  
Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23
Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY


Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

<ul>
<li>Weekly balance sheets give a view of underlying credit conditions in the US and they are not positive. Lending growth continues to decelerate and could reach negative growth soon. </li>
<li>Cash balances are rising and this suggests that US large banks are not comfortable with risk and also seeing less opportunities. Cash/loans ratio rising fastest in most recent week. </li>
<li>Large time deposits cost the most, and their growth rate is now 109% YoY in the most recent week, rising more than loans in each of the past 3 weeks.</li>
</ul>


Weekly balance sheets give a view of underlying credit conditions in the US and they are not positive. Lending growth continues to decelerate and could reach negative growth soon. 
Cash balances are rising and this suggests that US large banks are not comfortable with risk and also seeing less opportunities. Cash/loans ratio rising fastest in most recent week. 
Large time deposits cost the most, and their growth rate is now 109% YoY in the most recent week, rising more than loans in each of the past 3 weeks.


US Large Banks - Weekly Balance Sheets: Decelerating Loans, Rising Cash, Big Time Deposits +109% YoY

<ul>
<li>New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans</li>
<li>Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs</li>
<li>None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple </li>
</ul>


New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans
Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs
None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple 


US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

United States

Remitly Global Inc provides financial services. The Company offers online money transer and payment solutions. Remitly Global serves customers worldwide.

Remitly Global (RELY US)

US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Residential mortgage loan data is dismal and worsening for US banks, which we see in weekly data of loan growth and in the Mortgage Bankers Loan...

Daniel Tabbush

Remitly IPO. VC-Funded Disruptor Transforming Remittances

Remitly IPO is a promising investment opportunity to increase exposure to high-growth disruptors transforming global remittance market

Andrei Zakharov

Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

49% revenue growth 2Q23, COGS/revenue in decline. Adj EBITDA is positive, rising sharply in 2Q23 from 1Q23, 4Q22. Scale, penetration, reach, new...

Daniel Tabbush

US Large Banks - Weekly Balance Sheets: Decelerating Loans, Rising Cash, Big Time Deposits +109% YoY

US large banks are seeing loan growth decelerating, cash rising, large time deposits up 109% YoY in most recent week. Weekly B/S data suggests net...

Daniel Tabbush

US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

Zions bank is reporting incredibly high time deposit growth, with negative implications for forward net interest income, and both Zions and Cade...

Daniel Tabbush