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>With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. </li>
<li>Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.</li>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a> shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans</li>
</ul>


With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. 
Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.

Bank Of Communications Co H (3328 HK) shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans


China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

Equity Bottom-Up

Haitong Securities Co Ltd (A) / Equity Bottom-Up

<ul>
<li>With the potential corporate action (see additional reading below) there is more interest in Haitong Securities but operationally it does not appear positive, for many reasons</li>
<li>The company is seeing worse revenue growth in asset management, brokerage and investment banking, while its Haitong Bank can see far higher credit costs</li>
<li>Total operating costs are now 63% of revenue, tax rate is a lot higher, litigation risks seem to be oversized, with potential impact to costs</li>
</ul>


With the potential corporate action (see additional reading below) there is more interest in Haitong Securities but operationally it does not appear positive, for many reasons
The company is seeing worse revenue growth in asset management, brokerage and investment banking, while its Haitong Bank can see far higher credit costs
Total operating costs are now 63% of revenue, tax rate is a lot higher, litigation risks seem to be oversized, with potential impact to costs


Haitong Securities - Portugal Bank Goodwill Impairment Surge | Overall: High Costs, Poor Revenue

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<ul>
<li>Used cars / In Depth: China’s used-car dealers face a bumpy ride as price wars intensify</li>
<li>Housing /: China pilots government-funded housing renovation system in 22 cities</li>
<li>Banks /: Standard Chartered names new China CEO</li>
</ul>


Used cars / In Depth: China’s used-car dealers face a bumpy ride as price wars intensify
Housing /: China pilots government-funded housing renovation system in 22 cities
Banks /: Standard Chartered names new China CEO


CX Daily: China’s Used-Car Dealers Face a Bumpy Ride as Price Wars Intensify 

<ul>
<li>Data from <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a> is just out with poor 1H24 results YoY</li>
<li>Notable in its release are its Hong Kong overdue exposure by over three months</li>
<li>Hong Kong region income is the worst affected by credit costs, this does not seem to be over</li>
</ul>


Data from Bank of East Asia (23 HK) is just out with poor 1H24 results YoY
Notable in its release are its Hong Kong overdue exposure by over three months
Hong Kong region income is the worst affected by credit costs, this does not seem to be over


BEA - Far Worse Deterioration in Hong Kong than Other Regions & Sharply Lower HFD Centa City Index

National Australia Bank / Equity Bottom-Up

<ul>
<li>NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures </li>
<li>The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered</li>
<li>This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24</li>
</ul>


NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures 
The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered
This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24


NAB - Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly

Hong Kong

Standard Chartered plc is an international banking group operating principally in Asia, Africa, and the Middle East.  The Company offers its products and services in the personal, consumer, corporate, institutional and treasury areas.

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Standard Chartered (2888 HK)

China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

There are losses at China developers and some of this is new or losses are much higher. This is not fully reflected in headline figures at China...

Daniel Tabbush

Haitong Securities - Portugal Bank Goodwill Impairment Surge | Overall: High Costs, Poor Revenue

Profit down 75% YoY and revenue down 32% YoY in latest results just out for 1H24. Risks still remain for this company, and potentially worsening...

Daniel Tabbush

CX Daily: China’s Used-Car Dealers Face a Bumpy Ride as Price Wars Intensify

Used cars / In Depth: China’s used-car dealers face a bumpy ride as price wars intensify China’s second-hand car market is growing rapidly as more...

Caixin Global

BEA - Far Worse Deterioration in Hong Kong than Other Regions & Sharply Lower HFD Centa City Index

BEA just released 1H24 net profit - not good. Granular data shows most deterioration in HK region. HFD in real estate, lending suggests this is not...

Daniel Tabbush

NAB - Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly

NAB reported its 3Q24 results with profit down slightly, but the figure is exaggerated with sharply lower credit costs, despite much higher bad...

Daniel Tabbush

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