Financial sector veteran, KT Capital Group

Fern Wang

Financial sector veteran

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>StandChart may need to take further impairment hit on China Bohai Bank</li>
<li>VIU model is used to justify the higher carrying value compared to fair value of the holdings.  There is zero headroom between the VIU model and the carrying amount.</li>
<li>We looked at VIU model assumptions for HSBC and StandChart. A declining NIM is likely put further pressure on the VIU model output for StandChart.  </li>
</ul>


StandChart may need to take further impairment hit on China Bohai Bank
VIU model is used to justify the higher carrying value compared to fair value of the holdings.  There is zero headroom between the VIU model and the carrying amount.
We looked at VIU model assumptions for HSBC and StandChart. A declining NIM is likely put further pressure on the VIU model output for StandChart.  


StandChart Is Likely to Have More China Bohai Impairment

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.

<ul>
<li>Our focus is not on the decimation of earnings at <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a> but rather the granular detail of stage 2 and stage 3 loans</li>
<li>There is tremendous growth in stage 2 loans in the quarter, which means the bank enters the quarter with a far higher pool that can migrate to stage 3</li>
<li>Stage 3 remains markedly higher provisions, and the bank's rise in credit costs is still fairly low, it can rise another 50% before hitting average rates </li>
</ul>


Our focus is not on the decimation of earnings at Standard Chartered (STAN LN) but rather the granular detail of stage 2 and stage 3 loans
There is tremendous growth in stage 2 loans in the quarter, which means the bank enters the quarter with a far higher pool that can migrate to stage 3
Stage 3 remains markedly higher provisions, and the bank's rise in credit costs is still fairly low, it can rise another 50% before hitting average rates 


STAN - Stage 2 Loans Surge | Expect Migration to Stage 3 Loans | Credit Costs Can Move 50% Higher

Thematic (Sector/Industry)

<ul>
<li>HKMA data shows the loss loan ratio in HK is up 7.5x from FY19 to 2Q25. These are the worst of the worst bad loans </li>
<li>Substandard loan ratio in HK is up 4.7x over the same period, and this bucket can gradually migrate to worse buckets, requiring more credit costs</li>
<li>Overdue loan ratio and rescheduled loan ratio in HK is up 5.4x over this period, and these are not technically NPLs</li>
</ul>


HKMA data shows the loss loan ratio in HK is up 7.5x from FY19 to 2Q25. These are the worst of the worst bad loans 
Substandard loan ratio in HK is up 4.7x over the same period, and this bucket can gradually migrate to worse buckets, requiring more credit costs
Overdue loan ratio and rescheduled loan ratio in HK is up 5.4x over this period, and these are not technically NPLs


HSBC - Loss Loans up 7.5x from FY19 to 2Q25 in HKMA Industry Data. Hang Seng Bank Buyout, Now?

<ul>
<li>There is strong and accelerating growth visible in HFD for US banks, even in the very core bucket of C&amp;I loans</li>
<li>Most recent full month shows 10.1% growth YoY for C&amp;I but Other Loans are up 27.3% Yoy in the same month, which is partly C&amp;I</li>
<li>Deposit distribution is improving, toward CASA, US banks can see better NIM, and net interest income, while economy appears from weekly bank data</li>
</ul>


There is strong and accelerating growth visible in HFD for US banks, even in the very core bucket of C&amp;I loans
Most recent full month shows 10.1% growth YoY for C&amp;I but Other Loans are up 27.3% Yoy in the same month, which is partly C&amp;I
Deposit distribution is improving, toward CASA, US banks can see better NIM, and net interest income, while economy appears from weekly bank data


US Banks - C&I Loans +10.1% YoY in Apr From -2.9% in Jan, Strong Read-Through, Banks & Economy

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sichuan-kelun-biotech-biopharm" target="_blank" data-smartkarma-citation="entities:40071:1" rel="noopener">Sichuan Kelun-Biotech Bio (6990 HK)</a>, <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Ind. (669 HK)</a>, <a href="https://www.smartkarma.com/entities/vesync" target="_blank" data-smartkarma-citation="entities:31067:1" rel="noopener">Vesync (2148 HK)</a>, <a href="https://www.smartkarma.com/entities/chervon-holdings-limited" target="_blank" data-smartkarma-citation="entities:35309:1" rel="noopener">Chervon Hldgs (2285 HK)</a>, and <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a> have a very high reliance on the US market.</li>
<li>
<a href="https://www.smartkarma.com/entities/vtech-holdings-ltd" target="_blank" data-smartkarma-citation="entities:18812:1" rel="noopener">Vtech Hldgs (303 HK)</a>, <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a>, and <a href="https://www.smartkarma.com/entities/tcl-multimedia-technology" target="_blank" data-smartkarma-citation="entities:15654:1" rel="noopener">Tcl Multimedia (1070 HK)</a> ranked lower on the list, but consumer cutbacks will have a bigger impact. </li>
<li>The spillover effect of a US recession to other countries will pressurise companies that have low direct exposure, like <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> and <a href="https://www.smartkarma.com/entities/prada-s-p-a" target="_blank" data-smartkarma-citation="entities:889:1" rel="noopener">Prada S.P.A. (1913 HK)</a>.</li>
</ul>



Sichuan Kelun-Biotech Bio (6990 HK), Techtronic Ind. (669 HK), Vesync (2148 HK), Chervon Hldgs (2285 HK), and WuXi AppTec (2359 HK) have a very high reliance on the US market.

Vtech Hldgs (303 HK), Samsonite (1910 HK), Haier Smart Home (6690 HK), and Tcl Multimedia (1070 HK) ranked lower on the list, but consumer cutbacks will have a bigger impact. 
The spillover effect of a US recession to other countries will pressurise companies that have low direct exposure, like Orient Overseas International (316 HK) and Prada S.P.A. (1913 HK).


China & HK Strategy: Who Are the Victims of a US Recession?

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Standard Chartered (2888 HK)

StandChart Is Likely to Have More China Bohai Impairment

StandChart is likely to take more impairment hit on China Bohai with continue NIM decline of the latter. We reviewed both of HSBC and StandChart's...

Fern Wang

STAN - Stage 2 Loans Surge | Expect Migration to Stage 3 Loans | Credit Costs Can Move 50% Higher

STAN's traditional credit costs are surging and remain well below long term averages. Rising stage 2 loans are the real concern, with migration...

Daniel Tabbush

HSBC - Loss Loans up 7.5x from FY19 to 2Q25 in HKMA Industry Data. Hang Seng Bank Buyout, Now?

HSBC interview with Bloomberg shows another set of cost-cutting efforts. For anybody following this bank for ~20 years, a pattern is clear. It's...

Daniel Tabbush

US Banks - C&I Loans +10.1% YoY in Apr From -2.9% in Jan, Strong Read-Through, Banks & Economy

HFD for US banks, shows very strong acceleration in C&I loans, and also other loans, which will also include C&I. Data suggests good economic...

Daniel Tabbush

China & HK Strategy: Who Are the Victims of a US Recession?

Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

StandChart Is Likely to Have More China Bohai Impairment

StandChart is likely to take more impairment hit on China Bohai with continue NIM decline of the latter. We reviewed both of HSBC and StandChart's...

Fern Wang

STAN - Stage 2 Loans Surge | Expect Migration to Stage 3 Loans | Credit Costs Can Move 50% Higher

STAN's traditional credit costs are surging and remain well below long term averages. Rising stage 2 loans are the real concern, with migration...

Daniel Tabbush

HSBC - Loss Loans up 7.5x from FY19 to 2Q25 in HKMA Industry Data. Hang Seng Bank Buyout, Now?

HSBC interview with Bloomberg shows another set of cost-cutting efforts. For anybody following this bank for ~20 years, a pattern is clear. It's...

Daniel Tabbush

US Banks - C&I Loans +10.1% YoY in Apr From -2.9% in Jan, Strong Read-Through, Banks & Economy

HFD for US banks, shows very strong acceleration in C&I loans, and also other loans, which will also include C&I. Data suggests good economic...

Daniel Tabbush

China & HK Strategy: Who Are the Victims of a US Recession?

​Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...

Osbert Tang, CFA

Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...