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)

There are vast differences in provisioning done for US banks during 1Q20. There are some banks that indicate a similar high level of provisions during 2Q20. Where this likely marks the worst in terms of unemployment, economic distress, and the reopening of economies, we wonder if credit costs can come way in during 2H20? Where the current crisis is self-inflicted from flipping a switch, wholly unlike drivers of the Asian Financial Crisis and the Global Financial Crisis, the profile of provisioning can be vastly different. This is further the case against a backdrop strong recovery metrics, unprecedented fiscal stimulus and historically low rates.

There are vast differences in provisioning done for US banks during 1Q20. There are some banks that indicate a similar high level of provisions during 2Q20. Where this likely marks the worst in terms of unemployment, economic distress, and the reopening of economies, we wonder if credit costs can come way in during 2H20? Where the current crisis is self-inflicted from flipping a switch, wholly unlike drivers of the Asian Financial Crisis and the Global Financial Crisis, the profile of provisioning can be vastly different. This is further the case against a backdrop strong recovery metrics, unprecedented fiscal stimulus and historically low rates.

We have seen periods of high bad loans in the US, sometimes for consumer loans, other times for corporate loans. This time, it can be both at the same time. The IMF now joins others in its assessment for severe economic pain during 2020, expecting the worst economic crisis since the Great Depression. There will be swathes of sectors that can simply not service their loans, hotels, airlines, restaurants, energy, small enterprises. At the same time there will be many millions of people who can not service their card loans, student loans, or other personal loans. Even where we re-start economies, revenue and income will not suddenly catapult upward to where it was before. This can take several quarters, years. Considering where banks’ NPL ratios are now, where they have been in recent crises and with dwindling reserves, we have to expect sharply higher credit costs; this is beginning in the first week of April.

We have seen periods of high bad loans in the US, sometimes for consumer loans, other times for corporate loans. This time, it can be both at the same time. The IMF now joins others in its assessment for severe economic pain during 2020, expecting the worst economic crisis since the Great Depression. There will be swathes of sectors that can simply not service their loans, hotels, airlines, restaurants, energy, small enterprises. At the same time there will be many millions of people who can not service their card loans, student loans, or other personal loans. Even where we re-start economies, revenue and income will not suddenly catapult upward to where it was before. This can take several quarters, years. Considering where banks’ NPL ratios are now, where they have been in recent crises and with dwindling reserves, we have to expect sharply higher credit costs; this is beginning in the first week of April.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

We continue to move increasingly toward the bullish camp and we believe equities are poised for higher prices moving forward. In today’s report we outline our bullish case and highlight attractive Groups and stocks within Financials, Services, Technology and Manufacturing: Credit Card Issuers, Education Services, China, Solar Energy, and Industrial Rental Equipment.

We continue to move increasingly toward the bullish camp and we believe equities are poised for higher prices moving forward. In today’s report we outline our bullish case and highlight attractive Groups and stocks within Financials, Services, Technology and Manufacturing: Credit Card Issuers, Education Services, China, Solar Energy, and Industrial Rental Equipment.

U.S. Equity Strategy: Upgrading Cap-Weighted Communications to Overweight

Nearly half of all reporting US banks and specialty lenders, reported a decline in profit from 3Q18 to 4Q18. Of the 68 companies with populated data in our S&amp;P CIQ database, 30 companies show profit down QoQ. The average decline is 17% QoQ, with <a href="https://www.smartkarma.com/entities/1018" target="_blank" data-smartkarma-citation="entities:1018:1">Bank Of New York Mellon (BK US)</a>, <a href="https://www.smartkarma.com/entities/277" target="_blank" data-smartkarma-citation="entities:277:1">JPMorgan Chase &amp; Co (JPM US)</a>, and <a href="https://www.smartkarma.com/entities/279" target="_blank" data-smartkarma-citation="entities:279:1">Citigroup Inc (C US)</a> included in this group.

Nearly half of all reporting US banks and specialty lenders, reported a decline in profit from 3Q18 to 4Q18. Of the 68 companies with populated data in our S&amp;P CIQ database, 30 companies show profit down QoQ. The average decline is 17% QoQ, with Bank Of New York Mellon (BK US), JPMorgan Chase &amp; Co (JPM US), and Citigroup Inc (C US) included in this group.

The headline numbers at US banks are wholly misleading if the conclusion is a robust US economy, a robust US consumer and that interest rates will continue to rise a lot. Many banks have seen credit card delinquency rates soar in the past several months, to levels higher than anytime in the past 27 years; this is not making headlines, though. One must scour quarterly reports to see the very real distress contained within US consumer credit portfolios, and mostly with respect to credit cards. Or…

The headline numbers at US banks are wholly misleading if the conclusion is a robust US economy, a robust US consumer and that interest rates will continue to rise a lot. Many banks have seen credit card delinquency rates soar in the past several months, to levels higher than anytime in the past 27 years; this is not making headlines, though. One must scour quarterly reports to see the very real distress contained within US consumer credit portfolios, and mostly with respect to credit cards. Or…

US Banks - Deteriorating Consumer Credit Metrics May Point To Recession

United States

Synchrony Financial operates as a consumer financial services company. The Company provides  a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers.

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Synchrony Financial (SYF US)

US Banks – Provisions To Halve?

There are vast differences in provisioning done for US banks during 1Q20. There are some banks that indicate a similar high level of provisions...

Daniel Tabbush

US Banks – The Purge

We have seen periods of high bad loans in the US, sometimes for consumer loans, other times for corporate loans. This time, it can be both at the...

Daniel Tabbush

U.S. Equity Strategy: Upgrading Cap-Weighted Communications to Overweight

We continue to move increasingly toward the bullish camp and we believe equities are poised for higher prices moving forward. In today’s report we...

Vermilion Research

US Banks - Declining Profit

Nearly half of all reporting US banks and specialty lenders, reported a decline in profit from 3Q18 to 4Q18. Of the 68 companies with populated...

Daniel Tabbush

US Banks - Deteriorating Consumer Credit Metrics May Point To Recession

The headline numbers at US banks are wholly misleading if the conclusion is a robust US economy, a robust US consumer and that interest rates will...

Daniel Tabbush

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