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>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

<ul>
<li>There is no refuting the strong net interest income figures at DBS, although it seems toppy</li>
<li>DBS took credit costs/assets at 4bps in 2Q23 vs 13bps average during FY18, FY19 quarterly</li>
<li>There are not many banks that we can turn too with over 50% QoQ decline in credit costs</li>
</ul>


There is no refuting the strong net interest income figures at DBS, although it seems toppy
DBS took credit costs/assets at 4bps in 2Q23 vs 13bps average during FY18, FY19 quarterly
There are not many banks that we can turn too with over 50% QoQ decline in credit costs


DBS - Is This the Time To Take Provision Expenses at 70% Lower than Average?

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal</li>
<li>AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed</li>
<li>The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise</li>
</ul>


The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal
AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed
The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise


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

<section class="figure">
<p><a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a>released its 3Q2021 results this week which saw its 9M2021 new bookings increase +72.7% YoY or +4.2% QoQ, reflecting a new normal situation versus last year when new booking had virtually ground to a halt. All the same, this performance was impressive given the backdrop of Emergency PPKM measures impacting mobility.</p>
<p>3Q2021 performance was relatively robust given that the country was in the midst of Emergency PPKM during the quarter with a stronger recovery taking place in September. <a href="https://www.smartkarma.com/entities/bf-investment-ltd" target="_blank" data-smartkarma-citation="entities:9276:1" rel="noopener"></a></p>
<p><a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a> profitability remained healthy with its interest spread at 11.3%, with the cost of funds steady at 8.5%, making it very competitive versus competition.</p>
<p>The company's NCL ratio declined significantly QoQ but slightly higher than last year, as a result of more repossessions and collateral disposals. </p>
<p><a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a> continues to make good progress on restructured loans with 86.8% of restructured loans reverting to normal status as of the end of 9M2021.<a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener"></a></p>
</section>
<section class="figure">
<section class="figure">
<p>The company continues to develop its digital capabilities and has been developing its fintech push through Pinjam Modal and it has also launched BFI Connect, which is an open API platform, which can be integrated into other platforms such as e-commerce.</p>
<div class="content-highlight">
<p>The key message from <a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a> management was that the company is moving back towards a growth trajectory, with new booking improving and receivables seeing higher repayments. We continue to see <a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a> as the most interesting multi finance company in Indonesia, with a strong risk management culture and with the potential to generate higher ROEs as the market recovers. </p>
</div>
</section>
</section>


BFI Finance Indonesia (BFIN IJ)released its 3Q2021 results this week which saw its 9M2021 new bookings increase +72.7% YoY or +4.2% QoQ, reflecting a new normal situation versus last year when new booking had virtually ground to a halt. All the same, this performance was impressive given the backdrop of Emergency PPKM measures impacting mobility.
3Q2021 performance was relatively robust given that the country was in the midst of Emergency PPKM during the quarter with a stronger recovery taking place in September. 
BFI Finance Indonesia (BFIN IJ) profitability remained healthy with its interest spread at 11.3%, with the cost of funds steady at 8.5%, making it very competitive versus competition.
The company's NCL ratio declined significantly QoQ but slightly higher than last year, as a result of more repossessions and collateral disposals. 
BFI Finance Indonesia (BFIN IJ) continues to make good progress on restructured loans with 86.8% of restructured loans reverting to normal status as of the end of 9M2021.



The company continues to develop its digital capabilities and has been developing its fintech push through Pinjam Modal and it has also launched BFI Connect, which is an open API platform, which can be integrated into other platforms such as e-commerce.

The key message from BFI Finance Indonesia (BFIN IJ) management was that the company is moving back towards a growth trajectory, with new booking improving and receivables seeing higher repayments. We continue to see BFI Finance Indonesia (BFIN IJ) as the most interesting multi finance company in Indonesia, with a strong risk management culture and with the potential to generate higher ROEs as the market recovers. 




BFI Finance Indonesia (BFIN IJ) - Shining Through in a Difficult Period

<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

United Kingdom

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 (STAN LN)

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

DBS - Is This the Time To Take Provision Expenses at 70% Lower than Average?

With July domestic credit growth turning negative at -3% YoY this is a new development, and the delta in Singapore credit growth downward has been...

Daniel Tabbush

AT1 Bonds; Life After Credit Suisse

The CS AT1 write-off due to UBS's acquisition is an unconventional action on bondholders versus shareholders, implying a rising banks' cost of...

Victor Galliano

BFI Finance Indonesia (BFIN IJ) - Shining Through in a Difficult Period

We continue to see BFI Finance Indonesia as the premier multi finance company in Indonesia, with a strong risk management culture and with the...

Angus Mackintosh

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

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