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>The bank is seeing high growth in cash and deposits, with loans in decline, and the composition moving more toward government and corporate loans</li>
<li>ALM does not appear strong, and without any easy way to reduce operating costs, the bank is now seeing cost/income surge to 74%</li>
<li>Credit metrics on surface may appear fine, but the 47% QoQ rise in provision costs, suggests to us provisions were cut too much last year, and now there is normalization</li>
</ul>


The bank is seeing high growth in cash and deposits, with loans in decline, and the composition moving more toward government and corporate loans
ALM does not appear strong, and without any easy way to reduce operating costs, the bank is now seeing cost/income surge to 74%
Credit metrics on surface may appear fine, but the 47% QoQ rise in provision costs, suggests to us provisions were cut too much last year, and now there is normalization


Suruga Bank - Loans Down A Lot, Deposits Up Sharply, Cost/Income Up to 74%, Credit Costs +47% QoQ

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a> may not be the easiest company to analyze with its many pages of affiliates, but at the least, it's profit momentum is strong.</li>
<li>Securities Group profit is key to the company where growth is excellent in earnings and in the number of new accounts, across many businesses.</li>
<li>Its two banks in Japan are doing well, growing faster than others, but still <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a> is more of an alternative financial company to a traditional bank.</li>
</ul>



SBI Holdings (8473 JP) may not be the easiest company to analyze with its many pages of affiliates, but at the least, it's profit momentum is strong.
Securities Group profit is key to the company where growth is excellent in earnings and in the number of new accounts, across many businesses.
Its two banks in Japan are doing well, growing faster than others, but still SBI Holdings (8473 JP) is more of an alternative financial company to a traditional bank.


SBI Holdings - Pages of Affiliates | Strong Securities | Banks Doing Well | Accelerating Profit

<ul>
<li>
<a href="https://www.smartkarma.com/entities/seven-bank-ltd" target="_blank" data-smartkarma-citation="entities:16063:1" rel="noopener">Seven Bank Ltd (8410 JP)</a> is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.</li>
<li>Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts</li>
<li>Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines. </li>
</ul>



Seven Bank Ltd (8410 JP) is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.
Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts
Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines. 


Seven Bank - Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Thematic (Sector/Industry)

<ul><li>Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in September, the BoJ decided to leave its ultra- loose interest rates unchanged in spite of domestic consumer prices rising faster than the central bank’s 2% mandate.</li><li>The central bank’s decision to not tighten credit conditions, especially given the differential between BoJ’s policy rate and that of the US Federal Reserve’s (Fed) widening, led to the JPY tumbling against the USD to a 10-month low of JPY 148.46/USD.</li><li>Such domestic headwinds continue to put pressure on Japanese banks’ credit profiles which have been plagued by low domestic interest rate margins and fallout from decades of weak economic growth.</li></ul>

Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in September, the BoJ decided to leave its ultra- loose interest rates unchanged in spite of domestic consumer prices rising faster than the central bank’s 2% mandate.The central bank’s decision to not tighten credit conditions, especially given the differential between BoJ’s policy rate and that of the US Federal Reserve’s (Fed) widening, led to the JPY tumbling against the USD to a 10-month low of JPY 148.46/USD.Such domestic headwinds continue to put pressure on Japanese banks’ credit profiles which have been plagued by low domestic interest rate margins and fallout from decades of weak economic growth.

Change of Fortunes Result in Japanese Megabanks’ Leading Road to Recovery

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sbi-sumishin-net-bank" target="_blank" data-smartkarma-citation="entities:34572:1" rel="noopener">SBI Sumishin Net Bank (7163 JP)</a> raised around US$370m in its Japan IPO in Mar 2023. Its IPO linked lockup is set to expire on 24th Sep 2023.</li>
<li>SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



SBI Sumishin Net Bank (7163 JP) raised around US$370m in its Japan IPO in Mar 2023. Its IPO linked lockup is set to expire on 24th Sep 2023.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we will talk about the lock-up dynamics and updates since our last note.


SBI Sumishin Net Bank IPO Lock-Up - A US$1bn Lockup Release, Will Sell a Little at Some Point

Japan

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company established through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings. As a financial group, the Company provides a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services.

Mitsubishi UFJ Financial (MUFG) (8306 JP)

Mizuho Financial Group, Inc. provides comprehensive financial services through its subsidiaries. The Group provides variety of financial services such as general banking, securities brokerage, trust banking, and assets management.

Japan Post Bank Co. Ltd. provides general banking services. The Company offers deposits, savings, loans, currency exchange transactions, investment trusts, national bonds, and other related banking services to individuals and businesses. Japan Post Bank also provides other financial services such as insurance agency and financing service.

Shinkin Central Bank is a central bank for shinkin banks nationwide, operating as a cooperative financial institution.  The Bank has developed businesses in a variety of fields that contribute the shinkin banking industry.  The Bank's services include enhancement of the credit standing, efficient use of shikin bank's surplus funds, and settlement of domestic exchange transaction.

Resona Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides financial services, including banking, trust operations, and credit card services. Resona Holdings also offers consulting services related to personal loans, asset management, and asset succession.

Sumitomo Mitsui Trust Holdings, Inc. is a holding company established jointly by Chuo Mitsui Trust Holdings and Sumitomo Trust and Banking. As a financial group, the Bank provides trust banking business, as well as securities brokerage, assets management, and related financial services.

The Chiba Bank, Ltd. is a regional bank based in Chiba Prefecture. The Bank offers general banking services including deposits, loans, and foreign exchange transactions. The Chiba Bank also develops software and provides financial services such as leasing, securities brokerage, letter of credit, and credit cards.

Concordia Financial Group, Ltd. is a holding company established through the merger of Bank of Yokohama and Higashi-Nippon Bank. The Company provides banking services and other financial services.

Fukuoka Financial Group, Inc. is a holding company established through the merger of the Bank of Fukuoka and Kumamoto Family Bank. As a financial group, the Company provides banking services including deposits, loans, foreign currency transactions. The Company also provides other financial services such as credit card, letter of credit, and leasing services.

The Bank of Kyoto, Ltd. is a regional bank in Kyoto.  The Bank provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments.  The Bank of Kyoto also provides financial services such as letter of credit, leasing, loans, and credit cards.

National Australia Bank Limited is an international banking group which operates in Australia, New Zealand, Europe, Asia and the United States.  The Group offers banking services, credit and access card facilities, leasing, housing and general finance, international and investment banking, wealth and funds management, life insurance and custodian, trustee and nominee services.

DBS Group Holdings Limited and its subsidiaries provide a variety of financial services.  The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage .  DBS Group also acts as the primary dealer in Singapore government securities.

United Overseas Bank Limited provides a wide range of financial services including personal financial services, wealth management, private banking, commercial and corporate banking, transaction banking, investment banking, corporate finance, capital market activities, treasury services, futures broking, asset management, venture capital management and insurance.

Oversea-Chinese Banking Corporation Limited offers a comprehensive range of financial services.  The Company's services include deposit-taking, corporate, enterprise and personal lending, international trade financing, investment banking, private banking, treasury, stockbroking, insurance, credit cards, cash management, asset management and other financial and related services.

Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services such as personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. Kotak Mahindra Bank serves customers in India.

State Bank of India provides a wide range of banking and financial services to corporate, institutional, commercial, agricultural, industrial and individual customers throughout India.  The Bank also provides international banking to its Indian customers and has operations in other countries.

PNC Financial Services Group, Inc. is a diversified financial services organization.  The Company provides regional banking, wholesale banking, and asset management services nationally and in the Company's primary regional markets.

Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.

PT Bank Central Asia Tbk provides banking and related services.  The Bank also provides custodianship, trusteeship, and management of pension funds of financial institutions.  Through its subsidiaries, the Bank also provides leasing and consumer financing services.

Westpac Banking Corporation offers general and savings banking services.  The Company provides investment portfolio management and advice, insurance services,  consumer finance, and money market services among other services.  Westpac Banking Corp. serves individuals, businesses, and corporations worldwide.

Sumitomo Mitsui Financial Group, Inc. manages financial operations for its subsidiaries. The Company provides commercial banking and a variety of financial services.

Sumitomo Mitsui Financial Group (8316 JP)

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Sumitomo Mitsui Financial Group (8316 JP)

Suruga Bank - Loans Down A Lot, Deposits Up Sharply, Cost/Income Up to 74%, Credit Costs +47% QoQ

Cash is up a lot but loans are down a lot with sharply higher deposits, not the best ALM. Cost/income ratio is now 74%, not easy to cut costs...

Daniel Tabbush

SBI Holdings - Pages of Affiliates | Strong Securities | Banks Doing Well | Accelerating Profit

Earnings are very strong now, especially from mainstay securities business, but also from affilates. It is an interesting alternative financial...

Daniel Tabbush

Seven Bank - Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%

Highly geared toward change in negative rates on BOJ deposits. Good growth in ATMs outstanding, ATM transactions (especially overseas), and in...

Daniel Tabbush

Change of Fortunes Result in Japanese Megabanks’ Leading Road to Recovery

Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in...

Criat

SBI Sumishin Net Bank IPO Lock-Up - A US$1bn Lockup Release, Will Sell a Little at Some Point

SBI Sumishin Net Bank (7163 JP) raised around US$370m in its Japan IPO in Mar 2023. Its IPO linked lockup is set to expire on 24th Sep 2023.

Sumeet Singh

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