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>Total impairment costs are soaring now at Citigroup up to USD3.5bn in 4Q23 compared with an average charge of USD1.8-1.9bn in the recent preceding quarters. </li>
<li>Net interest income appears to be topping out now, as there is generally a lagged impact on funding in a rising rate environment. </li>
<li>The implications of the Citi results, steeped in geopolitical risk, are not positive for large global banks, major US banks in particular and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a> specifically. </li>
</ul>


Total impairment costs are soaring now at Citigroup up to USD3.5bn in 4Q23 compared with an average charge of USD1.8-1.9bn in the recent preceding quarters. 
Net interest income appears to be topping out now, as there is generally a lagged impact on funding in a rising rate environment. 
The implications of the Citi results, steeped in geopolitical risk, are not positive for large global banks, major US banks in particular and HSBC Holdings (5 HK) specifically. 


Citigroup - Impairment Costs Far Higher than Any Recent Quarter & Net Interest Income near Halting

Thematic (Sector/Industry)

<ul>
<li>For US banks outside the largest 100, credit card charge off rates are soaring now at 8.5% compared with a total charge off rate of 0.25%</li>
<li>Often smaller finance companies or non-traditional banks can see deterioration that hits the mainstream later, like in Thailand in 1997, and  like with HSBC Finance, Countrywide, Indymac in the past.</li>
<li>Ally Financial has already revealed a renewed surge of credit costs in 3Q23, defying the decline in the preceding two quarters. Maybe COF and others will show this too?</li>
</ul>


For US banks outside the largest 100, credit card charge off rates are soaring now at 8.5% compared with a total charge off rate of 0.25%
Often smaller finance companies or non-traditional banks can see deterioration that hits the mainstream later, like in Thailand in 1997, and  like with HSBC Finance, Countrywide, Indymac in the past.
Ally Financial has already revealed a renewed surge of credit costs in 3Q23, defying the decline in the preceding two quarters. Maybe COF and others will show this too?


US Banks - Credit Card Charge-Offs Soaring to 8.5%, Can Catch Some Off Guard with Focus on CRE, C&I

<ul>
<li>New data for US PMI shows a continued weak economy, which is not positive for bank lending prospects or for loan pricing. It is also not positive for credit metrics. </li>
<li>New weekly data for large US banks show risk aversion remains, with rising cash, but also dismal growth in loans at only 0.5% YoY in the most recent week. </li>
<li>Large time deposits continue to rise substantially at +110% YoY in most recent week, with cash rising too - the outlook for core net interest income is worsening.</li>
</ul>


New data for US PMI shows a continued weak economy, which is not positive for bank lending prospects or for loan pricing. It is also not positive for credit metrics. 
New weekly data for large US banks show risk aversion remains, with rising cash, but also dismal growth in loans at only 0.5% YoY in the most recent week. 
Large time deposits continue to rise substantially at +110% YoY in most recent week, with cash rising too - the outlook for core net interest income is worsening.


US Banks - Weekly Balance Sheets Show Risk Aversion Remains, New PMI Data Continues to Be Weak

<ul>
<li>There was one week of data where large US banks showed -0.1% YoY growth in commercial and industrial (C&amp;I) but the most recent week is -1.0% so more solidly negative.</li>
<li>Cash balances continue to show YoY growth at double digit, now at 18.4% suggesting limited demand, and still banks having risk-aversion.</li>
<li>Jumbo time deposit growth remains extraordinary at 118% YoY in most recent week, and this money is more expensive than other time deposits.</li>
</ul>


There was one week of data where large US banks showed -0.1% YoY growth in commercial and industrial (C&amp;I) but the most recent week is -1.0% so more solidly negative.
Cash balances continue to show YoY growth at double digit, now at 18.4% suggesting limited demand, and still banks having risk-aversion.
Jumbo time deposit growth remains extraordinary at 118% YoY in most recent week, and this money is more expensive than other time deposits.


US Banks - Weekly Balance Sheets, Negative C&I Growth, Nearly First Time This Year, Other Negatives

<ul>
<li>New weekly balance sheets for US large banks shows C&amp;I loan growth turning negative. De-risking continues with cash balances up 15.1% YoY, the fourth week of double digit growth. </li>
<li>Total loan growth is nearly negative with the most recent week's release showing further slowing to 1.11% YoY in week to18 October. </li>
<li>With all of this, US large banks are accelerating their more expensive jumbo time deposits, with growth now at 115% YoY and adding USD26bn in the week. </li>
</ul>


New weekly balance sheets for US large banks shows C&amp;I loan growth turning negative. De-risking continues with cash balances up 15.1% YoY, the fourth week of double digit growth. 
Total loan growth is nearly negative with the most recent week's release showing further slowing to 1.11% YoY in week to18 October. 
With all of this, US large banks are accelerating their more expensive jumbo time deposits, with growth now at 115% YoY and adding USD26bn in the week. 


US Banks - New Weekly Balance Sheets: C&I Loan Growth Turns Negative | Cash +15% | All Loans +1%

United States

Comerica Incorporated is the holding company for business, individual, and investment banks with operations in the United States, Canada, and Mexico.  The Company's subsidiaries provide services such as corporate banking, international finance, treasury management, community banking, private banking, small business and individual lending, investment services, and institutional trust.

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Comerica Inc (CMA US)

Citigroup - Impairment Costs Far Higher than Any Recent Quarter & Net Interest Income near Halting

Citigroup is now seeing its impairment costs far higher than any recent quarter, and much of this is from unfunded commitments. Its net interest...

Daniel Tabbush

US Banks - Credit Card Charge-Offs Soaring to 8.5%, Can Catch Some Off Guard with Focus on CRE, C&I

Credit card charge off rates are now at 8.5% for US banks outside the largest 100, they are incredibly high, and we may expect spillover to...

Daniel Tabbush

US Banks - Weekly Balance Sheets Show Risk Aversion Remains, New PMI Data Continues to Be Weak

New high frequency data on US large banks show weekly loan growth remains weak, large time deposit growth is high, and cash is rising. New PMI data...

Daniel Tabbush

US Banks - Weekly Balance Sheets, Negative C&I Growth, Nearly First Time This Year, Other Negatives

US large banks show -1.0% YoY growth in C&I loans in the most recent weekly release. Cash balances are still rising a lot as are jumbo time...

Daniel Tabbush

US Banks - New Weekly Balance Sheets: C&I Loan Growth Turns Negative | Cash +15% | All Loans +1%

New weekly balance sheet data gives near real-time view. C&I loans just turned negative. Cash is growing fast, total loans nearly negative. Large...

Daniel Tabbush

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