Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Taichung Commercial Bank / Equity Bottom-Up

We are on the hunt for banking assets with poor technical momentum, strong fundamental trends, and cheap valuations.We drill into detail to find the most unfashionable and cheapest banks in the world. Using a combination of technicals, fundamental momentum, and franchise value, we rank over 500 banks from the latest reporting season and allocate a score to capture relative attractiveness or ugliness. Buying into the ugly requires courage, common sense and a necessary timeframe.For fundamental momentum, we utilise our PH Score™. In some cases, most notably Turkey, the full weight of deterioration from FX and rate mismatch, under provisioning, and under reported asset quality erosion, has yet to flow into fundamental trends and metrics. We are all grown up enough to know that things will get worse there before they get better. So what does our model say?<ul>
<li>It appears that there is a build up of risk and opportunity in Turkey, Russia, South Korea, Sri Lanka and Nigeria from EM-frontier land.</li>
<li>Austrian and Spanish lenders stand out due to EM exposures - Russia, Turkey, and Argentina especially.</li>
<li>Banks such as HSBC and Unicredit suffer a double whammy of under provisioned EM exposures and domestic tribulations.</li>
<li>MENA banks, especially Emirates NBD, reflect Turkish risk. Prior to the Deniz deal, Emirates NBD was a poster child in the MENA region.</li>
<li>UK and Italian banks reflect regional (EU) issues such as Brexit and fiscal prudence/debt sustainability. </li>
<li>From the US, Bank of New York Mellon, Synovus, and Fifth Third catch the eye.</li>
<li>In Japan, mega banks MUFJ and Mizuho make the top quintile.</li>
<li>There is Greater China representation too. Many lenders have yet to report but Taichung stands out.</li>
</ul>In short, if you think that Brexit will not be as bad as it may appear or that Turkey or Russia are oversold, then opportunity knocks. Sberbank is actually a very good bank. The key is to weigh what things will look like in say 5 years. Will these basement levels be justified? After all, it only takes a second to score a goal.

We are on the hunt for banking assets with poor technical momentum, strong fundamental trends, and cheap valuations.We drill into detail to find the most unfashionable and cheapest banks in the world. Using a combination of technicals, fundamental momentum, and franchise value, we rank over 500 banks from the latest reporting season and allocate a score to capture relative attractiveness or ugliness. Buying into the ugly requires courage, common sense and a necessary timeframe.For fundamental momentum, we utilise our PH Score™. In some cases, most notably Turkey, the full weight of deterioration from FX and rate mismatch, under provisioning, and under reported asset quality erosion, has yet to flow into fundamental trends and metrics. We are all grown up enough to know that things will get worse there before they get better. So what does our model say?
It appears that there is a build up of risk and opportunity in Turkey, Russia, South Korea, Sri Lanka and Nigeria from EM-frontier land.
Austrian and Spanish lenders stand out due to EM exposures - Russia, Turkey, and Argentina especially.
Banks such as HSBC and Unicredit suffer a double whammy of under provisioned EM exposures and domestic tribulations.
MENA banks, especially Emirates NBD, reflect Turkish risk. Prior to the Deniz deal, Emirates NBD was a poster child in the MENA region.
UK and Italian banks reflect regional (EU) issues such as Brexit and fiscal prudence/debt sustainability. 
From the US, Bank of New York Mellon, Synovus, and Fifth Third catch the eye.
In Japan, mega banks MUFJ and Mizuho make the top quintile.
There is Greater China representation too. Many lenders have yet to report but Taichung stands out.
In short, if you think that Brexit will not be as bad as it may appear or that Turkey or Russia are oversold, then opportunity knocks. Sberbank is actually a very good bank. The key is to weigh what things will look like in say 5 years. Will these basement levels be justified? After all, it only takes a second to score a goal.

Global Banks: Any Takers for the Unloved?

Emirates NBD Bank PJSC / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/27001" target="_blank" data-smartkarma-citation="entities:27001:1">Emirates NBD PJSC (EMIRATES UH)</a> is a leading player in the UAE financial sector and (somewhat fractured) GCC. The bank is active in consumer and corporate banking as well Islamic services, as asset management, brokerage, private banking, card processing and trade finance.  The bank acquired Dubai Bank in 2011.This strong MENA franchise is underpinned by majority ownership from the government of Dubai. We do not rule out management extending this franchise across MENA.Emirates NBD leads the way in UAE with technological change, having inaugurated the first digital bank (Liv.) in the region, face video banking, a SkyShopper e-commerce portal, voice-based virtual chatbot, a blockchain network for remittances and trade finance, an automated loan decision-making system, payment innovations, interactive teller machines, and a digital fintech Future Lab etc.Since the GFC, Emirates NBD has made notable headway on fortifying its financial strength (above all its Capital and Asset Quality) and modernising its infrastructure and proposition.Shares have performed very well this year. However, we see continuing upside given the market pricing (undervaluation) of the bank’s Profitability as well as other key variables.A high PH Score™ of 8.3 signals that share price should continue to move higher, reflecting positive fundamental signals and valuation.<div class="content-highlight">PH Score™  encompasses signals from Profitability, Operating Efficiency, Liquidity, Capital Adequacy, Asset Quality, and Provisioning. The scores lie between 0 and 10, with higher scores representing more positive signs.</div>

Emirates NBD PJSC (EMIRATES UH) is a leading player in the UAE financial sector and (somewhat fractured) GCC. The bank is active in consumer and corporate banking as well Islamic services, as asset management, brokerage, private banking, card processing and trade finance.  The bank acquired Dubai Bank in 2011.This strong MENA franchise is underpinned by majority ownership from the government of Dubai. We do not rule out management extending this franchise across MENA.Emirates NBD leads the way in UAE with technological change, having inaugurated the first digital bank (Liv.) in the region, face video banking, a SkyShopper e-commerce portal, voice-based virtual chatbot, a blockchain network for remittances and trade finance, an automated loan decision-making system, payment innovations, interactive teller machines, and a digital fintech Future Lab etc.Since the GFC, Emirates NBD has made notable headway on fortifying its financial strength (above all its Capital and Asset Quality) and modernising its infrastructure and proposition.Shares have performed very well this year. However, we see continuing upside given the market pricing (undervaluation) of the bank’s Profitability as well as other key variables.A high PH Score™ of 8.3 signals that share price should continue to move higher, reflecting positive fundamental signals and valuation.PH Score™  encompasses signals from Profitability, Operating Efficiency, Liquidity, Capital Adequacy, Asset Quality, and Provisioning. The scores lie between 0 and 10, with higher scores representing more positive signs.

United Arab Emirates

Emirates NBD PJSC conducts banking and financial service activities. The Bank's business segments include corporate and institutional, retail, and private banking. Emirates NBD also offers treasury services and Islamic banking products, with headquarters in Dubai, United Arab Emirates.

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Emirates NBD Bank PJSC (EMIRATES UH)

Global Banks: Any Takers for the Unloved?

We are on the hunt for banking assets with poor technical momentum, strong fundamental trends, and cheap valuations.We drill into detail to find...

Paul Hollingworth

Emirates NBD: Underrated Transformation

Emirates NBD PJSC (EMIRATES UH) is a leading player in the UAE financial sector and (somewhat fractured) GCC. The bank is active in consumer and...

Paul Hollingworth

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