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>There are few large US banks where quarterly net interest income is more than 1.6x higher now on average than in late FY19 and early FY20</li>
<li>JPM demonstrates some of the best asset-liability management (ALM) of any major bank in the US</li>
<li>Other risks and parts of the business appear to be very well managed too, including credit risk and operating costs</li>
</ul>


There are few large US banks where quarterly net interest income is more than 1.6x higher now on average than in late FY19 and early FY20
JPM demonstrates some of the best asset-liability management (ALM) of any major bank in the US
Other risks and parts of the business appear to be very well managed too, including credit risk and operating costs


JPM - Exceptional Core Income Strength, ALM Is Excellent, HFD for US Banks Supports Outlook

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ally-financial-inc" target="_blank" data-smartkarma-citation="entities:9683:1" rel="noopener">Ally Financial (ALLY US)</a> gave a poor view of now and the immediate future for credit costs within its primary loan book, used cars for subprime borrowers</li>
<li>There is often good read-through for mainstream banks and overall credit metrics, we saw this in Thailand before 1997 and in the US with Indymac, Countrywide, Household</li>
<li>If the Fed has a better view on granular data than one single finance company, we believe they will use this data when considering rate cut magnitude, <span><strong>next week</strong></span>
</li>
</ul>



Ally Financial (ALLY US) gave a poor view of now and the immediate future for credit costs within its primary loan book, used cars for subprime borrowers
There is often good read-through for mainstream banks and overall credit metrics, we saw this in Thailand before 1997 and in the US with Indymac, Countrywide, Household
If the Fed has a better view on granular data than one single finance company, we believe they will use this data when considering rate cut magnitude, next week



Ally Financial - Suggests Large Fed Cut, Credit Cost Guidance Worsening, Fringe Finco View Can Lead

<ul>
<li>Weekly balance sheets give a view of underlying credit conditions in the US and they are not positive. Lending growth continues to decelerate and could reach negative growth soon. </li>
<li>Cash balances are rising and this suggests that US large banks are not comfortable with risk and also seeing less opportunities. Cash/loans ratio rising fastest in most recent week. </li>
<li>Large time deposits cost the most, and their growth rate is now 109% YoY in the most recent week, rising more than loans in each of the past 3 weeks.</li>
</ul>


Weekly balance sheets give a view of underlying credit conditions in the US and they are not positive. Lending growth continues to decelerate and could reach negative growth soon. 
Cash balances are rising and this suggests that US large banks are not comfortable with risk and also seeing less opportunities. Cash/loans ratio rising fastest in most recent week. 
Large time deposits cost the most, and their growth rate is now 109% YoY in the most recent week, rising more than loans in each of the past 3 weeks.


US Large Banks - Weekly Balance Sheets: Decelerating Loans, Rising Cash, Big Time Deposits +109% YoY

<ul>
<li>High frequency data shows small banks continue to take more CRE loan market share to week 23 August, now at 66.11%, rising 0.06% WoW (double avg WoW rise this year)</li>
<li>Net-Charge off rates on CRE loans for the 100 largest US banks just doubled in the past week to 26bps, for other banks they are still low...for now</li>
<li>Weekly mortgage loan applications index fell 5.7% in most recent weeks' data to 25 August, a steep decline compared with an avg 0.3% WoW decline since 7 July </li>
</ul>


High frequency data shows small banks continue to take more CRE loan market share to week 23 August, now at 66.11%, rising 0.06% WoW (double avg WoW rise this year)
Net-Charge off rates on CRE loans for the 100 largest US banks just doubled in the past week to 26bps, for other banks they are still low...for now
Weekly mortgage loan applications index fell 5.7% in most recent weeks' data to 25 August, a steep decline compared with an avg 0.3% WoW decline since 7 July 


US Banks - Small Banks' CRE Loan Share Up Weekly, Now 66.1% | Mtg Loan App's Index -5.7% In the Week

<ul>
<li>Large US banks saw loans down USD22bn from 28 Jun to 16 Aug vs 5bn decline preceding</li>
<li>Weekly data in preceding several weeks shows combined USD18bn decline: it's worsening</li>
<li>Large time deposits, at large US banks, up 76% YoY at 16 Aug - growth is 'off the charts' </li>
</ul>


Large US banks saw loans down USD22bn from 28 Jun to 16 Aug vs 5bn decline preceding
Weekly data in preceding several weeks shows combined USD18bn decline: it's worsening
Large time deposits, at large US banks, up 76% YoY at 16 Aug - growth is 'off the charts' 


US Banks - New HFD Shows Loans Down $22bn From 28 Jun To 16 Aug & Large Time Deposits up 76% YoY

United States

Fifth Third Bancorp is a diversified financial services company that operates banking centers in the Midwestern and Southeastern regions of the United States. The Company's principal businesses include retail banking, commercial banking, investment advisory, and data processing.

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Fifth Third Ban (FITB US)

JPM - Exceptional Core Income Strength, ALM Is Excellent, HFD for US Banks Supports Outlook

JPM shows some of the best rise of quarterly net interest income in US banking, and we believe this is very much due strong ALM, which is core to...

Daniel Tabbush

Ally Financial - Suggests Large Fed Cut, Credit Cost Guidance Worsening, Fringe Finco View Can Lead

New disclosure, comments, guidance from Ally Financial show a major deterioration in credit metrics now, in coming months, which can mean a larger...

Daniel Tabbush

US Large Banks - Weekly Balance Sheets: Decelerating Loans, Rising Cash, Big Time Deposits +109% YoY

US large banks are seeing loan growth decelerating, cash rising, large time deposits up 109% YoY in most recent week. Weekly B/S data suggests net...

Daniel Tabbush

US Banks - New HFD Shows Loans Down $22bn From 28 Jun To 16 Aug & Large Time Deposits up 76% YoY

US banks' HFD data shows loans down $22bn in recent weeks - a major worsening - and 76% growth in the latest week YoY for large time deposits. B/S...

Daniel Tabbush

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JPM - Exceptional Core Income Strength, ALM Is Excellent, HFD for US Banks Supports Outlook

JPM shows some of the best rise of quarterly net interest income in US banking, and we believe this is very much due strong ALM, which is core to...

Daniel Tabbush

Ally Financial - Suggests Large Fed Cut, Credit Cost Guidance Worsening, Fringe Finco View Can Lead

New disclosure, comments, guidance from Ally Financial show a major deterioration in credit metrics now, in coming months, which can mean a larger...

Daniel Tabbush

US Large Banks - Weekly Balance Sheets: Decelerating Loans, Rising Cash, Big Time Deposits +109% YoY

US large banks are seeing loan growth decelerating, cash rising, large time deposits up 109% YoY in most recent week. Weekly B/S data suggests net...

Daniel Tabbush

US Banks - Small Banks' CRE Loan Share Up Weekly, Now 66.1% | Mtg Loan App's Index -5.7% In the Week

Weekly US data shows US small banks taking higher CRE loan market share every week this quarter, now at 66.1%, while the US Mortgage Loan...

Daniel Tabbush

US Banks - New HFD Shows Loans Down $22bn From 28 Jun To 16 Aug & Large Time Deposits up 76% YoY

US banks' HFD data shows loans down $22bn in recent weeks - a major worsening - and 76% growth in the latest week YoY for large time deposits. B/S...

Daniel Tabbush