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.

Thematic (Sector/Industry)

<ul>
<li>Weekly mortgage loan applications index in the US is declining rapidly as is the weekly mortgage loan volume index. This gives a good forward view of growth.</li>
<li>Mortgage loans remain one of the most important segments for US banks at 23% of loans in the most recent week, so their decelerating growth is meaningful.</li>
<li>Given the high level of 30-year mortgage rates - not moving lower fast - decelerating mortgage loan growth should continue, and is likely to turn negative soon.</li>
</ul>


Weekly mortgage loan applications index in the US is declining rapidly as is the weekly mortgage loan volume index. This gives a good forward view of growth.
Mortgage loans remain one of the most important segments for US banks at 23% of loans in the most recent week, so their decelerating growth is meaningful.
Given the high level of 30-year mortgage rates - not moving lower fast - decelerating mortgage loan growth should continue, and is likely to turn negative soon.


US Banks - Mtg Loan Applications Index -15% from July | Mtg Loans 23% of Total | Growth Can Turn -Ve

Equity Bottom-Up

<ul>
<li>WFC is seeing net interest income growth rate decelerate sharply from 29% YoY in 2Q23 to 8% YoY in 3Q23. Its deposit costs rose from 23bps to 192bps YoY</li>
<li>CRE NCO's rose to USD93m in 3Q23 from reversals in 3Q22. Its CRE non-accruals rose to USD3,863m in 3Q23, vs USD2,507m in 2Q23, vs USD853m in 3Q22</li>
<li>Mortgage, Auto, CRE loans are down QoQ and YoY. C&amp;I loans, its largest loan bucket are down 0.9% QoQ. Total gross loans declined USD5.5bn QoQ, now down USD13bn from peak.</li>
</ul>


WFC is seeing net interest income growth rate decelerate sharply from 29% YoY in 2Q23 to 8% YoY in 3Q23. Its deposit costs rose from 23bps to 192bps YoY
CRE NCO's rose to USD93m in 3Q23 from reversals in 3Q22. Its CRE non-accruals rose to USD3,863m in 3Q23, vs USD2,507m in 2Q23, vs USD853m in 3Q22
Mortgage, Auto, CRE loans are down QoQ and YoY. C&amp;I loans, its largest loan bucket are down 0.9% QoQ. Total gross loans declined USD5.5bn QoQ, now down USD13bn from peak.


WFC - Net Interest Income +8% YoY Vs +29% | CRE Non-Accruals +54% QoQ, +4.5x YoY | NIM -17bps in 6M

<ul>
<li>US large banks' new balance sheet data for 27 September show surging cash at +USD90bn in the week putting YoY growth highest all year, at 11.6%. This is risk aversion.</li>
<li>Commercial &amp; Industrial lending, shows another subdued week, down USD1bn to 27 Sept WoW, and YoY growth at 0.36% compared with 12.5% early this year. Suggests a weak underlying economy.</li>
<li>CRE lending growth remains negative, and book value growth worsens in past 2 weeks, from +USD9.4bn to +USD4.0bn and now to +0.4bn WoW. </li>
</ul>


US large banks' new balance sheet data for 27 September show surging cash at +USD90bn in the week putting YoY growth highest all year, at 11.6%. This is risk aversion.
Commercial &amp; Industrial lending, shows another subdued week, down USD1bn to 27 Sept WoW, and YoY growth at 0.36% compared with 12.5% early this year. Suggests a weak underlying economy.
CRE lending growth remains negative, and book value growth worsens in past 2 weeks, from +USD9.4bn to +USD4.0bn and now to +0.4bn WoW. 


US Banks - Cash +USD90bn in Week, CRE  -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks

<ul>
<li>US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans</li>
<li>Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth</li>
<li>Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?</li>
</ul>


US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans
Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth
Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?


US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

<ul>
<li>High-Frequency data for US mortgage loan applications, lending and LLR are a red flag</li>
<li>US large banks' loan growth is decelerating sharply, and LLR rising fast for many weeks</li>
<li>Banks face low or negative net interest income growth, as credit costs rise substantially</li>
</ul>


High-Frequency data for US mortgage loan applications, lending and LLR are a red flag
US large banks' loan growth is decelerating sharply, and LLR rising fast for many weeks
Banks face low or negative net interest income growth, as credit costs rise substantially


US Banks - HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions

United States

The Goldman Sachs Group, Inc., a bank holding company, is a global investment banking and securities firm specializing in investment banking, trading and principal investments, asset management and securities services.  The Company provides services to corporations, financial institutions, governments, and high-net worth individuals.

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Goldman Sachs Group (GS US)

US Banks - Mtg Loan Applications Index -15% from July | Mtg Loans 23% of Total | Growth Can Turn -Ve

HFD in the US shows worsening weekly data for mortgage loan applications and for mortgage loan volume. Growth is decelerating fast and it can turn...

Daniel Tabbush

WFC - Net Interest Income +8% YoY Vs +29% | CRE Non-Accruals +54% QoQ, +4.5x YoY | NIM -17bps in 6M

Net interest income is slowing dramatically and could turn negative in 4Q23. NIM pressure is worsening and CRE nonaccrual loans are soaring. Most...

Daniel Tabbush

US Banks - Cash +USD90bn in Week, CRE -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks

New weekly balance sheet data shows USD90bn surge in cash assets in the most recent week. Growth YoY has never been higher this year. There are...

Daniel Tabbush

US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

HFD shows risk aversion increasing at large US banks. LLR rising a lot and big fixed time deposits, can mean worsening net profit delta. With less...

Daniel Tabbush

US Banks - HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions

High frequency data in the US suggests bank earnings will be weak in coming quarters. Weekly mtg loan vol data nearing 1990 levels, weekly loan...

Daniel Tabbush

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