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)

Banks in Hong Kong have some of the lowest levels of loan loss reserves (LLR) compared with loans and also their loan loss provision (LLP) expenses are paltry. The sharp rise of interest rates during late this year will see a marked increase in interest payments. This is due to the magnitude of the rate change, which is over 60% higher. It is fairly simple to service loans at near zero interest rates, but the propensity for defaults is suddenly much higher as rates climb to 1.25%.  Hong Kong – 3…

Banks in Hong Kong have some of the lowest levels of loan loss reserves (LLR) compared with loans and also their loan loss provision (LLP) expenses are paltry. The sharp rise of interest rates during late this year will see a marked increase in interest payments. This is due to the magnitude of the rate change, which is over 60% higher. It is fairly simple to service loans at near zero interest rates, but the propensity for defaults is suddenly much higher as rates climb to 1.25%.  Hong Kong – 3…

Equity Bottom-Up

It is difficult to be anything but concerned with <a href="https://www.smartkarma.com/entities/516" target="_blank" data-smartkarma-citation="entities:516:1">HSBC Holdings Plc (5 HK)</a> [<a href="https://www.smartkarma.com/entities/21976" target="_blank" data-smartkarma-citation="entities:21976:1">HSBC Holdings Plc (HSBA LN)</a>].  Four fines or settlements come to mind over the past several weeks. One is for HK$400 million for the Hong Kong branch of its Swiss private-banking subsidiary, over the sale of Lehman-linked products. Together with this fine, HSBC Private Bank (Suisse) will have its license to give advice on securities suspended and its license partially suspended to deal in securities. Another fine is for…

It is difficult to be anything but concerned with HSBC Holdings Plc (5 HK) [HSBC Holdings Plc (HSBA LN)].  Four fines or settlements come to mind over the past several weeks. One is for HK$400 million for the Hong Kong branch of its Swiss private-banking subsidiary, over the sale of Lehman-linked products. Together with this fine, HSBC Private Bank (Suisse) will have its license to give advice on securities suspended and its license partially suspended to deal in securities. Another fine is for…

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

* Fundamentals at Standard Chartered Bank (Hong Kong) [SCBHK] have improved over the past several years. However, SCBHK has aggressively pulled on various non-core, low quality sources of revenue in order to buoy Standard Chartered’s (2888.HK/STAN.LN) profits  - making them look better than they otherwise would have.* There is some strain on SCBHK’s capital position. Our burn-down analysis suggests that SCBHK is already close to the 2019 Basel III floor level for Common Equity Tier 1 (CET1) capital. As such, on top of concerns over IFRS 9, Basel III/IV, and regulatory penalties - Standard Chartered may need to worry about capital at risk in its Hong Kong franchise prior to re-instituting a dividend.

* Fundamentals at Standard Chartered Bank (Hong Kong) [SCBHK] have improved over the past several years. However, SCBHK has aggressively pulled on various non-core, low quality sources of revenue in order to buoy Standard Chartered’s (2888.HK/STAN.LN) profits  - making them look better than they otherwise would have.* There is some strain on SCBHK’s capital position. Our burn-down analysis suggests that SCBHK is already close to the 2019 Basel III floor level for Common Equity Tier 1 (CET1) capital. As such, on top of concerns over IFRS 9, Basel III/IV, and regulatory penalties - Standard Chartered may need to worry about capital at risk in its Hong Kong franchise prior to re-instituting a dividend.  

Standard Chartered (Hong Kong) – A Messy Flagship

* Problems at Group Lease (GL.TB) became more apparent with Ernst &amp; Young’s scathing 2016 audit report which questioned the integrity of inter-company loans, more liberal accounting policies, and the 30% purchase of a Sri Lankan company from a related party at a 120% market premium.* Among other items, an independent research report further alleged that Group Lease purposely misled investors, Ernst &amp; Young, and the Stock Exchange of Thailand (SET). Our own research suggests that each…

* Problems at Group Lease (GL.TB) became more apparent with Ernst &amp; Young’s scathing 2016 audit report which questioned the integrity of inter-company loans, more liberal accounting policies, and the 30% purchase of a Sri Lankan company from a related party at a 120% market premium.* Among other items, an independent research report further alleged that Group Lease purposely misled investors, Ernst &amp; Young, and the Stock Exchange of Thailand (SET). Our own research suggests that each…

Hong Kong’s banks have exposure to China. Some more than others. There are signs of worsening credit conditions in China from some of Hong Kong banks’ financials. We believe this may be as good as any indicator for China credit risk, even where non-performing loan (NPL) ratios appear static in the Mainland. At the same time, some banks in Hong Kong are seeing high rates of growth in domestic impaired loans, provision costs or overdue loans. With less support from China, it is no wonder that…

Hong Kong’s banks have exposure to China. Some more than others. There are signs of worsening credit conditions in China from some of Hong Kong banks’ financials. We believe this may be as good as any indicator for China credit risk, even where non-performing loan (NPL) ratios appear static in the Mainland. At the same time, some banks in Hong Kong are seeing high rates of growth in domestic impaired loans, provision costs or overdue loans. With less support from China, it is no wonder that…

Hong Kong

Hang Seng Bank Limited and its subsidiaries provide banking and related financial services.

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Hang Seng Bank (11 HK)

Hong Kong Banks – Interest Rate Shock

Banks in Hong Kong have some of the lowest levels of loan loss reserves (LLR) compared with loans and also their loan loss provision (LLP) expenses...

Daniel Tabbush

HSBC Does Not Impress

It is difficult to be anything but concerned with HSBC Holdings Plc (5 HK) [HSBC Holdings Plc (HSBA LN)]. Four fines or settlements come to mind...

Daniel Tabbush

Standard Chartered (Hong Kong) – A Messy Flagship

* Fundamentals at Standard Chartered Bank (Hong Kong) [SCBHK] have improved over the past several years. However, SCBHK has aggressively pulled on...

Thomas J. Monaco

Group Lease - Lessons from Icharus

* Problems at Group Lease (GL.TB) became more apparent with Ernst & Young’s scathing 2016 audit report which questioned the integrity of...

Thomas J. Monaco

HK Banks - Domestic Decay, And China Too

Hong Kong’s banks have exposure to China. Some more than others. There are signs of worsening credit conditions in China from some of Hong Kong...

Daniel Tabbush

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