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)

It is rare for Japan’s banks to shine. We wonder if this is now their time and even if only fleetingly so? Credit costs are down substantially for almost every reporting bank in the June quarter, at least so far. Most will recognize by now that this crisis is not like past crises, and that as we turn economies back on, together with unprecedented stimulus, low interest rates, the recovery profile can also be very different. We are seeing this within many economies and Japan’s banks stand out, globally. Their credit cost delta is generally higher than others and what matters more is that some have seen their previous six months’ credit costs still far higher than recent years. This can mean substantially lower provisions in coming quarters, leading to substantially higher profit.

It is rare for Japan’s banks to shine. We wonder if this is now their time and even if only fleetingly so? Credit costs are down substantially for almost every reporting bank in the June quarter, at least so far. Most will recognize by now that this crisis is not like past crises, and that as we turn economies back on, together with unprecedented stimulus, low interest rates, the recovery profile can also be very different. We are seeing this within many economies and Japan’s banks stand out, globally. Their credit cost delta is generally higher than others and what matters more is that some have seen their previous six months’ credit costs still far higher than recent years. This can mean substantially lower provisions in coming quarters, leading to substantially higher profit.

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/5219" target="_blank" data-smartkarma-citation="entities:5219:1">Shimane Bank Ltd/ The (7150 JP)</a> is a secondary regional bank based in Shimane Prefecture in the Chugoku Region of western Japan.  It is a very small bank with some very large problems.  Management has taken the most unusual step of slashing dividend guidance by 60% from ¥50/share to ¥20/share in order to preserve capital and keep the payout ratio around the 30% level.  Banks do not normally cut their dividends, even in years when they report net losses, so this action by Shimane Bank management should be seen as a sign of just how serious the outlook is when viewed from within the bank. 
Shimane Bank's micro-cap size makes it essentially uninvestible for most professional funds, but the bank should attract investors' attention as a potential harbinger of things to come in the Japanese regional banking sector if the current negative interest rate policy, or NIRP, is maintained for much longer by the Bank of Japan. As of end-March 2018, according to the FSA, 54 out of 106 regional and secondary regional banks incurred a loss from their core operations, with all but two of the 54 recording losses for a second year in succession.  According to the FSA’s calculations, 23 regional and secondary regional banks have been making losses on their core banking operations for 5 years or more.  This situation cannot continue indefinitely.  Caveat emptor!  (May the buyer beware)!

Shimane Bank Ltd/ The (7150 JP) is a secondary regional bank based in Shimane Prefecture in the Chugoku Region of western Japan.  It is a very small bank with some very large problems.  Management has taken the most unusual step of slashing dividend guidance by 60% from ¥50/share to ¥20/share in order to preserve capital and keep the payout ratio around the 30% level.  Banks do not normally cut their dividends, even in years when they report net losses, so this action by Shimane Bank management should be seen as a sign of just how serious the outlook is when viewed from within the bank. 
Shimane Bank's micro-cap size makes it essentially uninvestible for most professional funds, but the bank should attract investors' attention as a potential harbinger of things to come in the Japanese regional banking sector if the current negative interest rate policy, or NIRP, is maintained for much longer by the Bank of Japan. As of end-March 2018, according to the FSA, 54 out of 106 regional and secondary regional banks incurred a loss from their core operations, with all but two of the 54 recording losses for a second year in succession.  According to the FSA’s calculations, 23 regional and secondary regional banks have been making losses on their core banking operations for 5 years or more.  This situation cannot continue indefinitely.  Caveat emptor!  (May the buyer beware)!

Shimane Bank (7150 JP):  Another Flag Raised

Japan

THE HOWA BANK, LTD. is a regional bank based in Oita Prefecture.  The Company provides general banking services including deposits, loans, exchange transactions, and corresponding banking services to local companies and individuals.  Howa Bank also provides financial services such as credit cards and leasing.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Howa Bank (8559 JP)

Japan Banks – Rare Time to Shine?

It is rare for Japan’s banks to shine. We wonder if this is now their time and even if only fleetingly so? Credit costs are down substantially for...

Daniel Tabbush

Shimane Bank (7150 JP): Another Flag Raised

Shimane Bank Ltd/ The (7150 JP) is a secondary regional bank based in Shimane Prefecture in the Chugoku Region of western Japan. It is a very...

J. Brian Waterhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)