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

Excerpts From The Tabbush Report:<ul><li>While Hang Seng Bank may have been able to divest Industrial Bank before the routing in China bank NPLs, without that capital gain, the worsening of China credit quality will now become all too clear in the bank&rsquo;s income statement....</li><li>HSB has made China integral to its business.....</li><li>Should HSB&rsquo;s cost-subsidy from HSBC be lessened, as its own credit costs worsen, it will not be a positive combination.....</li></ul>Full Report For Subscribers only

Excerpts From The Tabbush Report:While Hang Seng Bank may have been able to divest Industrial Bank before the routing in China bank NPLs, without that capital gain, the worsening of China credit quality will now become all too clear in the bank&rsquo;s income statement....HSB has made China integral to its business.....Should HSB&rsquo;s cost-subsidy from HSBC be lessened, as its own credit costs worsen, it will not be a positive combination.....Full Report For Subscribers only

Hang Seng Bank's losses in China can worsen

Thematic (Sector/Industry)

<ul><li>Last year seven banks in China saw deposits contract. The year previous the number was one. </li><li>Deposit flight is one of the first things to look for in a banking crisis.&nbsp;</li><li>Even where deposits are simply being moved out of traditional banks and placed with a government policy bank, it can be a concern.</li><li>As bad loans worsen, banks find it increasingly difficult to pay back depositors, which can mean calling in loans. This only exacerbates financial stress for debtors.</li></ul>Full report below the fold....&nbsp;

Last year seven banks in China saw deposits contract. The year previous the number was one. Deposit flight is one of the first things to look for in a banking crisis.&nbsp;Even where deposits are simply being moved out of traditional banks and placed with a government policy bank, it can be a concern.As bad loans worsen, banks find it increasingly difficult to pay back depositors, which can mean calling in loans. This only exacerbates financial stress for debtors.Full report below the fold....&nbsp;

<ul><li>It is rare for bad loans to rise gradually as they peak.</li><li>In most all cases the rise of NPLs and corresponding credit costs is radical.</li><li>It is not steady and calm, in the throes of an NPL cycle.</li><li>The peak of credit costs can be well over 5x lows, and unlike typical forecasts.</li><li>With the signals being sent from Beijing, it suggests we are on the precipice of a radical rise in banks&rsquo; bad loans and associated credit costs.&nbsp;&nbsp;</li></ul>

It is rare for bad loans to rise gradually as they peak.In most all cases the rise of NPLs and corresponding credit costs is radical.It is not steady and calm, in the throes of an NPL cycle.The peak of credit costs can be well over 5x lows, and unlike typical forecasts.With the signals being sent from Beijing, it suggests we are on the precipice of a radical rise in banks&rsquo; bad loans and associated credit costs.&nbsp;&nbsp;

<ul><li>Perhaps the old thinking, of DBS Group Holdings being safe and conservative is outdated.</li><li>Its bad loan experience in China is amongst the worst in the country.</li><li>There are 59 banks there with a lower bad loan ratio than DBS Bank (China).</li><li>While in India it is reporting a loss, with bad loans at nearly 8% of total.</li><li>Its credit costs in India have been higher than operating profit for the past two years.</li><li>Perhaps its time to look a bit closer at these subsidiaries, and at the same time, reconsider the long-held perception of this stalwart SE Asian bank?</li></ul>Full report below the fold....

Perhaps the old thinking, of DBS Group Holdings being safe and conservative is outdated.Its bad loan experience in China is amongst the worst in the country.There are 59 banks there with a lower bad loan ratio than DBS Bank (China).While in India it is reporting a loss, with bad loans at nearly 8% of total.Its credit costs in India have been higher than operating profit for the past two years.Perhaps its time to look a bit closer at these subsidiaries, and at the same time, reconsider the long-held perception of this stalwart SE Asian bank?Full report below the fold....

<ul><li>There is no time in recent memory where we see an aggressive decline in loans outstanding for Standard Chartered Bank.</li><li>This can be called de-risking, and it is a bank&rsquo;s way of signalling distress.</li><li>It is also called loan rationing.</li><li>Even in 2008 and 2009, STAN expanded credit at US$20bn per year. It&rsquo;s now on track for a decline in credit of US$7bn to US$12bn per year, during 2014 and 2015.</li></ul>Full note below the fold...

There is no time in recent memory where we see an aggressive decline in loans outstanding for Standard Chartered Bank.This can be called de-risking, and it is a bank&rsquo;s way of signalling distress.It is also called loan rationing.Even in 2008 and 2009, STAN expanded credit at US$20bn per year. It&rsquo;s now on track for a decline in credit of US$7bn to US$12bn per year, during 2014 and 2015.Full note below the fold...

Standard Chartered Signals are Worse than 2008

United Kingdom

HSBC Holdings plc is the holding company for the HSBC Group. The Company provides a variety of international banking and financial services, including retail and corporate banking, trade, trusteeship, securities, custody, capital markets, treasury, private and investment banking, and insurance.  The Group operates worldwide.

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HSBC Holdings (5 HK)

Hang Seng Bank's losses in China can worsen

Excerpts From The Tabbush Report: While Hang Seng Bank may have been able to divest Industrial Bank before the routing in China bank NPLs, without...

Daniel Tabbush

Deposit Flight at China's Banks

Last year seven banks in China saw deposits contract. The year previous the number was one. Deposit flight is one of the first things to look...

Daniel Tabbush

China's NPL Growth will be Radical

It is rare for bad loans to rise gradually as they peak. In most all cases the rise of NPLs and corresponding credit costs is radical. It is not...

Daniel Tabbush

DBS surprises with risk in China, India

Perhaps the old thinking, of DBS Group Holdings being safe and conservative is outdated. Its bad loan experience in China is amongst the worst in...

Daniel Tabbush

Standard Chartered Signals are Worse than 2008

There is no time in recent memory where we see an aggressive decline in loans outstanding for Standard Chartered Bank. This can be called...

Daniel Tabbush

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