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 hard to envisage how the two opposing data sets can co-exist without something worrisome happening behind the scenes. Here we look at annual growth of loan interest income for China’s banks, and the story is bizarre, to say the least. <div class="content-highlight">
Growth in China banks’ loan interest income on a quarterly basis is now negative at 1Q16.
This is totally new.
</div>It is also at complete odds with rampant loan growth. We must remind that this interest income is for loans only, it is not for wealth management…

It is hard to envisage how the two opposing data sets can co-exist without something worrisome happening behind the scenes. Here we look at annual growth of loan interest income for China’s banks, and the story is bizarre, to say the least. 
Growth in China banks’ loan interest income on a quarterly basis is now negative at 1Q16.
This is totally new.
It is also at complete odds with rampant loan growth. We must remind that this interest income is for loans only, it is not for wealth management…

China - Something Happening Here, Exactly What Isn't Clear

China Macroeconomics & Academia

Christopher Balding

Macroeconomics

International bank transaction data was released on the 20th and we believe this provides a better gauge of currency flows than more widely reported data.  There are large acknowledged discrepancies between Customs report import, export, and surplus numbers and the bank reported data due to fraudulent payment or invoicing issues.  This then permeates the calculations on balance of payment and other flow issues that provide serious distortions on currency flows.Current account based upon…

International bank transaction data was released on the 20th and we believe this provides a better gauge of currency flows than more widely reported data.  There are large acknowledged discrepancies between Customs report import, export, and surplus numbers and the bank reported data due to fraudulent payment or invoicing issues.  This then permeates the calculations on balance of payment and other flow issues that provide serious distortions on currency flows.Current account based upon…

RMB Outflows Continue As Inflows Collapsing

While credit quality is certainly the most important issue facing China’s banks, we can not dismiss core income. This is what will pay for credit costs. But China’s banks are quietly facing a vanishing of their asset yields and therefore, net interest margins (NIM). Where interest rates are not coming down in the quarter, we suspect that much of the worsening in asset yields and NIM is due to loans not paying market rates.These may more affectionately be called NPLs, restructured loans or…

While credit quality is certainly the most important issue facing China’s banks, we can not dismiss core income. This is what will pay for credit costs. But China’s banks are quietly facing a vanishing of their asset yields and therefore, net interest margins (NIM). Where interest rates are not coming down in the quarter, we suspect that much of the worsening in asset yields and NIM is due to loans not paying market rates.These may more affectionately be called NPLs, restructured loans or…

Yesterday was money and credit data release data in China.  Most of the numbers grew robustly, as is always expected with this specific release, but there were two numbers that we wanted to highlight because of what they mean for other issues.First, new RMB loans in China were up 9% YoY and 16% YTD YoY.  This represents the ongoing rapid expansion of credit in China that at best seems unsustainable at worst reckless.  Despite talk of restricting credit expansion, credit is growing more than…

Yesterday was money and credit data release data in China.  Most of the numbers grew robustly, as is always expected with this specific release, but there were two numbers that we wanted to highlight because of what they mean for other issues.First, new RMB loans in China were up 9% YoY and 16% YTD YoY.  This represents the ongoing rapid expansion of credit in China that at best seems unsustainable at worst reckless.  Despite talk of restricting credit expansion, credit is growing more than…

The Importance of the Obscure: Banker's Acceptance and Capital Flows Out of China

It was announced early Asia morning that the MSCI would not be including China in the Emerging Market Index.  While China had clearly hoped for inclusion at the annual, there were signs pointing to this as the outcome.  There are a number of important market factors to include going forward.First, it was MSCI exclusion that triggered the July 2015 collapse in A-share prices.  Though no Chinese indexes are nearly as frothy as in June 2015, there will be significant additional downward pressure on…

It was announced early Asia morning that the MSCI would not be including China in the Emerging Market Index.  While China had clearly hoped for inclusion at the annual, there were signs pointing to this as the outcome.  There are a number of important market factors to include going forward.First, it was MSCI exclusion that triggered the July 2015 collapse in A-share prices.  Though no Chinese indexes are nearly as frothy as in June 2015, there will be significant additional downward pressure on…

What MSCI Rejection Means for Chinese Indexes and the RMB

China

The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

MSCI Emerging Markets Index (MXEF INDEX)

China - Something Happening Here, Exactly What Isn't Clear

It is hard to envisage how the two opposing data sets can co-exist without something worrisome happening behind the scenes. Here we look at annual...

Daniel Tabbush

RMB Outflows Continue As Inflows Collapsing

International bank transaction data was released on the 20th and we believe this provides a better gauge of currency flows than more widely...

Christopher Balding

The Quiet Collapse in China Bank Margins

While credit quality is certainly the most important issue facing China’s banks, we can not dismiss core income. This is what will pay for credit...

Daniel Tabbush

The Importance of the Obscure: Banker's Acceptance and Capital Flows Out of China

Yesterday was money and credit data release data in China. Most of the numbers grew robustly, as is always expected with this specific release,...

Christopher Balding

What MSCI Rejection Means for Chinese Indexes and the RMB

It was announced early Asia morning that the MSCI would not be including China in the Emerging Market Index. While China had clearly hoped for...

Christopher Balding