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)

Japan’s banks face pressure on margins, credit costs and stock market losses. Much of this will worsen further since events in the UK. Unfortunately, for Japan’s banks, there is little in the way of ROA to give up, even for marginal financial deterioration.<h2>Margin pressure</h2> Japan’s banks face worse margin pressure since the negative interest rate policy took hold earlier this year.<div class="content-highlight">Where banks have excess deposits with the Bank of Japan, they will be paying for this, rather than receiving income.…</div>

Japan’s banks face pressure on margins, credit costs and stock market losses. Much of this will worsen further since events in the UK. Unfortunately, for Japan’s banks, there is little in the way of ROA to give up, even for marginal financial deterioration.Margin pressure Japan’s banks face worse margin pressure since the negative interest rate policy took hold earlier this year.Where banks have excess deposits with the Bank of Japan, they will be paying for this, rather than receiving income.…

Three Pronged Attack on Japan's Banks, Becomes More Pointed

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser extent. We plan to reduce the fair value estimates for Nomura Holdings as the company remains poorly positioned as a subscale investment bank with high conduct risk and repeated failures in expanding the global fixed income franchise. Nomura makes significant use of three subsidiaries under European Economic Area, or EEA, passporting privileges to reach its wholesale clients in continental Europe. For other banks, the impacts are likely to be less acute relative to Nomura as they do not hold too many derivative contracts under United Kingdom entities, and their direct exposures are largely limited to traditional lending functions to support foreign subsidiaries of the Japanese parent companies.Analysts: Mari Kumagai &amp; Michael Wu, CAIA

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser extent. We plan to reduce the fair value estimates for Nomura Holdings as the company remains poorly positioned as a subscale investment bank with high conduct risk and repeated failures in expanding the global fixed income franchise. Nomura makes significant use of three subsidiaries under European Economic Area, or EEA, passporting privileges to reach its wholesale clients in continental Europe. For other banks, the impacts are likely to be less acute relative to Nomura as they do not hold too many derivative contracts under United Kingdom entities, and their direct exposures are largely limited to traditional lending functions to support foreign subsidiaries of the Japanese parent companies.Analysts: Mari Kumagai &amp; Michael Wu, CAIA

The Brexit Vote Result Means Additional Headwinds ForJapanese Banks

With less interest income on cash, securities and loans, Japan’s banks can lose a considerable amount of current profit. We show how negative interest rates and lower yielding JGB’s and loans can affect some of Japans largest banks. And with little ROA at present, there is not much room to give up any net interest income, without facing a major drop in earnings.<table class="table table-striped"><tbody>
<tr>
<td>At 9M16</td>
<td>Cash</td>
<td>Securities</td>
<td>Loans</td>
<td>NIM (%)</td>
<td>Profit</td>
<td>LLP/loans(%)</td>
<td>LLP/profit(%)</td>
<td>ROA (%)</td>
</tr>
<tr>
<td>Nishi-Nippon</td>
<td>454,094</td>
<td>1,869,789</td>
<td>6,366,571</td>
<td>1.17</td>
<td>25,326</td>
<td>0.04</td>
<td>4.56</td>
<td>0.39</td>
</tr>
<tr>
<td>Yamagu</td>
</tr>
</tbody></table>…

With less interest income on cash, securities and loans, Japan’s banks can lose a considerable amount of current profit. We show how negative interest rates and lower yielding JGB’s and loans can affect some of Japans largest banks. And with little ROA at present, there is not much room to give up any net interest income, without facing a major drop in earnings.

At 9M16
Cash
Securities
Loans
NIM (%)
Profit
LLP/loans(%)
LLP/profit(%)
ROA (%)


Nishi-Nippon
454,094
1,869,789
6,366,571
1.17
25,326
0.04
4.56
0.39


Yamagu

…

It was bad enough before, but negative rates will only exacerbate the worsening margins of Japan’s banks. These banks are highly liquid, so that there are plenty of assets affected by lower interest rates, and now negative interest rates. Some banks in Japan have no ability to lower their deposit rates further, and these banks can be even more adversely affected. These are the regional banks. Late in January 2016, the Bank of Japan (BOJ) announced that it will charge a rate of 0.10% on current…

It was bad enough before, but negative rates will only exacerbate the worsening margins of Japan’s banks. These banks are highly liquid, so that there are plenty of assets affected by lower interest rates, and now negative interest rates. Some banks in Japan have no ability to lower their deposit rates further, and these banks can be even more adversely affected. These are the regional banks. Late in January 2016, the Bank of Japan (BOJ) announced that it will charge a rate of 0.10% on current…

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

Macroeconomics

The ECB delivered a comprehensive set of further policy easing measures.  But it eschewed the concept of a tiered rate policy, in contrast to the BoJ, and suggested that it was unlikely to target further declines in cash rates.  Its policies are more focused on boosting domestic asset prices and domestic bank lending and place less emphasis on a weaker exchange rate policy.  Since the ECB set its course to further ease policy at its 22-October 2015 policy meeting, the market has presumed that it favored lower interest rates.  It has now signaled it has reached bottom on this path, just as the BoJ has diverted its attention to negative interest rates.  As such, we see a case for a recovery in EUR/JPY, potentially retracing the significant fall since October last year.

The ECB delivered a comprehensive set of further policy easing measures.  But it eschewed the concept of a tiered rate policy, in contrast to the BoJ, and suggested that it was unlikely to target further declines in cash rates.  Its policies are more focused on boosting domestic asset prices and domestic bank lending and place less emphasis on a weaker exchange rate policy.  Since the ECB set its course to further ease policy at its 22-October 2015 policy meeting, the market has presumed that it favored lower interest rates.  It has now signaled it has reached bottom on this path, just as the BoJ has diverted its attention to negative interest rates.  As such, we see a case for a recovery in EUR/JPY, potentially retracing the significant fall since October last year.

AmpGFX - ECB and BoJ Policy Easing Paths Diverge

Japan

SBI Shinsei Bank, Ltd. provides banking services including deposits, loans, and foreign exchange transaction, as well as investment trust service and issuance of long-term bonds.

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SBI Shinsei Bank (8303 JP)

Three Pronged Attack on Japan's Banks, Becomes More Pointed

Japan’s banks face pressure on margins, credit costs and stock market losses. Much of this will worsen further since events in the UK....

Daniel Tabbush

The Brexit Vote Result Means Additional Headwinds ForJapanese Banks

The Brexit vote result is a clear negative for independent investment banks, and major banks with sizable crossborder transaction flows to a lesser...

Morningstar, Inc.

Japan's Banks Can Lose 30% of Income

With less interest income on cash, securities and loans, Japan’s banks can lose a considerable amount of current profit. We show how negative...

Daniel Tabbush

Japan's Nasty Margin Trend

It was bad enough before, but negative rates will only exacerbate the worsening margins of Japan’s banks. These banks are highly liquid, so that...

Daniel Tabbush

AmpGFX - ECB and BoJ Policy Easing Paths Diverge

The ECB delivered a comprehensive set of further policy easing measures. But it eschewed the concept of a tiered rate policy, in contrast to the...

Greg Gibbs

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