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

Discover Financial Services / Equity Bottom-Up

<p>We look at credit metrics of three specialty lenders in the US, for newly announced results. <a href="https://www.smartkarma.com/entities/11966" target="_blank" data-smartkarma-citation="entities:11966:1">Discover Financial Services (DFS US)</a> mostly provides credit card loans, but additionally it provides student loans and personal loans. The last category is where there is the most deterioration in the just-reported 4Q18 results, and it goes to our concerns about the reported ‘robustness’ of the US economy.  The company’s charge off rate in personal loans rose to 4.49% in 4Q18. The figure was 3.62% in 4Q17 and 2.70% in 4Q16. This is considerable deterioration. Even where some of the credit metrics in credit card loans is not as dire, the direction is of concern. All said, perhaps this is one reason that DFS falls into our growing bucket of financial companies with declining QoQ profit in 4Q18? Credit metrics at Sallie Mae and Synchrony Financial, do not leave us sanguine about the US consumer either. </p>

We look at credit metrics of three specialty lenders in the US, for newly announced results. Discover Financial Services (DFS US) mostly provides credit card loans, but additionally it provides student loans and personal loans. The last category is where there is the most deterioration in the just-reported 4Q18 results, and it goes to our concerns about the reported ‘robustness’ of the US economy.  The company’s charge off rate in personal loans rose to 4.49% in 4Q18. The figure was 3.62% in 4Q17 and 2.70% in 4Q16. This is considerable deterioration. Even where some of the credit metrics in credit card loans is not as dire, the direction is of concern. All said, perhaps this is one reason that DFS falls into our growing bucket of financial companies with declining QoQ profit in 4Q18? Credit metrics at Sallie Mae and Synchrony Financial, do not leave us sanguine about the US consumer either. 

US Speciality Lenders – Worse Credit Metrics, Especially Personal Loans

Thematic (Sector/Industry)

<p>It is becoming clearer now that the idea of rising rates being driven by healthy sustained economic growth is false. The esteemed UCLA Anderson School of Business just released its US real GDP growth forecasts, which move from 3% this year, to 2% next year and 1% in 2020. The pace of deceleration is significant. But what matters more is when we understand this within the context of banks' significant new credit over the past eight years, since the Global Financial Crisis (GFC). The IMF is also touting a similar story of decelerating GDP growth, and it is only a matter of time before this becomes mainstream – and real. And where rates hardly rose in nominal terms since late 2016, rate cuts are hardly going to help this time around.  The outcome should be significant defaults at US banks, higher credit costs, and far worse income. </p>

It is becoming clearer now that the idea of rising rates being driven by healthy sustained economic growth is false. The esteemed UCLA Anderson School of Business just released its US real GDP growth forecasts, which move from 3% this year, to 2% next year and 1% in 2020. The pace of deceleration is significant. But what matters more is when we understand this within the context of banks' significant new credit over the past eight years, since the Global Financial Crisis (GFC). The IMF is also touting a similar story of decelerating GDP growth, and it is only a matter of time before this becomes mainstream – and real. And where rates hardly rose in nominal terms since late 2016, rate cuts are hardly going to help this time around.  The outcome should be significant defaults at US banks, higher credit costs, and far worse income. 

United States

SLM Corporation, commonly known as Sallie Mae, provides education funding, originating and servicing of U.S. government guaranteed and private student loans.  The Company, through its subsidiaries, also provides debt management services and business and technical products to a range of clients including colleges, universities and loan guarantors.

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Slm Corp (SLM US)

US Speciality Lenders – Worse Credit Metrics, Especially Personal Loans

We look at credit metrics of three specialty lenders in the US, for newly announced results. Discover Financial Services (DFS US) mostly provides...

Daniel Tabbush

US Banks – Brace, Brace

It is becoming clearer now that the idea of rising rates being driven by healthy sustained economic growth is false. The esteemed UCLA Anderson...

Daniel Tabbush

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