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

National Australia Bank / Equity Bottom-Up

<ul>
<li>NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures </li>
<li>The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered</li>
<li>This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24</li>
</ul>


NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures 
The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered
This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24


NAB - Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

CK Infrastructure Holdings / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener"><strong>CK Infrastructure Holdings (1038 HK)</strong></a>, 75.67%-held by <strong><a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a></strong>, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0711/2024071100267.pdf" target="_blank" rel="noopener">announced</a> it is considering a second listing on an overseas stock exchange, such as London.</li>
<li>A UK-listing makes perfect sense. In excess of 90% of CKI's FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.</li>
<li>The wording in the announcement is unclear - a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.</li>
</ul>



CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
A UK-listing makes perfect sense. In excess of 90% of CKI's FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
The wording in the announcement is unclear - a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.


<ul>
<li>There is renewed interest in HDFC Bank given potential for stock index re-balancing as well as an acquisition for one of its subsidiaries </li>
<li>The story with HDFC Bank is strong regardless of these new ancillary positives, where growth is incredibly stable, and credit metrics shine</li>
<li>We remind that the amalgamation of HDFC Finance remains new, and gains are still not fully reflected, but a look at costs/assets shows progress</li>
</ul>


There is renewed interest in HDFC Bank given potential for stock index re-balancing as well as an acquisition for one of its subsidiaries 
The story with HDFC Bank is strong regardless of these new ancillary positives, where growth is incredibly stable, and credit metrics shine
We remind that the amalgamation of HDFC Finance remains new, and gains are still not fully reflected, but a look at costs/assets shows progress


HDFC Bank - Rebalancing & MUFG Acquisition Benefit, Ongoing NPL Stability & Profit Strength

Thematic (Sector/Industry)

<ul>
<li>Credit costs, net charge-offs, are rising rapidly for US credit card companies and also for many banks</li>
<li>The 'buy now, pay later' industry is fairly new, Apple's new announcement to exit this business suddenly, may be testimony to stresses</li>
<li>The proportion of US credit card delinquencies/total US delinquencies is now higher than past credit cycles </li>
</ul>


Credit costs, net charge-offs, are rising rapidly for US credit card companies and also for many banks
The 'buy now, pay later' industry is fairly new, Apple's new announcement to exit this business suddenly, may be testimony to stresses
The proportion of US credit card delinquencies/total US delinquencies is now higher than past credit cycles 


Postal Savings Bank of China C / Equity Bottom-Up

<ul>
<li>NIM is continuing to decline, from ~2.5% at its recent peak to ~1.8% in the most recent quarter. This may be from higher rescheduled loans. </li>
<li>Loan growth ascent is strangely steady, and not indicative at all, of any business cycle. This alone is a concern, for true visibility of figures. </li>
<li>Impairment costs do not suggest concern on underlying credit metrics, but with far higher loan balances in the past few years, this is an even greater worry.</li>
</ul>


NIM is continuing to decline, from ~2.5% at its recent peak to ~1.8% in the most recent quarter. This may be from higher rescheduled loans. 
Loan growth ascent is strangely steady, and not indicative at all, of any business cycle. This alone is a concern, for true visibility of figures. 
Impairment costs do not suggest concern on underlying credit metrics, but with far higher loan balances in the past few years, this is an even greater worry.


China Postal Savings Bank - Lower NIM, But Steady Lending & Credit Costs Suggests All Is Fine?

Hong Kong

Standard Chartered plc is an international banking group operating principally in Asia, Africa, and the Middle East.  The Company offers its products and services in the personal, consumer, corporate, institutional and treasury areas.

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Standard Chartered (2888 HK)

NAB - Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly

NAB reported its 3Q24 results with profit down slightly, but the figure is exaggerated with sharply lower credit costs, despite much higher bad...

Daniel Tabbush

CK Infra (1038 HK): London Calling

CKI announced it is considering a second listing on an overseas exchange such as London. But a dual primary listing, or a secondary listing? The...

David Blennerhassett

HDFC Bank - Rebalancing & MUFG Acquisition Benefit, Ongoing NPL Stability & Profit Strength

Renewed interest from a potential re-balancing, and a possible MUFG purchase for HDB. It shines on its own: stability, growth, credit metrics, with...

Daniel Tabbush

US Banks - Buy Now, Default Later?

Credit card defaults can be major risk for US card companies and banks. Credit cards and net charge-offs are surging. Macro data on credit card...

Daniel Tabbush

China Postal Savings Bank - Lower NIM, But Steady Lending & Credit Costs Suggests All Is Fine?

China Postal Savings Bank shows far higher loans with almost no increase of impairment costs. NIM reduction is radical, we wonder if this is partly...

Daniel Tabbush

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