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)

<ul>
<li>US Federal Reserve Bank balance sheets are released weekly and more current than commercial banks. Latest Fed B/S is for 4 October, shows -USD47bn WoW in loans, securities, repos.</li>
<li>Liquidity conditions in the US banking system are becoming tighter faster, with the most recent week showing loans, securities, repos at -9.4% YoY vs -8.3% four weeks ago.</li>
<li>With tighter liquidity we should expect less loan growth, but also more difficult conditions for cash-strapped companies, prompting more defaults, and higher credit costs at banks.</li>
</ul>


US Federal Reserve Bank balance sheets are released weekly and more current than commercial banks. Latest Fed B/S is for 4 October, shows -USD47bn WoW in loans, securities, repos.
Liquidity conditions in the US banking system are becoming tighter faster, with the most recent week showing loans, securities, repos at -9.4% YoY vs -8.3% four weeks ago.
With tighter liquidity we should expect less loan growth, but also more difficult conditions for cash-strapped companies, prompting more defaults, and higher credit costs at banks.


US - Fed Liquidity Moves USD147bn Lower In Past 3 Weeks, Pace Is Accelerating

<ul>
<li>US large banks' new balance sheet data for 27 September show surging cash at +USD90bn in the week putting YoY growth highest all year, at 11.6%. This is risk aversion.</li>
<li>Commercial &amp; Industrial lending, shows another subdued week, down USD1bn to 27 Sept WoW, and YoY growth at 0.36% compared with 12.5% early this year. Suggests a weak underlying economy.</li>
<li>CRE lending growth remains negative, and book value growth worsens in past 2 weeks, from +USD9.4bn to +USD4.0bn and now to +0.4bn WoW. </li>
</ul>


US large banks' new balance sheet data for 27 September show surging cash at +USD90bn in the week putting YoY growth highest all year, at 11.6%. This is risk aversion.
Commercial &amp; Industrial lending, shows another subdued week, down USD1bn to 27 Sept WoW, and YoY growth at 0.36% compared with 12.5% early this year. Suggests a weak underlying economy.
CRE lending growth remains negative, and book value growth worsens in past 2 weeks, from +USD9.4bn to +USD4.0bn and now to +0.4bn WoW. 


US Banks - Cash +USD90bn in Week, CRE  -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks

<ul>
<li>US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans</li>
<li>Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth</li>
<li>Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?</li>
</ul>


US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans
Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth
Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?


US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

<ul>
<li>De-Risking is well in place in weekly balance sheet for US banks. Cash rose USD122bn in past 2 weeks, loans rose USD31bn, and deposits rose USD113bn. CRE loans are down.</li>
<li>US banks' LDR <em>was</em> rising a lot, from 58.6% low in week of 15 December 2021 to 69.3% in the most recent week's data; they do not want the money.</li>
<li>The increase in large time deposits, which cost more than other deposits, is now 82.8% YoY in the most recent week; this YoY growth was 71.0% just 9 weeks earlier.</li>
</ul>


De-Risking is well in place in weekly balance sheet for US banks. Cash rose USD122bn in past 2 weeks, loans rose USD31bn, and deposits rose USD113bn. CRE loans are down.
US banks' LDR was rising a lot, from 58.6% low in week of 15 December 2021 to 69.3% in the most recent week's data; they do not want the money.
The increase in large time deposits, which cost more than other deposits, is now 82.8% YoY in the most recent week; this YoY growth was 71.0% just 9 weeks earlier.


US Banks - Added $122bn Cash In Past 2 Weeks | Loans up $31bn | CRE Loans Down | Deposits up $113bn

Equity Bottom-Up

<ul>
<li>Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  </li>
<li>Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23</li>
<li>Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY</li>
</ul>


Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada.  
Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23
Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY


Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

United States

Synchrony Financial operates as a consumer financial services company. The Company provides  a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers.

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Synchrony Financial (SYF US)

US - Fed Liquidity Moves USD147bn Lower In Past 3 Weeks, Pace Is Accelerating

Fed data shows USD147bn lower liquidity in just the past 3 weeks, and the pace is accelerating. There are negative implications for bank loan...

Daniel Tabbush

US Banks - Cash +USD90bn in Week, CRE -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks

New weekly balance sheet data shows USD90bn surge in cash assets in the most recent week. Growth YoY has never been higher this year. There are...

Daniel Tabbush

US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

HFD shows risk aversion increasing at large US banks. LLR rising a lot and big fixed time deposits, can mean worsening net profit delta. With less...

Daniel Tabbush

US Banks - Added $122bn Cash In Past 2 Weeks | Loans up $31bn | CRE Loans Down | Deposits up $113bn

US banks are de-risking. Weekly balance sheet data shows almost all new deposits coming in moving into cash. Jumbo time deposits now far higher to...

Daniel Tabbush

Remitly - Rev +49% | ROW Rev +120% | Scaling: COGS -25% | Adj EBITDA Margin 2Q23 Is 8.7%, Highest

49% revenue growth 2Q23, COGS/revenue in decline. Adj EBITDA is positive, rising sharply in 2Q23 from 1Q23, 4Q22. Scale, penetration, reach, new...

Daniel Tabbush

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