Daily Brief Financials: Japan Post Bank, IDFC First Bank Limited, National Australia Bank, S&P 500 INDEX, S&U PLC, Tether, Goldman Sachs Group, Essential Properties Realty and more

• Japan Post Bank (7182 JP) was effectively re-IPOed in March when Japan Post Holdings (6178 JP) offered more than a BILLION shares against the 400mm shares then in float. 
• It was a huge offering. A huge increase in float. Lots of immediate liquidity. A PERFECT opportunity for the TSE to do an ad hoc FFW change. But they didn’t. 
• Then in June they lowered the FFW (on a technicality). That leaves a big upweight in October. In this insight we measure the opportunity.

• IDFC First Bank is now at USD7bn market cap, and it will now be seen by more than before
• Net interest income rising from INR27.5bn to INR37.5bn is amongst best in India banking
• Credit metrics improving dramatically, but credit costs have yet to trail lower – to come

• We turn to granular Pillar 3 disclosure of NAB seeing divergent moves in PD buckets
• Its worst PD buckets are seeing sharp rise, while best buckets are falling, flat-ish
• LT credit cost data, PD buckets, timely CBA data, suggests higher provision costs

• The 2023 multi-month rally in APAC markets started roughly in autumn 2022, in sync with the US market rally, then stalled when the US market began to pull back.
• We propose an analysis of the S&P500 MONTHLY, to find support levels to be used as a proxy for predicting APAC bloc’s markets supports.
• Main forecast: August/September could be down, but the current MRM pattern reading is bullish – the correction (currently at Q2 supports) should not last beyond end of September.

S&U held a cautious approach to new lending in H124, emphasising higher-quality customers and avoiding competition directly on price. Consequently, net receivables were 5% below our expectations in H124. Encouragingly, S&U has experienced a rise in transactions and new customer pipeline in the past two months in the Advantage motor business, but weakening consumer confidence, higher interest rates and paydowns are likely to curtail the usual rate of growth in Aspen for FY24. Despite this, impairments and arrears are below budget, which should provide some resilience to the net interest margin. We have marginally lowered our estimates for FY24 and FY25 but still expect EBITDA growth of 16% and 15%, respectively.

• The Curve 3pool – long one of the most important sources of liquidity for DAI, USDC, and USDT – has continued to bleed this summer, shrinking by $175mn.
• This outflow has been primarily led by USDC; users have withdrawn $125mn of Circle’s stablecoin.
• By this metric, USDT has remained roughly even while $60mn DAI has been removed, $25mn of which came in just three transactions on July 31.

• Quarterly figures are poor, with net interest income growth negative, again
• Fees appear to be topping out, with operating costs at very high levels
• 7 August letter from Senator Warren: congressional scrutiny on SVB

• Essential Properties Realty Trust, Inc. has held up well compared to other REITs this year, suggesting it has unique strengths.
• The REIT’s cash-on-cash returns have increased, indicating a high rental yield relative to purchase price, but valuation risks remain, according to the REIT.
• Essential Properties Realty Trust, Inc. (NYSE:EPRT), unlike many other real estate investment trusts, or REITs, has held up quite well this year, suggesting it possesses significant idiosyncratic strengths.