Daily Brief Financials: TOPIX-Banks Index, Haitong International Securities Group, Arbuthnot Banking, M & T Bank Corp, S&P Global , State Street, American Express Co, Truist Financial Corp, ICG Enterprise Trust plc, Lippo Karawaci and more

• In July the BOJ lifted the YCC range to allow flexibility at 0.5% and a red line at 1.0%. Today it moved the “reference” to 1.0% with no red line.
• This allows 10yr yields to move higher, but the Board’s insistence on negative rates and YCC staying in place tells you steeper for longer makes shorting long JGBs tough.
• The move today helps encourage the market mechanism to take control of dampening volatility, the same way it did when the BOJ stepped away from ETF buying in 2021.

• For the month of October 2023, 7 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
• The average premium for the new deals announced (or first discussed) in October was 65%. The average YTD is 37% (85 deals).
• This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

• In our view, the key takeaway from the recent 3Q trading statement is how ABG is progressing strategically towards its “Future State 2” plan.
• In particular, we note specialist SME finance divisions generating the ambitious balance sheet growth in the plan, optimising the core relationship banking franchise, which, in this period, saw 7% deposit growth ‒ given the level of base rates, this is a profitable product for a relationship bank, and continued investment, which, at times, requires a step change in cost rather than a gentle evolution.
• To meet expected multi-year demand, ABG is increasing its central London HQ office space by 45% at an annual increase in cost of ca.£5m (with further dual running costs until October 2024 as it is refitted).

• M&T Bank Corporation delivered an all-around beat in the previous quarter.
• Revenues grew by 4% compared to the previous year, with net charge-offs decreasing and GAAP net income increasing by 7%.
• While economic uncertainty persists, M&T Bank’s historical outperformance during uncertain times underscores its resilience and potential for shareholder value creation.

• This is our first report on global financial behemoth S&P Global.
• The company reported a 7% revenue growth in the second quarter, excluding the impact of Engineering Solutions.
• In May, S&P Global introduced an AI assistant named ChatIQ for internal testing within Capital IQ Pro Labs.

• State Street Corporation delivered a mixed set of results for the quarter, with revenues below the analyst consensus.
• Initially, the quarter started with a positive note for equity markets in July, only to take a sharply negative turn as it progressed.
• State Street’s Alpha continued to gain traction, deepening existing mandates and securing two new Alpha mandate wins in the third quarter, including the company’s first Alpha for private markets mandate.

• American Express Company delivered a solid result and managed an all-around beat in the last quarter, continuing the impressive trajectory of its financial performance.
• The company reported its 7th consecutive quarter of tangible results, with significant revenues reaching $15.4 billion, showcasing a 13% year-over-year increase.
• The company further introduced product improvements and analytics advancements to its digital cash flow management hub, American Express Business Blueprint.

• Truist Financial Corporation delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• In terms of digital and technology, the company reported positive digital engagement trends, accounting for 61% of total bank transactions.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• ICGT’s interim results to July 2023 confirmed the robust nature of its strategy and portfolio with LTM NAV per share total return of 4.1%.
• The 1HFY’24 portfolio return, on a constant currency basis, was 4.6% and the long-term, ongoing buyback programme enhanced NAV with an average discount on purchase of over 40%.
• Realisations were £94m, new investments £64m and new commitments £110m; activity that is slower than the recent past but still ongoing.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Lippo Karawaci