Research and consultancy, Tabbush Report

Daniel Tabbush

The Tabbush Report: Asian bank research and consultancy, without the noise.

Daniel Tabbush has ~30 years experience analyzing Asia-Pacific banks, including HSBC, Standard Chartered, Japanese and Australian banks. His research and consulting focuses on global banking issues, including with banks in the US. He was the Head of Asian Bank research at the number one Asian brokerage CLSA for most of his career, overseeing coverage of 80 banks and 10 analysts in Asia-Pacific.

He has been highly ranked by Asiamoney, The Asset and Bloomberg, as well as by institutional investors focused on Asia. He continues to appear in press interviews with TVB in Hong Kong, and has appeared on CNBC in the past. He maintains an information-sharing agreement with Dr. Jim Walker of Asianomics, the foremost economist in Asia-Pacific, and Tabbush was an invited speaker on Asian banks at the Independent Research Summit in Hong Kong, during years 2013 and 2014.

Daniel started his own independent bank research and consultancy in 2012, under the banner name Tabbush Report. Since 2014, he has been a member of University of California San Diego Economics Leadership Council (ELC), supporting Economic students at the University through this alumni association, and providing guidance on Economics program develoment. Daniel grew up in Los Angeles, graduated from UCSD in Economics, cum laude and with Phi Beta Kappa honors. He lives with his family in Bangkok, and enjoys cooking, running and chess.

He is known for extolling the unusual positives of Japan’s mega banks in 2005, and the risks likely to hit HSBC from its U.S. subprime loan operations, in 2006.  More recently, when most were concerned with nearly all Western banks in late 2008, Tabbush highlighted the positive outlook for Standard Chartered Bank at that time. 

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, S&P Global Market Intelligence. S&P Capital IQ augments our database, with corporate data and CEIC, with economics.

Research and consultancy

US Banks – Less Strong Demand in Key Credit Segments

US Banks – Discover Financial Services Charge-Offs Now Surpass 4%

US Banks - Deteriorating Consumer Credit Metrics May Point To Recession

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)

United states Banks / Thematic (Sector/Industry)

<p>Many associate rising interest rates with an environment where banks make huge amounts of core income, e.g. net interest income. Where rising rates are driven by credit demand, a renewed investment cycle, and broad-based economic improvement, this is more likely. Where rising rates are simply driven by policy, it is less likely.  The reason is simple. In the latter case, it is less easy to pass on higher rates to customers, and credit volume is not necessarily strong. In the latter case, banks are not able to apply an increasingly higher spread on loans, unlike in the former environment. Where this is concurrent with rising funding costs, the result at the margin is less and less growth of net interest income. US bank’s 3Q18 results are striking in this respect. It is the first time in this rising rate cycle that banks have seen their funding cost change in dollars greater than half of their interest income change in dollars.</p><p>We look at 50 US banks with fully populated 3Q18 data. We exclude the largest five banks which would distort the data toward their figures. Our analysis is based on the actual USD change, not percentages. Banks are now seeing a sharp acceleration in the change in funding costs compared with the change in interest income. From 1Q16 through 1Q18, funding cost growth hardly varied compared with interest income growth, at around 30% in each period. The numbers rose to 40.5% in 2Q18 and to 52.2% in 3Q18. As the change in funding costs further overshadows the change in interest income, there is increasing risk to core profit. These dynamics may be one of the more esoteric examples of real underlying weakness in US credit.    </p>

Many associate rising interest rates with an environment where banks make huge amounts of core income, e.g. net interest income. Where rising rates are driven by credit demand, a renewed investment cycle, and broad-based economic improvement, this is more likely. Where rising rates are simply driven by policy, it is less likely.  The reason is simple. In the latter case, it is less easy to pass on higher rates to customers, and credit volume is not necessarily strong. In the latter case, banks are not able to apply an increasingly higher spread on loans, unlike in the former environment. Where this is concurrent with rising funding costs, the result at the margin is less and less growth of net interest income. US bank’s 3Q18 results are striking in this respect. It is the first time in this rising rate cycle that banks have seen their funding cost change in dollars greater than half of their interest income change in dollars.We look at 50 US banks with fully populated 3Q18 data. We exclude the largest five banks which would distort the data toward their figures. Our analysis is based on the actual USD change, not percentages. Banks are now seeing a sharp acceleration in the change in funding costs compared with the change in interest income. From 1Q16 through 1Q18, funding cost growth hardly varied compared with interest income growth, at around 30% in each period. The numbers rose to 40.5% in 2Q18 and to 52.2% in 3Q18. As the change in funding costs further overshadows the change in interest income, there is increasing risk to core profit. These dynamics may be one of the more esoteric examples of real underlying weakness in US credit.    

US Banks – Funding Cost Change Now More than Half of Interest Income Change