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It is a myth that China corporates are deleveraging. There is no indication of this from company data or from bank data. Rather, corporates are re-leveraging. Over the latest full year, total debt of China’s non-financial companies rose dramatically, by US$431 billion. This change is higher than any year in the past five and at 19% growth YoY, it far surpassed the previous three years. Our corporate data shows most growth was with the most distressed companies, those with debt/ebitda at >7x. This makes it important to understand that large banks are giving up corporate loan share, while small ...
The magnitude of Tisco Financial Group’s (TISCO) net interest margin (NIM) expansion is tremendous. Of 72 Asian banks, Tisco’s NIM expansion ranks third, at +108bps from 2015 to 1Q18. The figures are not flattered from being low, where its NIM is now 4.58%, one of the highest in Asia.
The turnaround at Philippine National Bank (PNB) accelerates in 1Q18. Where the bank reinstated its dividend in 2016 it is still early days in its transformation. But 1Q18 data is reassuring. Net interest margins (NIM) rose to 3.44% in 1Q18 from 3.12% last year, and marks a directional change.
There is no major bank in Asia-Pacific that is growing loan as fast as HDFC Bank. Over the past two years, from FY16 to FY18, the bank expanded its gross loans from INR4,873 billion to INR7,000 billion. This 44% growth comes during a time of unprecedented weakness in the domestic economy, as evidenced by India’s banks having the highest non-performing loan (NPLs) ratios in the region. Average NPL ratios were 9.9% as at calendar year-end 2017 for India’s banks compared with 1-3% for others in Asia-Pacific. This does not include restructured loans, which as at the most recent fiscal year-end ave...
Krungthai Card PCL (KTC) was already one of Asia’s most profitable lenders during 2016 and 2017. With 1Q18 ROA at an
unprecedented 6.7%, it makes historically high returns look paltry. This is despite recent Bank of Thailand (BOT) regulations
implemented during September 2017, which lowered the maximum rate charged on credit cards from 20% to 18%.
Malaysia Building Society (MBSB) is one of Malaysia’s lesser-known financials and more of a specialized
lender in personal loans. But major positive changes are happening. MBSB is showing some of the best
improvements in credit metrics and returns of most any bank in Asean, let alone in Malaysia.
With MBSB’s recent acquisition of
Asian Finance Bank (AFB), MBSB is moving forward. It will now transform itself to a full-fledged Islamic
bank. Merger risks are now lessened and the bank completes its transformation by April 2018; when it
marks its Islamic bank operational readiness and a full...
For 16 China banks with non-performing loan (NPL) distribution detail, loss NPL growth was 63% YoY in 2017. There is marked
deterioration in the worst category of NPLs, where banks are least likely to be repaid and that require the most loan loss
reserves (LLR). What these figures conceal is far greater distress at four banks, where loss NPL growth averaged 165% YoY.
NPLs are in sharp decline, its merger is nearly done, and in April it re-brands. ROA doubled last year, but it's not finished. Having the best capital position in Malaysia, means its especially safe, but also that it can maintain a high payout. We see only three analysts covering the bank, where profit estimates for 2018 seem far too low.
China banks' asset growth has not been lower in 11 years. Even the paltry 7% rate currently, is flattered from a higher share of government lending. Decelerating lending to other financial corporations is also a critical signal. There are negative implications for bank earnings. The gap between perception and reality of China's economic and lending strength, grows.
US credit metrics are worsening. This is contrary to what most believe, and most visible at the fringe. Where interest rate increases in the US are not driven by increased demand for money but rather Fed policy, the risks of loan defaults are exacerbated. The reality is that net-charge offs (NCOs) an