iFAST Corp is bouncing back from delays surrounding its ePension project in Hong Kong with positive net inflows, new digital banking services in its UK business, and promises of greater profitability in the coming quarters.
While market and investor sentiment remained volatile in 3QFY2023 ended September, iFAST recorded positive net inflows that improved 34.4% q-o-q to $751 million.
The group’s assets under administration (AUA) grew 1.7% q-o-q and 12.6% y-o-y to $19.12 billion as at Sept 30, achieving the highest end-of-quarter AUA. The group targets AUA of $100 billion by 2028.
Compared to net losses after tax of $2.7 million incurred in 2QFY2022 due to a onetime impairment loss related to the India business, iFAST posted net profit after tax of $3.6 million in 2QFY2023, up 20.7% q-o-q. In 3QFY2023, net profit after tax surged 308.4% y-o-y to $8.52 million.
For the first nine months of 2023, iFAST’s net profit after tax almost doubled y-o-y, surging 194.2% y-o-y to $15.09 million.
Since the release of the 9MFY2023 results, shares of the Mainboard-listed company have recovered to near the 52-week highs seen in December 2022. iFAST shares started the year at $5.81, before news of its Hong Kong project delays weighed the stock to lows of around $4.16 in May. As at Nov 3, shares in iFAST were changing hands around $6.77.
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Based on iFAST’s weighted return on equity and returns to shareholders over three years, the company has emerged as a winner in The Edge Singapore’s Billion Dollar Club Awards 2023. For 3QFY2023, the group has declared a third interim dividend of 1.30 cents per share, unchanged from the year before.
“Going forward, the group expects overall revenue and profitability to show marked improvements, and the group expects profitability in 2023 to be substantially better than in 2022,” said the company at the release of its 9MFY2023 results on Oct 25. “With this, the revenues and profitability in 2024 are expected to show robust growth compared to 2023.”
Hong Kong pension services
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iFAST’s involvement as one of the builders of the Hong Kong mandatory ePension platform project has long been touted as a potentially significant source of revenue.
The ePension platform is the largest public retirement scheme in Hong Kong, with some HK$1.11 trillion ($194.9 billion) of assets under management.
The subsidiary iFAST ePension Services launched Orso ePension Services in June, a one-stop digital pension solution for Hong Kong Occupational Retirement Schemes Ordinance (Orso) Pension schemes.
Orso and the Mandatory Provident Fund (MPF) are retirement schemes in Hong Kong. Orso is voluntary, while MPF is mandatory for all employees aged 18 and 64.
According to a blog entry published by the Mandatory Provident Fund Authority (MPFA), the platform will now enter the testing phase, with a target to complete by year-end. Migration of MPF accounts will commence in 2Q2024, and the MPFA targets for the platform will be fully operational in 2025.
The new Orso ePension Services will be available digitally, enabling users to easily perform a range of essential functions pertaining to their pension schemes via an online platform, says iFAST.
iFAST expects the Orso ePension Services to start making sizeable contributions to its Hong Kong AUA from 1Q2025, bringing about material positive contribution to the revenues and profitability of the iFAST Hong Kong business.
According to iFAST, its ePension division has been working closely with partners and all parties involved in the eMPF project to meet a 2024 launch target before turning fully operational in 2025.
Lim Chung Chun, chairman and CEO of iFAST, calls the Orso launch a milestone for the group’s progress “towards enhancing platform capabilities and transitioning into a strong global player in digital banking, wealth management and pension administration solutions”.
“iFAST Corp remains committed to investing in fintech developments and believes a well-rounded wealth management platform should be seamlessly linked to digital pension services,” adds Lim. “With our fintech ecosystem and capabilities, the group has been able to further innovate and digitalise pension services and processes, delivering solutions that cater to changing industry trends that bring greater convenience and flexibility, enabling us to add value to all our stakeholders.”
UK bank to play major role in medium to long term
In April, iFAST Global Bank (IGB) launched digital personal banking in the UK, allowing users outside of the UK to open a digital bank account online. Customers around the world can access deposit services, including fixed-term, notice deposits and multi-currency deposits.
IGB offers digital personal banking customers multi-currency deposits in six currencies: British pound, US dollar, euro, Hong Kong dollar, Singapore dollar and renminbi. IGB also offers notice deposits for US dollar, British pound and Hong Kong dollar to users in Asia.
This adds to IGB’s existing funds transfer, payments and remittance services. IGB account holders can also link their digital banking accounts with iFAST’s other platforms, such as FSMOne.com, iFAST Financial and iFAST Global Markets.
Lim thinks the group is “well-positioned” to benefit from offering digital banking and wealth management capabilities to a global customer base. “With the Internet, investors and individuals will be able to go online to look for the best wealth management platform and digital bank that best suits their needs, and they are no longer limited and restricted by platforms based in their own respective geographical locations.”
iFAST says the division has continued to actively market the product to retail customers, and has received “encouraging interest” from customers from over 50 countries who have opened accounts with IGB.
iFAST acquired the UK bank in April 2022 for some $73.4 million, and the business has yet to turn a profit. The banking business reported a $2.2 million loss in 2QFY2023.
That said, iFAST’s leaders believe IGB will break even in FY2024. “We expect iFAST Global Bank to play a major role in the growth of the group in the medium to long term, particularly beyond 2025.”
The group has continued to disclose the regulatory ratios for IGB, including the liquidity coverage ratio, net stable funding ratio and total capital ratio, which are at 454%, 289% and 33% respectively as at Sept 30, exceeding minimum regulatory requirements.
Investing globally
Lim co-founded iFAST at the turn of the millennium with the launch of its now business-to-consumer division Fundsupermart.com in Singapore, following which the business-to-consumer division, iFAST Financial, was launched in 2001.
Lim subsequently led the company’s regional expansion efforts, extending iFAST’s presence beyond Singapore to Hong Kong, Malaysia, China and the UK. Today, the group serves more than 800,000 customer accounts.
For his leadership, Lim was named “Outstanding Chief Executive of the Year” at the 38th Singapore Business Awards (SBA) in August.
Meanwhile, iFAST Financial (Hong Kong) received two awards for its technology at the Hong Kong Business Technology Excellence Awards 2023 in September. And of course, iFAST is a regular winner at the Billion Dollar Club awards organised by The Edge Singapore.
In line with the group’s mission statement, “To help investors around the world invest globally and profitably”, iFAST launched its digital video channel iFAST TV in January 2022 to further investor education.
Fronted by in-house analysts and industry experts, iFAST produces videos in English, Chinese and Cantonese. To produce such content, the company transformed an area of its Singapore office into a 4K TV studio with live production facilities.
The way Lim sees it, iFAST has always, since its inception, adhered to the principles of helping investors invest globally and profitably; providing investors with the necessary financial education and tools to help them make informed investment decisions; and establishing a win-win relationship with its clients, business partners as well as its own employees.
Lim says: “Our focus on helping investors in making the right investment decisions, and our commitment in making the right decision for the business throughout different market conditions, have also helped to lay a strong foundation for the company to achieve our vision of becoming a top digital banking and fintech wealth management player with a ‘truly global’ business.”
