After a loss-making 2QFY2022, iFast Corporation has reported net profit of $2.08 million in its 3QFY2022 ended September, a 72.6% decrease y-o-y amid challenging market environment.
This translates to an earnings per share of 71 cents for the period, down from the 2.74 recorded in 3QFY2021.
As at Sept 30, iFast’s assets under administration (AUA) declined 3.9% q-o-q and 7.6% y-o-y to $16.98 billion as a result of sharp declines in most equity and bond markets, as well as the company’s decision to exit the onshore platform service business in India.
In comparison, the MSCI AC Asia ex-Japan index dropped more than 13% q-o-q and more than 28% YoY as at Sept 30.
Despite negative market conditions impacting the asset values of investment products and affecting investor sentiments, net inflows of iFast’s client assets remained healthy in 2022, with positive net inflow of $599 million in 3QFY2022.
Net revenue was down 1.3% y-oy to $30 million in 3QFY2022, as global financial markets continued to go through very difficult conditions. The period’s net revenue included a contribution of $2.22 million from iFAST Global Bank in the UK.
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The y-o-y decline in net revenue (non-banking operation) in 3QFY2022 was mainly due to a substantial 38.5% y-o-y drop in its non-recurring net revenue (non-banking operation), reflecting reduced transactional activities in the midst of very poor global financial market conditions.
On the other hand, iFast’s recurring net revenue (non-banking operation) was up a healthy 5.9% y-oy and 8.3% q-o-q to $21.73 million in 3QFY2022. The increase was largely due to higher net interest income on the cash portion of the company’s AUA, benefitting from the rising interest rate environment.
In the period from 2021 to 9MFY2022, the average contribution from recurring net revenue towards total net revenue has increased to 69.9%. Recurring net revenue as a ratio of average AUA has also picked up in 9M2022 after declining in FY2020 and FY2021.
In a statement, the company said 2022 will be a year whereby the group revenue may be flat while net profit will see a substantial decline compared to 2021. This happens as it incurs impairment charge for its India business (recognised in 2QFY2022), initial operating losses for iFast Global Bank, as well as an increase in its overall operating expenses.
The company adds that the operating expenses are increasing even as its revenue trend flattens in 2022 as it is preparing for the ePension business which will become operational from 2023, while positioning itself for opportunities arising from a more globalised wealth management and digital banking business model.
“Despite the difficult conditions of current global financial markets, the group expects to see accelerated growth momentum from 2023 onwards. The group also expects revenues and profitability to grow to new highs in 2023 as the ePension division, which is not subject to market volatilities, starts to contribute more substantially from 3QFY2023 onwards.”
For the third interim dividend for 3Q2022, iFast has declared a dividend of 1.30 cents per ordinary share, unchanged from this period last year.
Shares in iFast closed 17 cents higher or 4.65% up on Oct 26 at $3.82.
