It has been a roller-coaster ride for iFAST Corporation Limited (SGX: AIY) as its business was roiled by the volatility in financial markets.
Back in 2021, the financial technology (fintech) company’s assets under administration (AUA) hit a record high of S$19 billion with net profit jumping close to 45% year on year to S$30.6 million.
However, last year saw iFAST’s net profit plunge 79% year on year as the US and Hong Kong stock markets came under pressure.
The group even reported a quarterly loss due to an impairment loss of S$5.2 million for its Indian associate.
And that brings us to today.
The fintech has just released its latest set of earnings for 2023’s second quarter (2Q 2023) and first half (1H 2023).
Not only did the group manage to more than double its net profit year-on-year, but it stated that both revenue and profits will show “marked improvements” in the second half of this year.
Here are five highlights from iFAST’s latest results.
1. A reversal from a net loss last year
For 2Q 2023, net revenue rose 6.5% year on year to S$31.8 million, contributed by higher year-on-year revenue from both Singapore and Malaysia but offset by a 28.1% year-on-year fall in revenue from iFAST’s UK banking operations.
The fintech reported an operational profit of S$5.1 million, reversing an operating loss of S$2.3 million in 2Q 2022.
Net profit came in at S$3.6 million for the quarter.
For 1H 2023, iFAST saw net revenue increase by 7.5% year on year to S$62.8 million while operating profit surged 69.5% year on year to S$9.1 million.
Net profit more than doubled year on year to S$6.6 million.
Meanwhile, operating cash flow more than tripled year on year from S$8 million a year ago to S$26.3 million in 2Q 2023.
Free cash flow for the quarter more than quadrupled year on year to S$21.5 million.
iFAST declared an interim dividend of S$0.011, unchanged from a year ago.
2. AUA rising amid net inflows
The group’s AUA posted an 8% year on year rise to S$18.81 billion, just shy of the record S$19 billion at the end of 2021.
Net inflows remained positive, coming in at S$559 million, up 78% from the previous quarter’s S$329 million.
Despite the improvement, net inflows at S$872 million for 1H 2023 were still 31% lower than the prior year’s S$1.26 billion.
3. Bright Hong Kong prospects
For its Hong Kong e-Pension division, iFAST pointed to a blog entry posted by the Hong Kong Mandatory Provident Fund Administration on its website stating that software development has been mostly completed last month.
Various tests will be conducted and completed by the end of 2023 with migration and onboarding taking place in the second quarter of 2024.
The group has reiterated its targets for its overall Hong Kong division set in April 2022.
Net revenue is projected to hit more than HK$900 million and HK$1.3 billion in 2024 and 2025, respectively.
Profit before tax is estimated to exceed HK$250 million for 2024 and HK$500 million for 2025.
Late last month, iFAST also announced the launch of a one-stop digital pension solution for Hong Kong’s Occupational Retirement Schemes Ordinance (ORSO) Pension Schemes.
This project should begin making a sizable addition to Hong Kong’s AUA from 1Q 2025 onwards, lifting the division’s revenue and profitability significantly.
4. Steady momentum for iFAST Global Bank
iFAST Global Bank (iGB), the group’s digital bank division, has demonstrated good traction.
The division reported revenue of S$5.8 million for 1H 2023, up 46.8% year on year from S$3.9 million in 1H 2022.
Operating expenses, however, doubled year on year to S$10.2 million, resulting in a loss before tax of S$3.9 million.
Meanwhile, management reported that the digital personal banking platform for the digital bank has received encouraging interest from global customers.
Bank account opening applications have been received from over 30 different countries, providing good momentum for iFAST’s goal to have a “truly global business model”.
In an interview with CEO Lim Chung Chun, who was named Outstanding CEO at this year’s Singapore Business Awards, he believes that getting one million clients for iGB is a “reasonable target”.
He surmises that if each customer parks S$10,000 to S$20,000 with the bank on average, it will translate to S$10 billion to S$20 billion in additional AUA.
Hence, he remains optimistic that iFAST is on track to achieve the S$100 billion AUA target that was set in 2018.
5. Launching new products and services
Despite all the activities, the fintech is not done.
It has plans to launch further products and services in the second half of 2023.
For Singapore, iFAST’s business-to-business (B2B) platform has finalised business discussions with potential partners in 2Q 2023, leading to a 10% increase in partners utilising the B2B system.
The division also launched a Digital Term Insurance solution during the quarter in the spirit of making insurance more affordable.
On its FSMOne platform, a new US dollar auto-sweep feature was introduced to help investors earn an attractive yield on their idle cash with swift redemption, no lock-in period, and no minimum balance fee.
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Disclosure: Royston Yang owns shares of iFAST Corporation Limited.