Digital bank hopeful iFast Corp has reported record high net profit and assets under administration (AUA) in 3Q20 of $6.16 million and $12.59 billion respectively.
Net profit grew 150.6% y-o-y, achieved on the back of a 35.7% y-o-y increase in net revenue to $22.9 million and a 33.3% y-o-y increase in gross revenue to $45.0 million.
iFast notes that growth in profit was substantially higher than the growth in revenue. The Group’s profit before tax margin as a percentage of net revenue increased from 17.0% in 2019 to 28.3% in 9M20.
Net inflows of client assets registered a record high of $1.07 billion in 3Q20, raising AUA. Of the net inflows of $1.07 billion, 60.5% came from unit trusts.
For the third interim dividend for 3Q20, the Directors declared a dividend of 0.80 cents per ordinary share, up from 0.75 cents per ordinary share this time last year.
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Earnings per share increased to 2.27 cents from 0.92 cents this time last year, along with an increase in the number of ordinary shares by some three million.
“This decision takes into consideration a balance between rewarding shareholders and retaining sufficient capital in the event of a need for expansion such as the launch of the digital bank business in Singapore if the application is successful,” says iFast in a press release on Oct 23.
Outside of China, the Group’s operations in Malaysia saw the largest growth in net profit after tax, at 308.7% y-o-y to $1.2 million. Singapore is next, with 132.3% y-o-y growth to $5.8 million, followed by Hong Kong, with 24.7% y-o-y growth to $1.6 million.
The B2B division of Singapore operation has geared up for a great business momentum in 3Q20, notes iFast after the Covid-19 circuit breaker measures are progressively lifted from June. The amounts of investment subscription from customers of B2B division grew more than 50.0% q-o-q in 3Q20.
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In Malaysia, where Movement Control Order restrictions were relaxed in June, investor sentiments turned positive on continued loose monetary policies globally in 3Q20, and iFast conducted a series of online seminars to attract more clients in the period.
As a result, both B2C business and B2B business recovered significantly in 3Q20 and a new record quarterly subscription sale of unit trusts was achieved in the quarter. The net revenue in Malaysia operations grew 59.6% y-o-y in 3Q20 and 37.9% y-o-y in 9M20. The average AUA of Malaysia operation grew 41.2% y-o-y to $1.09 billion in 3Q20.
In Hong Kong, although the market was still facing economic slowdown due to sustained social distancing and weak investor sentiment, iFast has seen significant net inflows from customers in UTs, bonds and stocks. Net revenue in Hong Kong operation grew 12.2% q-o-q in 3Q20.
Overall, excluding China operations, the Group’s profit before tax increased by $4.43 million or 105.2% y-o-y, to $8.64 million in 3Q20 from $4.21 million in 3Q19. “The higher profitability of the Group was contributed by the higher growth of net revenue and the lower growth of operating expenses in the period,” says iFast Corp.
On costs, the Group’s total operating expenses increased by $2.23 million, or 15.4% y-o-y, to $16.70 million in 3Q20 from $14.47 million in 3Q19.
“These were due mainly to the Group’s increased efforts in enhancing its platform capabilities including improving the range and depth of investment products and services being provided to customers in the existing markets including China market over the period so as to strengthen the Fintech Ecosystem of the Group and further scale up the businesses of the Group continuously,” notes the company.
Staff costs grew 25.5% y-o-y to $8.62 million, a rise the company attributes to additional staff bonus handed out to reward employees for their work throughout Covid-19.
The Group’s cash and cash equivalents and investments in financial assets (categorised as other investments under current assets) net of bank loans increased to $48.29 million as at Sept 30, 2020 from $40.15 million as at Dec 31, 2019.
“This was due mainly to net cash generated from operating activities in the period, partially offset by payments of additional investments in associates, additions of plant and equipment and intangible assets, office leases and dividends in 9M20 and some bank loan repayment in 3Q20,” says iFast Corp.
iFast is part of a consortium eyeing one of the three digital wholesale bank licences to be awarded by the Monetary Authority of Singapore (MAS) soon. According to chairman and Chief Executive Officer Lim Chung Chun at a virtual press conference on July 23, iFast is ready to commit $80 million in upfront capital and launch the bank by end of 2021. Should it be successful, it plans to raise the capital needed through a combination of issuing new shares, drawing from existing resources, and borrowing from banks.
“We believe that the robust growth seen by the Group this year has resulted from our past investments in building up a strong integrated digital wealth management platform. The Group will continue to work hard on various initiatives in all existing markets that the Group operates in to ensure that our medium to long term growth prospects will remain strong,” says Chief Financial Officer Leung Fung Yat in a press release.
“Barring unforeseen circumstances, the Group expects the full year 2020 performance to show robust growth in profit and revenue compared to 2019.”
Incorporated in the year 2000 in Singapore and listed on the SGX-Mainboard in December 2014, iFast Corp is a wealth management FinTech platform present in Hong Kong, Malaysia, China and India.
As at end-September, the group offers access to over 11,000 investment products including over 7,700 funds from over 270 fund houses, over 1,300 bonds, stocks and ETFs.
As at 8.33am, shares in iFast Corp are trading flat at $3.26.
