iFast CEO urges investors to bear with global bank’s teething losses
WEALTH management platform iFast Corporation is looking at its global banking business and e-pension services to drive growth in the next five to 10 years, and chief executive Lim Chung Chun is expecting the global bank to break even in H2 2024.
In a briefing with reporters and analysts on Wednesday (Jul 26) to discuss the company’s latest quarterly earnings, Lim acknowledged that iFast’s banking business, or iFast Global Bank, reported a loss of S$2.2 million in the second quarter ended June and a loss of S$3.9 million for the first half of the year.
iFast Global Bank was born out of iFast’s acquisition of an 85 per cent stake in UK-based BFC Bank for a price tag of £40 million (S$73.4 million). The transaction was first announced in January last year, and was completed in April last year.
Although the bank has posted losses since the acquisition, Lim urged investors to look past the initial losses. He said the latest quarter’s S$2.2 million loss is “by any standard a small number”.
“Some players are burning (the same amount) in a day,” he said. “I’d just like investors to understand what we’re trying to achieve.”
Going into 2024, Lim said iFast will also be in a position to boost its dividend payouts to shareholders, as the group’s overall cash flow starts to improve “quite significantly”.
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Lim noted that competition in the banking sector is intense in some areas, particularly with the rise of digital banks that are threatening the incumbent players. Such players are also offering additional perks like cashbacks to their customers, he said.
However, he said the number of competitors in each market is “typically limited”. He also argued that iFast Global Bank is also targeting a unique portion of the market – customers who are looking for wealth management platforms or digital banking platforms located outside their home country.
The banking sector is also becoming more digital, and people are able to transfer “millions of dollars with their mobile phones”, Lim said.
If iFast had set its sights on targeting the high net worth individuals, it would have faced intense competition from other banks. But the company is instead focusing on the retail masses – an area which most banks “are not interested” in pursuing.
iFast on Tuesday posted earnings of S$3.6 million for its second quarter ended June, reversing from a net loss of S$2.7 million in the year-ago period. Net revenue was up 6.5 per cent to S$31.8 million.
Shares of iFast were up 6.2 per cent on Wednesday as at the mid-day break to S$4.94, making the counter one of the top gainers on the Singapore bourse as traders piled into the stock.
Apart from the global banking business, Lim said the company is also expecting its e-pensions business to drive its growth in the near term. He said Hong Kong’s e-pensions division is expected to contribute more significantly to the group’s results.
iFast is expecting the newly-launched Orso e-pension services to start making “sizeable” contributions to its assets under administration in Hong Kong from Q1 2025, which will also bring about material positive contributions to the topline and bottomline figures of iFast’s Hong Kong business.
Despite the rising focus on its global bank and e-pensions units, Lim said iFast’s core business would still be its wealth management unit. However, the different businesses are likely to become more interlaced and connected, which would also bring about more efficiency for the group as a whole.
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