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iFast Corp's Q2 net profit jumps 40% despite loss-making mainland China operations

WEALTH management firm iFast Corp saw its net profit jump in the second quarter on higher revenue, despite the hit from its loss-making mainland Chinese operations, according to unaudited half-year results.

Earnings came in at S$2.94 million for the three months to June 30, surging by 40.4 per cent on the previous year, the mainboard-listed financial technology (fintech) platform announced on Saturday. Revenue swelled by 25.4 per cent to S$30.9 million.

iFast saw growth in both its business-to-customer and business-to-business (B2B) divisions, it noted in its financial statement, with the Singapore market still making up the lion's share of turnover.

Hong Kong, where an iFast unit is awaiting the outcome of its virtual banking licence application, saw revenue grow by 53.7 per cent in the quarter thanks to strong investment in-flows from high-net worth investors.

"We believe that a virtual banking licence can potentially enhance the capability of a wealth management platform substantially, especially for a group like iFast that already has a well-established fintech ecosystem," the company said.

"There can be no assurance that iFast Hong Kong will be successful in its application. However, if successful, we believe that the growth potential of the group can be substantially enhanced in the medium to long term."

Meanwhile, iFast said that its Malaysian operations saw significant growth in the bond business, which helped to grow revenue in that market despite a slight unit trust slowdown on election-dimmed market sentiment and trade war fears.

But iFast's fledgling mainland Chinese business remains in the red, with losses narrowing by 2 per cent on the year before, to S$1.06 million, even though revenue nearly tripled from S$98,000 to S$268,000.

"(The) China business still remains in the early stages of building the iFast brand among potential clients and investment practitioners in China's wealth management industry," the company said.

"For the China onshore business, the China operation is working to expand its network with existing B2B partners in the market. For the China offshore business, it continues to help investors, including financial institutions, in China invest internationally, especially through the group’s presence in Hong Kong and Singapore."

It added: "Barring unforeseen and adverse circumstances including potential downturn of the financial market, we expect the group’s business performance in 2018 to show a healthy improvement over 2017."

Earnings per share was 1.1 Singapore cents, up from a restated 0.79 Singapore cent previously, while net asset value ticked up to 31.26 Singapore cents a share, against 30.69 Singapore cents as at Dec 31, 2017.

For the six months, iFast reported a 46.1 per cent spike in net profit, to S$5.69 million, on a 32.3 per cent increase in revenue, to S$61.9 million.

The firm had S$8.33 billion in assets under administration as at June 30.

The board has proposed an interim dividend of 0.75 Singapore cent a share, against 0.68 Singapore cent for the year-ago period.

iFast closed at S$1.09 on Friday.