iFast eyeing ‘accelerated growth’ from 2023, says CEO, after results stumble

IFAST Corp is having to settle for a fairly dismal 2022, after its run as one of Singapore’s top performing stocks from mid-2020 to 2021. The company will see its revenue flat for the current fiscal year on a year-on-year basis, while net profit will see a “substantial decline”.

In a call to discuss the company’s latest earnings for Q3 ended September on Thursday (Oct 27), the company attributed the slower year to a number of factors, including an impairment charge for the restructuring of its India business, initial operating losses for the iFast global bank (formerly known as BFC Bank) and a rise in overall operating expenses. 

On Wednesday, iFast reported a net profit of S$2.1 million for Q3, down from earnings of S$7.6 million in the corresponding year-ago period. Net revenue, which does not account for commission and fee expenses, was down by a marginal 1.3 per cent to S$30.1 million.

As at Sep 30, iFast’s assets under administration fell 7.6 per cent year on year to about S$17 billion, due to sharp declines in most equity and bond markets, as well as the group’s decision to exit the onshore platform service business in India.

iFast also declared a dividend of S$0.013 per ordinary share for Q3, unchanged from the year-ago period.

Lim Chung Chun, chief executive officer (CEO) of iFast, told reporters and analysts that one particular area of concern for the company is its Hong Kong business. 

The group issued a target guidance on Apr 23 last year for this segment, and the guidance had “conservatively assumed” the contribution from the e-pension division would begin in Q4 2023. 

Lim said operations for this division are now expected to begin in Q3 2023, and the group hopes to update its targets early next year, when financial results for Q4 2022 are released. 

This Hong Kong division is currently working towards ensuring the business is ready for operation, said the company. Focus points for now include enhancing IT systems and capabilities, as well as staff recruitment and training.

In January this year, iFast also acquired an 85 per cent stake in BFC Bank for a total investment amount of £40 million (S$73.4 million). Lim said over the past six months, the company has been working on “making some changes”. 

BFC Bank’s main revenue contributor has been the remittance segment. Other segments include a UK consumer remittance business and a wholesale currency business. After an internal review, iFast has decided to pull out of the wholesale currency business, Lim said, as this business segment does not “fit in” with the group’s overall strategy. 

Lim said the “new path” for iFast global bank will be two main areas: a digital transaction banking business and a digital personal banking business. The former will cater to local corporates – especially those involved in the payment industry – while the latter will be targeting individuals and allowing them to open a bank account outside their home country and having access to seamless banking services. 

Lim advised investors to endure the teething losses of iFast’s recent acquisitions. 

“I know that investors don’t like short-term losses, but I think in business sometimes we have to make a balanced decision,” he said. iFast will also remain on the lookout for more acquisitions, although the key consideration for the group is to ensure the target company fits in with its “overall strategy”. 

“We typically don’t acquire (assets) just for the purpose of increasing revenue or profitability,” Lim noted, adding that for now there is “nothing major” in the acquisition pipeline. 

iFast will however steer clear of the China market as much as possible for the time being. Lim said the market will “remain very tough” in the short and medium term due to worsening geopolitical issues. “We are not sure when that will turn around,” he said. 

As at 3.30 pm, shares of iFast are up 3.4 per cent or S$0.13 to S$3.95.