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iFast Q2 bottomline surges 84.7% on increased digital adoption in wealth management

DIGITAL bank hopeful iFast Corp on Thursday reported a net profit of S$4.5 million for the second quarter ended June 30, 2020, a surge of 84.7 per cent from S$2.5 million a year ago.

The record quarterly earnings were achieved on the back of a 25.8 per cent year-on-year growth in gross revenue to S$38.5 million, from S$30.6 million previously.

"The improvement in the group's business shows that the group has been a beneficiary of increased digital adoption in the wealth management industry," the wealth management fintech platform said in results released on Thursday morning. 

These improvements were seen for both its business-to-consumer (B2C) and business-to-business (B2B) divisions.

The B2C arm's revenue grew 54.7 per cent on the year in Q2, mainly due to "significant increases" in transaction fees resulting from increased investment subscription from customers especially in exchange-traded funds (ETFs) and stocks, and service fees arising from the provision of currency conversion administration services.

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As for the B2B division, the Covid-19 "circuit breaker" in Singapore led to revenue growth slowing slightly to 20 per cent for the quarter, iFast said. The trade volume of customers' investment subscription in unit trusts and portfolio services continued to grow in Q2.

Earnings per share stood at 1.67 Singapore cents for the quarter, up from 0.91 cent a year ago.

An interim cash dividend of 0.75 cent per ordinary share was declared for Q2, unchanged from the year-ago period. The dividend will be paid on Aug 19, after books closure on Aug 5.

For the first half of this year, net profit doubled to S$8.2 million, from S$4.1 million in H1 2019, while revenue rose by 33.2 per cent to S$77 million.

Net inflows of client assets amounted to S$1.25 billion in H1 2020, pushing the group's assets under administration to a new record of S$11.15 billion as at June 30, 2020, from S$10 billion as at Dec 31, 2019.

iFast expects the acceleration of digital adoption in the wealth management industry to continue to underpin its growth prospects.

"Barring unforeseen circumstances, the group expects the full year 2020 performance to show healthy growth in profits and revenues compared to 2019," it added.

On Thursday, the fintech company also said that if its consortium succeeds in its application for a digital wholesale bank licence in Singapore, iFast expects to launch digital banking services by the end of 2021.

Based on estimates, this digital bank launch will add about 9-11 per cent to the group's operating expenses in 2022, calculated based on iFast's effective shareholding of 65 per cent in the proposed digital bank.

The Monetary Authority of Singapore in June announced that it will award the digital bank licences by the end of this year. It will issue up to three digital wholesale bank licences.

iFast shares fell S$0.06 or 3.2 per cent to close at S$1.79 on Wednesday.

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