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iFast Q3 profit falls 5.5% amid surge in expenses for platform upgrades

DIGITAL bank hopeful iFast Corporation posted a 5.5 per cent drop in net profit to S$2.5 million for its third quarter ended Sept 30, from S$2.6 million a year ago.

The decline was mainly due to iFast stepping up investments into its platform capabilities, particularly in its IT capabilities, over the last few years, the mainboard-listed fintech group said in a regulatory filing on Thursday morning.

Earnings per share stood at 0.92 Singapore cent for the quarter, down 6 per cent from 0.98 cent a year ago.

Revenue for Q3 rose 7.6 per cent to S$33.8 million, from S$31.4 million a year ago, amid higher contributions from two of the group’s main business divisions. The business-to-customer (B2C) segment saw a 17.5 per cent year-on-year increase in revenue to S$5.4 million for the quarter, while the business-to-business (B2B) segment posted a 5.9 per cent rise to S$28.3 million.

Overall, customers’ investment subscription in unit trusts grew 41 per cent on the year for Q3, resulting in higher front-end commission income.

An interim cash dividend of 0.75 Singapore cent per share was declared for the quarter, unchanged from a year ago. The dividend will be paid on Nov 22, after books closure on Nov 12.

The group's assets under administration (AUA) increased 4.5 per cent quarter on quarter to reach its record high of S$9.44 billion as at Sept 30. This came amid improvements in the range and depth of investment products and services as well as the strengthened fintech capabilities of its platforms, iFast said on Thursday.

The growth in AUA was also despite “volatile financial market conditions and generally jittery investor sentiments in Asia” in the nine months to Sept 30, iFast added.

While the group will further upgrade its platform capabilities – including laying the initial foundations to become a digital bank – it expects its operating expenses to increase at a “moderate” pace over the next 12 months. This is because a large part of the key infrastructure required for an integrated wealth management platform is already in place.

Operating expenses surged 15 per cent to S$13.1 million for Q3, from S$11.35 million for the corresponding period last year.

In 2020, operating expenses are estimated to increase by about 5 to 9 per cent year on year, to reach a total ranging from S$59.9 million to S$62.1 million. This will be lower than the double-digit percentage year-on-year increases in operating expenses that iFast has seen in the past few years. However, these estimates do not take into account the planned digital banking licence in Singapore, which may affect expenses starting in the second half of 2020 if the application is successful.

Shares of iFast closed at S$1.01 on Wednesday, up one Singapore cent or 1 per cent, before the results were announced.

Last week, iFast announced that its Chinese subsidiary has set up a joint venture with RFO Holdings, the Singapore office of Hong Kong-based Raffles Family Office, to serve China’s ultra high net worth market.

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