iFast to return to profitability from next quarter, keep focus on existing markets: CEO

IFAST Corporation is bracing for a “substantial decline” in profitability for the rest of the year, but chief executive Lim Chung Chun said the group will see a “robust ramp-up” in overall profitability from 2023 to 2025. 

For the second quarter of 2022 ended June, iFast – which was one of Singapore’s best performing stocks in 2021 – posted a net loss of S$2.7 million, reversing from a net profit of S$7 million in the corresponding year-ago quarter. Revenue, however, rose 5.8 per cent to S$53.9 million.

iFast India Holdings, an associate company that is 41.5 per cent owned by iFast, also decided to exit its onshore platform service business in India and pivot to focus on providing global fintech solutions. As a result of this, iFast provided a one-time estimated impairment allowance of S$5.2 million in Q2.

Speaking to reporters and analysts on Monday (Jul 25) to discuss the company’s latest financial results, Lim said the group is expected to return to profitability from Q3.

Lim notes that the Securities and Exchange Board of India had announced the discontinuation of the usage of a pool account for mutual fund transactions with effect from Jul 1. This has resultantly undermined the ability of iFast India to provide efficient online platform services to its clients, advisers and business partners in India.

iFast is also in talks with potential buyers for “parts” of its India associate’s business, and hopes to “recoup something back” from the exit, although the loss will still be significant, Lim said.

“In most countries, you actually find that capital market services licence holders or stockbroking firms have the ability to operate a pool account or nominee account. So if we can’t then we essentially wouldn’t be able to operate the platform profitably or efficiently,” said Lim.

He explained that over the last 2 years, the associate has chalked up annual losses at an operating level of close to S$500,000. The restructuring means this loss will be eliminated from the next quarter.

After the restructuring, iFast will only have a small office in India after substantially scaling down the bulk of its presence in the country. It will, however, continue to provide some fintech solutions and global wealth management services to its partners there.

Lim said the group currently does not intend to scale down its footprint in other countries it operates in, and will keep its focus on existing markets with no near-term plans to set up shop in any other country. 

Looking ahead, Lim said iFast is sticking to its 4-year plan and will continue to work on increasing the scale and quality of its fintech wealth management platform in various markets. The target of having assets under administration (AUA) worth S$100 billion by 2028 remains, he said. 

He expects that various countries will contribute to this target. While Singapore is the group’s “core market” and accounts for over 60 per cent of the group’s AUA, Lim estimates that the Republic’s share will shrink to the range of 30 to 40 per cent. 

Markets like Malaysia, Hong Kong and China will contribute significantly, he said, adding that the UK is also an important market for iFast following its acquisition of a majority stake in BFC Bank.

Lim stressed that market conditions for the near-term are “very tough”, and this would have an impact on iFast’s overall business. Average volumes for stockbroking and unit trusts have fallen over the last 2 quarters. 

Bonds have had a mixed performance in Singapore on the back of higher interest rates, but had a poor showing in Hong Kong because the overall high yield bond environment in the city has taken a substantial hit due to the problems in China.

iFast shares closed 5.5 per cent or S$0.22 lower at S$3.77 on Monday.