iFast Q3 2022 net profit plunges 72.6% on higher expenses, tough market conditions

FINTECH platform iFast Corporation's net profit sank 72.6 per cent to S$2.1 million in the third quarter of 2022 ended Sep 30, from S$7.6 million in the same period a year ago.

However, on a quarter-on-quarter basis, net profit recovered from a net loss of S$2.7 million in the previous quarter, as an impairment charge resulting from its India business. Its associate company iFast India Holdings has decided to exit its onshore platform service business in India to focus on delivering global fintech solutions.

As a result of the restructuring, iFast provided a one-time estimated impairment allowance of S$5.2 million, which was recognised in the previous quarter.

Third-quarter gross revenue fell to S$53.5 million, a 3.9 per cent decline from S$55.7 million a year ago as global financial markets continued to be difficult, said iFast in a bourse filing on Wednesday (Oct 26).

Net revenue, which is revenue earned by the group after deducting commission and fee expenses as well as interest expenses, went down slightly by 1.3 per cent to S$30.1 million, from S$30.5 million over the same period. This included a contribution of S$2.22 million from iFast Global Bank in the United Kingdom.

As at Sep 30, its assets under administration fell 7.6 per cent year on year to S$16.98 billion as a result of sharp declines in most equity and bond markets, as well as the group's decision to exit the onshore platform service business in India.

Earnings per share for the quarter were 0.7 Singapore cent, compared to 2.7 cents in the same quarter a year ago.

Besides difficult market conditions, operating expenses also went up significantly, jumping 33.6 per cent to S$27.6 million from S$20.7 million a year ago, as it prepares for its Hong Kong ePension business, set to become operational from 2023.

Nevertheless, iFast noted some bright spots in Q3.

While market conditions have impacted the asset values of investment products and investor sentiment, net inflows of client assets remained healthy in 2022, with positive net inflow of S$599 million in Q3.

Its recurring net revenue for Q3 2022 went up 5.9 per cent year on year to S$21.73 million, compared to a year ago. This was due to higher net interest income on the cash portion of the group's assets under administration, as it benefited from the rising interest rate environment.

It has also seen an increase in bond turnover across most regional platforms, as investors turned to bonds to benefit from higher yields. 

iFast reiterated that net profit for the whole of 2022 will substantially decline, even though overall revenue may be flat due to the impairment charge incurred from its India business, initial operating losses from its UK business and higher operating expenses.

iFast declared a dividend of 1.30 cents per ordinary share for Q3.

The counter jumped 4.7 per cent or S$0.17 to close at S$3.82 on Wednesday.

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