IFAST Corporation Ltd
SGX:AIY
Earnings Call Analysis
Q4-2023 Analysis
IFAST Corporation Ltd
iFAST Corporation has recently unveiled their financial achievements for the year 2023, highlighting a remarkable 340% surge in net profit to $28.3 million, underpinned by a 22.8% climb in total revenue to $256.5 million. Furthermore, the firm's Assets Under Administration (AUA) hit a historic peak of $19.8 billion, fueled by $2 billion in net inflows, showcasing the company's ability to attract and retain capital even in a fluctuating market environment.
A significant driving force behind iFAST's success story has been the iFAST Global Bank, which saw customer deposit amounts balloon by 53.4% quarter-on-quarter and by an impressive 257.9% year-over-year to about $358.6 million by the end of December 2023. This remarkable expansion has been pegged as a major source of the increased net interest income and is a testament to the bank's growth trajectory. Furthermore, the bank's ambitious target to break even by the fourth quarter of 2024 indicates a strategic focus on profitability, hinged on the continued growth of its deposit base and net interest income.
iFAST has high expectations for its ePension division in Hong Kong, pinpointing it as a key growth catalyst for 2024 and 2025. While the overall wealth management platform maintains its momentum, the addition of the ePension services is positioned as a strategic move to bolster the company's market position in the thriving financial hub.
Reflecting a steady stewardship approach, iFAST's management has announced a final dividend of $1.04 per ordinary share for the full year of 2023, mirroring the dividend issued in the previous year, which is slated for approval at the upcoming Annual General Meeting on 26th April 2024. This move demonstrates a balance between reinvesting for growth and rewarding shareholders consistently.
In the fourth quarter of 2023 alone, iFAST reported a 69.3% skyrocket in total revenue to $82.9 million, with net revenue leaping by 92% to $57.13 million. Year-over-year, the company's operational expenses rose by 46.5% to $40.71 million, while net profits enjoyed a substantial boost of 97.1% to $13.18 million. For the full year, a 22.8% revenue increase resulted in $256.54 million, with net revenue rising by 26.7% to $161.66 million. Operating expenses ascended by 21.6% to $136.23 million, equating to a staggering 340% jump in net profit to $28.7 million. The company's optimism is captured through their anticipation of robust growth rates in revenue and profitability for 2024, barring unforeseen circumstances.
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Hi, everyone. Welcome to iFAST Corporation's Fourth Quarter 2023 and Full Year 2023 Results Presentation. My name is JP. I'm from the Corporate Communications team at iFAST. I'll be running through the key summary and the financial results before inviting Lim Chung Chun, our CEO, to carry on with our section. In our key summary starting with the first slide, in 2023, our net profit increased by 340% year-on-year to $28.3 million on the back of a 22.8% increase in our total revenue were $256.5 million. The increase in profitability was driven by initial contributions from our Hong Kong invention division as well as improvements in our core wealth management platform business. At the end of 2023, our AUA increased to a record high of $19.83 billion, driven by net inflows of $2 billion during the year. iFAST Global Bank's customer deposit amounts grew 53.4% Q-on-Q and 257.9% year-on-year to GBP 213.5 million equivalent about $358.6 million as of 31st December 2023, contributing to higher net interest income. Going forward, as part of our 3-year plan, we target to make solid progress as a global digital banking and wealth management fintech platform with a truly global business model. We also target to accelerate Hong Kong growth and effectively deliver on ePension services; and thirdly, effectively develop innovative fintech services that are complementary to digital banking and wealth management platforms. On an overall basis, and barring unforeseen circumstances, we expect 2024 to see robust growth rates in revenues and profitability compared to 2023. On our next slide for key summary. The ePension division in Hong Kong will be an important growth driver in 2024 and 2025, while the overall wealth management platform is expected to continue to show healthy progress. We expect iFAST Global Bank to post a reduced loss in 2024 compared to 2023. iFAST Global Bank is targeting to breakeven by fourth quarter 2024 driven to a large extent by growth in net interest income as the deposit base continues to grow. iFAST Global Bank is expected to become an important growth driver for the growth in 2025 and beyond. For the final dividend for full year 2023, the directors proposed a dividend of $1.04 per ordinary share, similar to the same period in 2022. And the proposed dividend will be subject to approval by shareholders at our Annual General Meeting to be held on 26th of April 2024. On the next slide, our group AUA. As I mentioned, hit a record high of $19.8 billion as of 31st December 2023, and we show the breakdown between the B2B and B2C sections. So the B2B segment contributes roughly about 69% of total AUA, while the remaining 31% comes from the B2C. In terms of our net inflows and our unit trust subscriptions, so for the full year of 2023, our net inflow stood at $2 billion. In 4Q 2023, net inflows was about $0.33 billion. Net inflow in 4Q 2023 before the transfer out of stock from an institutional client was higher at $0.78 billion. Our subscriptions ended the full year 2023 at $4.49 billion. And in the 4Q alone of last year, gross UT subscriptions was at $1.11 billion. Moving on to Section 1 of our financial results. So starting off with the financial results of the group for 4Q 2023 compared to 4Q 2022. So total revenue stood at $82.9 million in 4Q 2023. That's a 69.3% year-on-year change. Net revenue was up 92% year-on-year to $57.13 million. OpEx was up 46.5% year-on-year to $40.71 million 4Q period of last year. And net profit was up 97.1% year-on-year to $13.18 million in 4Q 2022. Moving on to the financial results for the group again, but for the full year of 2023 compared to full year 2022. So total revenue was up 22.8% year-on-year to $256.54 million. Net revenue was up 26.7% year-on-year to $161.66 million. OpEx was up 21.6% to $136.23 million. And net profit was up 340% year-on-year to $28.7 million. But of positive, we exclude an impairment loss of $5.2 million related to the India business, which was recognized in second quarter 2022. Our net profit was up 340% year-on-year compared to that impairment that I just mentioned. The next slide shows the results overview for the last 5 full years. So I won't go into the details. Moving on to the financial indicators for the nonbanking operations on a quarterly basis, so total revenue was 57.2% year-on-year to $75.66 million in 4Q 2023. Net revenue was up 94.3% to $3.86 million. Net profit was up 39.7% to $15.75 million in 2023. Similarly, for financial indicators for nonbanking operations for full year 2023, so net revenue was up 35.7% to $129.31 million. Net profit was up 121.3% to $36.88 million. On the last slide for this section, so on the proposed final dividend for full year 2023, the directives as I mentioned, proposed a dividend of $1.04 per ordinary share, which is subject to the global by shareholders at our AGM, which will be held on May 6 April this year. The proposed final dividend brings a total dividend to $0.048 per ordinary share of year 2023, which is similar to the year 2022. I'll now invite Chung Chun to carry on with the business update in Section 2 and -- Chung Chun.
Thanks, JP. So for me, we'd like to do is talk about the plan that we have for the next 3 years. We typically like to rule vision of our plan for the group's business. So you may have noticed that all this is pay, run our business, quite a lot of business models are new, and we emphasize being able to progress consistently through the rapidly changing business model, taking advantage of the opportunities arise because of the way the interchange more. So to be able to do that, it's important in again, and we also like to ensure that the shareholders understand what we're trying to achieve. So that's a great about our plan. So in the past, we have talked about 5-year plan for a plan last year, we talk about 3-year plan, and now we updated 3-year plan also communicated. So the really important that we would like to talk about, the first really is to be able to make solid progress as a global digital banking, and wealth management in that platform. There's a truly global business model. So a few points in that statement. The first is the global digital bank. So we have added back to the -- our overall group feedback ecosystem. We believe that with that within the group, which will help us accelerate the overall potential of the group leverage or later on. The other point really is what we call a truly global business model. I think historically, most businesses are very much constrained by geographical one. But clearly, Internet has changed the world and it actually brings up trusts as well as opportunities. The opportunity for companies are able to tap into the power of the Internet, and be able to cross-border and tap to the opportunities that arise. I think we have seen that actually many industries have been transformed by the Internet, I think all it about businesses right now and on a global basis. If you take something like Google, for instance, it's essentially no more even to a U.S. company, but tapping to customers around the world. There are companies like Netflix, Spotify, right? We are basically tapping into customer base from around the world, but only operating from one of a few countries. Banking, interestingly, is an area where you actually find that most banks are not trying to tap into the potential of a truly global business. What most banks do is to credible to every country, a license setup operations and a branch before the customer base in those despite the fact that banking wealth management doesn't actually involve fiscal moment. So our belief is that in time to come back in and well management will be increasingly run on the truly global business moment. And this is where we see a huge opportunity, huge that opportunity, an opportunity where most banks are still not even trial. So that is something that we want more emphasizing. Second one will be about our Hong Kong business. So Hong Kong, broadly speaking that 2 parts of the business was a wealth management platform that we've been running for these years. The second part is the part that's relatively new, the ePension part of the business. ePension itself, you have the MDF and then you have the business. So the EMBL part of the business has started to contribute in bigger win recently. So in the last 4 months of 2023, you see that has started to contribute quite well to the revenue and profitability. So that has actually helped to give the overall profitability of our Hong Kong business as well as that of the total. We are clearly still at early stages of this ramp-up and 2024 and 2025 will see the bigger ramp-up of this overall business and bigger contribution from this. So the challenges here for us really is to make sure that we are able to deliver on our services smoothly without too much on operational issuance. Our ETF is a business where a service fee. That fee is not dependent on market condition. That fee more or less is a really low base on the milestone in terms of a certain base level of work and so as an additional amount that comes about arising from higher dividend. So the fact that it's not depending on our position, I think it's a positive thing because historically, where we are comforted to have some volatility resulting from the market condition. So this will help us ensure that the overall profitability will be smoother for. The other point that we like to touch on already is on the -- being able to continue to develop innovative financial services that are complementary to our call with us as of -- as a web Internet platform and also solicit the complementary to digital banking. So example, in terms of what are some of the new that will be doing a big sale on the bond business. Bond business today, investors can buy bots through us. But you find that 1 business is one where unlike the stockbroking business, right on billing is actually still done in the bot industry in a relatively nontransparent. I think the bar transaction take Singapore, most customers will buy from the bank, the bank customer or order by the bank then you get cut from the RM. RM will get equipped from the bond desk and Asia a put on different varying level of markup, et cetera. So that's still a relatively primitive way of doing the business. I think the future, clearly will be one 1 example basis. So our vision really is to be able to help make bond during as close to that of stocklist. So that's where the bond comes in the need for bonds on I'll elaborate a bit more on this. Another area that we are increasingly trying to give, but we still had early stages will be areas business. I think once we get into banking other than being able to allow investors to get good interest rates in different currencies. The other part that we want to ensure an easy for customers is a to say the debit card online payment. So the equipment of payload or even cross-border. So these services are important in ensuring that we can develop well in overall digital banking. Yes. So these 3 is more or less on the core ops for us in the next 3 years. And let me elaborate a bit more on visions. So this chart here that what we show is the IFRS impact ecosystem that we are actually ensuring for the last couple of years. There are some updates periodically in terms of number of customers, et cetera. But the other update I'd like to draw attention to that we put in here that are the chart, where you see we put in the Central Bank together with 1 houses, et cetera. So also the way to understand this chart really is that iFAST as a platform is sitting in the middle. We provide a range of services and we link up the various product providers on the left-hand side to the various distribution channels on the right-hand side. So the distribution channel include personal or VCCS, FSMOne. Secondly, it includes at the different financial advisory companies that use us and banks and so on firms or even Internet firms in China, especially that use us for of services as a platform. On the left side is really the different product. We start up with front houses. And then when we put on stock booking ATM and so on, then we essentially start to make the users of that to the soft and ETF that trade at -- so we're better in the Central Bank because now will be order bank in the U.K. So the bank, of course, is directly able to access the Central Bank. So a very clear benefit of this is if you think in terms of the deposit base, right? So for sterling, right, where we take deposits from the client. As of today, we pay 4.05% for current cost savings account to the retailer, right? Decline where is across U.K., from overseas from Honor, whichever country, they will open account on us and they can place deposits with us. These are overnight money against withdrawn money anytime a bit on equipment service, and we're paying 4.5%, right? But we have a 4.25%, we're not taking reach to be able to that. We basically think that to this interest rate environment, we're giving to being in the Central Bank. And into this interest rate environment, they gave us 5.25%, right? So we basically -- and apart on very good interest rate to the consumers, 4.25% will be higher for was essentially current count savings income. Yes, we are just making 1%. We're not taking any balance sheet rates. So that's why my holding it back were make excess of the Central Bank, and that's part of a model. And we feel that, that in itself, which will allow us to grow the business very substantially. I think many digital banks around the world when they talk about launching the business as a new digital bank, they talk about lending, et cetera. We are going to do some lending, but we expect to be conservative. We actually give a big part of what we do with the deposit is essentially operate a very safe approach. So if you look at our balance sheet today, there's a lot of cash. So that's because we have a big chunk of the deposits that we take, we pass it to the bank rate. Therefore that we can just take a decent spread without taking the balance sheet risks. The other part is we buy investment reform. We were happy with a spread of 1-plus percent, yes. So that's what we do. So anyway, back to this chart in the ecosystem, yes. So we are increasingly building a ecosystem whereby we're connecting the various product providers as well as exchanges in Central Bank to the various end customers as well as financial instruction or users of platform on the right side. So that's something that we'll continue to build upon as we move. You also noticed also that yes, we leased out all the various services and many of this store exchanges, central banks, prime holders, et cetera, in different countries. And as I said, there's an increasingly more teles will. And yes, we'll continue to build on that and expand all those. Next slide. So just a couple of points about the bank. We see the addition of digital bank to the -- our overall group as something that will help us accelerate our overall wealth. The overall growth of our wealth management. If you look at most countries around the world, especially those in Asia, including Singapore, you will notice that the biggest well management players in fact. So the question is why that is? It because banks are the best adviser or distributor or have the best technology that allowed them to do the wealth management business well. The truth is not a case, right? The reason why banks are generating the biggest wealth management players simply because they have a simple detaching the place cash. So as have grown over the last 24 years without this particular advantage of having less cash in our system. So in a sense, in the last few years, we have come to a point when we feel that we want to also have some of these advantages that the banks have traditionally enjoy as we decided by the bank 2 years ago. And I suppose there is a difference where most banks actually you look at this business, especially the business in relate to the retail. They look at it in a localized mill, but we look at this business as a global business. So having that overall bank -- a global bank and the large part to be able to accelerate the growth of our overall wealth management platform. Yes. So we then we're looking at being able to attract deposits globally for various countries. A large part of the state with the bank, but we also expect that in fact to come, a decent portion will also find its way to the platform side, say, Singapore, where Singapore platform is a linked quite seamlessly with our U.K. digital bank. So we can just transfer some money because platform and be able to invest in the whole range of investment products that, that will allow us to capture a global business in a digital way. In Singapore, there are lots of private bank, and they're doing a huge business, but most private banks are essentially doing non-digital business. They are relying on the RMs and so forth, and they're going out to the big customers. I think the Mass model client saw a masterful not serve those are across poetic because to be able to do that, you need to regard additional solutions. So for us, we're actually basically developing more that and that's how we see something we progress. Moving on. Yes. So as I mentioned, we see the bank as an accelerator for us. So at this point in time, the bank still making losses. Last year, we made a loss of over $8 million as a group. Of course, if you look at $8 million loss, over $8 million loss relative to the number for group profitability last couple of years, it didn't the block. The bank is -- for some people, they love it such a good idea to shareholder bank but if you're adjusting in terms of the potential that having a bank, a retail classes retainer grew to what it can help us do in the future. Then you realize that certainly that some of this initial process for the force. There are quite a lot of digital banks, but we actually find that most of them really lose huge amount of money when they launched massive millions or hundreds million. It's actually quite long. I find that to a large extent, that happened also because the cost of implementation, cost of implementing the system, the technology is so high for most of these startups the bank that's why to recur messages. For us, we view that time. Yes, a loss of $8-plus million at this stage is -- it's a small number relative to what the bank can do for us the 3 local banks in Singapore, really, the biggest profit generator in the whole country and it looks like it continues to be the case in the possible. So we see the bank being able to drive quite a bit of growth, especially 2025 and beyond. So that's how we see it. Moving on. Yes. So the second part really is about Hong Kong. As I mentioned earlier, Hong Kong has started to put it long second to the lead. So for Hong Kong, a year ago, we saw a contribution of the year ago in 2023, saw a contribution of $33.8 million. There was a substantial pickup in the last 4 months of 2023 because of the initial contribution of the '23 pension part of the business. Going forward, we expect that -- yes, we will see further growth. In April '22, almost 2 years ago, we actually gave a guidance in terms of group targets for our overall Hong Kong business. We gave a guidance in terms of revenue targets as well as targets on profit before tax. We gave a guidance for 2023, 2024, 2025. So our 2023 numbers we show that we have achieve our revenue targets in 2023, and we have exceeded our profit before 2023. So now that we have crossed into a new financial year in 2024, so we are actually giving a bit of updated guidance. In essence, we are maintaining our targets for private debt at profit before tax. So the next slide. Yes. So this particular slide on the left-hand side, we show the original guidance that we gave. And then now the updated targets at. In essence, as far as the profit before tax are concerned, we are maintaining our patented PBT for the 2024, 2025. But as far as revenues are concerned, we have actually brought up target across and net revenue, 2024 and 2025. The reason for bringing down the targeted revenue is because on the wealth management side of the business, the Hong Kong has gone through very tough 2 years because China market has performed very benchmark effect on common and Singapore, Hong Kong and Asia. So because of that, we are assuming lower contribution in '24 and '25. The other reason for the reduction is the revenue target is because there are some timing differences, timing delay for the ETF part of that business. But timing delay essentially mainly the fact the pace of onboarding rate, the pace of onboarding but reducing the revenue, but our expenses have both also been brought down because since there's some delay in terms of the onboarding time table that the ramp-up in expenses has also been brought down or pushback in terms of timing. So on the whole, then our PBT target is not changed. So that's on Hong Kong. Moving forward, next slide. Yes. So just to elaborate a bit more on the top point I was making at introducing complementary services, some services and sent to -- yes, our overall platform, of course, our power business of wealth management and digital banking. So this is, as I mentioned, the bond business is one example. Our vision is that eventually we would like to bring to the individual investor, right, improved bond transaction capabilities. I think the experience of transacting or trading in bonds is still way off compared to experience of transacting in stocks around the globe. The answer really is having a digital solution. To be able to do that, so as actually means having something that is close to being a bond exchange, right? We're not calling our foreign exchange, but we're essentially trying to build something like a bond exchange. And to be able to do so, we need a license called the recognized market of water license. And we in January, we actually will officially given the recruit spoke for this RM license bilaterals, which allow us to run a bond marketplace in Malaysia. So even though the license is in Malaysia, but the way we're running a business, you actually benefit our investors from the various countries we're in. So the way to think about it is the more marketplace -- so you think in terms of like U.S. stocks, right? So the Singaporeans investing in U.S. stock, you don't need to go in U.S. open account, but it will transact through your local pro. We're going to do an income to the U.S. exchanges. So for the bond business, when we have a bond market place in Malaysia, then there is going to be the internal into investors will benefit from the price transparencies as well as being able to execute on some spot directly in. So that is essentially what we are working on, and we noted officially launch this in the second half of 2024. Yes. So as a group we always in order to make sure that we remain relevant in the long run of being able to ensure that we can grow in the long run, then I think the business model need made to progress. I used to be a top okay industry in the '90s. In fact, then there's no Internet. In order for the investors to know that the share price and the call out, the dealer on the things like that on that basis and commission rates for the regulator and so on. But today, it's a completely different environment. So financial sector business environment change all the time. I think in order to stay at it. We need to bring the business model as we move on and that essentially means trying to add on more value to investors. So these are a part of the overall thinking and ongoing apart as a group. Yes, next slide. Yes, this slide is regarding our bond business, just showing how the volumes have grown. I think in faster, you find that in the last 2 years, the volume has grown quite significantly. The increase -- the high interest rate environment have actually made things more interesting because you find that even if you're buying a bond, U.S. Treasury, for instance, right, then you can get your 5% return and so on for something that's very sick. So government bond, investment-grade bonds are to become interesting for investors as well. So that actually moves the overall volume for our bond business. And I think going forward, we'd like to have the bonds Supermart, the bond marketplace to cap enhance the overall experience for investors and have for our businesses. Next slide really is a summary of our outlook. So we're essentially expecting that 2024 should see robust growth in revenue and profitability compared to 2023. In 2024, doing a 5-year pension division in Hong Kong will be a modern growth driver. What overall well management platform is expected to continue showing progress. Singapore wealth platform, for instance, generally based able to quite consistently grow even though that some market volatility. And yes, so that ongoing healthy progress of a wealth management platform, we expect to continue. In addition to that, we upbeat that going forward in 2025 and beyond, then the will start to be an important driver for the overall group as -- and yes, so this is not part of a quite exciting for us for the next 5 to 10 years. That's how we see our overall growth. So with that, I'll stop here, and we'll be happy to take on any questions.
Hi, everyone. So for our Q&A segment for our fiscal captures stone, if you have any questions. And for our virtual attendees, [Operator Instructions]. So perhaps we can start with our fiscal best.
Congrats on the result on top. Okay. So just a few questions to start. I know the target $100 billion is extended from 5-years 2023 by the last quarter, between 20 year lease tell a bit more on a vision that this forecast without any further special catalysts in your existing markets? And also does it roll out any entry into new markets?
Yes. I think we -- internally, we still want to shoot for the 2023 year for the $100 million. But I suppose last 2 years, things have grown mostly because of other market conditions. So we essentially knew that -- yes, at this point in time, it will be good to look at that target in terms of the reach being 2028 and 13. To keep that in 28 year looking at CAGR of 36% to see that in 2020 and look at CAGR of 26%. I think, yes, 26% to 36% -- that's the current reach. Yes, so is an update of -- yes, actual number as we take to account machetes.
Mention there's 1 pension division in Hong Kong, -- you see this will be growth driver by 2024 and 2025. Can you just walk us through how much the entire project has relieved operation from December 31 currently and by an 2024.
So what we saw in recent months really is actually still at the initial base of other variants that's taken the various proud by getting ready for the go people. The actually onboarding hasn't actually officially start but all starting in second quarter of this year and you can the volume and by end of 2025. That's -- so as an onboarding ramp-up, that's when you see the important contribution.
Sorry so 2 questions on dividends here. So could you just provide from Catarina dividend for this year because EPS has searched more year-on-year over the past 5 years? And also, what is your payout ratio for FY '23?
We have kept the dividend unchanged because we look at the overall payout ratio for the year as a whole. So for 2023, the dividend that we've paid out look up to a payout ratio above just over 50%. That's why we can't give that change. So the previous year in 2022, even the profitability was negatively affected. We repaid the dividend. So in 2023, in a sense, profitability is catching. Going forward in terms of 2024, we expect to be raising our iteration. I think we essentially balancing between the ability and intention to reward shareholders to pay up more dividend with our pretty strong ambition of building our overall banking business as well. I think in the overall context of the banking world, our current shareholders of $250 million is still small number. So that's still the banking, the over time, we want the shareholders equity to continue growth. Yes. So for 2024, well, if the share will increase, we don't think that will be paying up 50% because leverage and it should be less than 2023.
Perhaps we'll start with a few questions from our virtual attendees. So we have a question from the atoms -- yes, okay. For Hong Kong, the revenue targets are lower than what you mentioned earlier that you have maintained your PBT targets, how will this be achieved? Are you expecting significant reduction in OpEx? Or is it something else that will allow you to achieve the same PBT numbers?
Yes. So the PBT is a function of revenue and costs, certainly. So the reason why the revenue parts have been reduced is partly because the pace of ramp-up of the onboarding has -- yes, slower. It is going to be slower in the initial 1 year but since the big ramp-up is slower than the pace of how fast we build up our human resources to do the more required is also being reduced. So that's why the projector increases in costs also have been brought down. So because of all that and the PBT number has not changed.
Okay. We have a similar question for our nomination business from Shaw Han. For Hong Kong business, are there onetime project fees that were paid off once the cementation is over? Yes, products on these fees. What is the revenue level of HKE pension business when fully ramped up beyond 2025?
The -- yes, if we go back to 2022 and initial part of 2023, there were some one-off implementation fee. But those numbers were actually that small. So for us the main revenue really will be always a service fee that we have started to see for the last 4 months of 2023. So this part is not one-off. It's recurring and is still in fact going to increases on boarding rate growth. And as we expect that we see more in 2024 and in the 2025, we grow compared to. Beyond that, we still expect some growth as well, that is for is plus 7 years. But beyond 2025, the growth will be as substantial in terms of percentage, but it won't drop on because of overall service for continue is 1.
Perhaps I can just follow up with a few other Hong Kong key question and also the related questions from Rosero. Thank you for the reset results and focus. Since we are now in 2021, premanagement to provide guidance for the MPI past revenue and PBT targets for 2026. Any updates on the Oso pension services? What is the status of this at present?
The ePension revenue and trade for 2026 -- we haven't pinned down an exact number. We probably won't be giving an exact number, but we would expect that there still will be som e growth in 2026 compared to 2025 and likewise for subsequent few years, but the growth would be aspect in terms of percentage. Any update on the OZO retention part of the business? For this part of business, we are expecting that there will be some initial contribution in the later part of 2024.
Okay. So asset, I think we have already addressed your question 3. So we will proceed to the 4%? noted that the loss for a Nubank stood at $8.6 million 2023 compared with $5 million for losses have increased despite revenue rising to $12.3 million for 2023. What is management's confidence breakeven can be achieved by 4Q 2024 despite that the losses seem to be higher year-on-year?
So losses sales have gone up to a large extent because the cost have increased as we launch our new division, as we increased our resources to launch a new division in cement the launch of this new division, the digital transaction linking this personal banking, et cetera. So that's exactly the key reason for that. In terms of how we expect to achieve profitability, I think we're, in a sense, counting on -- just a simple formula that banks around the world have used all along, which is net interest income. So net interest income will ramp up as a deposit base ramp up, and we're able to deploy that into some assets that give us some margin, right? So we just need to achieve 1% or 0.25% and net interest income will ramp up. So the expectation in terms of being able to reach breakeven end of this year, it's on the basis of what we're expecting in terms of the ramp up of the deposit base. So this -- yes, nothing too complicated.
Just a colo question is let's see trying customer pay forward to 5%. And what are your patents space? And since you can get 5 or -- is it any limit to treat limited past results to restore, and also bispaceplan and kind of how savings. So there's a mismatch of the tenor asset environment.
Yes. So to the question on what the competitors pay. So the competitors are -- you were saying this is about the traditional bank, right? Because of all deposits at -- generally speaking, you have to give an account where you can take the money off any time, overnight money and can use it for payment, like the paydown person and U.K. required FBS services. For the natural credit mining ore, right? I still use DBS. I'm guessing I'm getting 5%. At iFAST fee, we have a cash account. Cash account for 2% now, right? At 2%, we're actually making a comfortable margin. So imagine at 0.05%, EPS certainly is making a huge margin. So banks are pays very little on this part of it. And the very little is not they can afford to be real, and money still remains with them. That has been the way the banking system works. It continues to be a case. I've always said that banking system, banks -- banking industry from our perspective is least competitive part of the financial sector, simply because you don't have too many new players coming in. And to the traditional bank and so on, they still have a lot of legacy systems and processes where that sort of discouragement from paying more higher interest rate for retail customer because if you there's administration costs. But in our case, we can pay out 4.25%. Yes. So that's the current situation. Technically, I think in Singapore, I think if you can actually just -- I think Transbank is repaying in a higher rate and is -- I'm sure they're attracting lots of money. Transbank is a new bank. They look at the number, they say, okay, we can make good money by paying 2% and chances are the other backbone substantially. Your question on how big can that be? For bank display the ability to ramp up the volume, there are few considerations that one of consideration really is a risk. So you're taking deposits, what to place it in, right? Because you need to burn the interesting. So if you lending traditionally, of course, back to the organic. In our case, we haven't started our lending business. So what we are doing is mainly -- yes, giving a central bank and we buy investment grade for. That's what we're doing. So if you take the part where we pass our money to Central Bank, that essentially is something where the capital cost is effectively rated at 0 -- almost 0, right? Because investment group on business the risk rating or assets. You can place a Central Bank that's rated at 0. So in theory, you could say that we can raise $1 billion, $10 billion and so on and just make it a 1% spread. And we can just keep wrapping that up, that promo. That's technically, right? Not in okay. Yes, so that's the way we see. Yes. So that's why we can do that. That's why I typically say banking is actually in the less competitive power business, and high-end margin business. Simplest product payer margin. Bar is still a consideration of having to have the capital and so on. So in our case, we see ourselves as a wealth management group, but adding banking into it. We're a management group is potentially a business where fee-base,we don't need to ramp up the capital too much at the volume growth banking, you be accommodation of certain parts where capital requirements are so high value but other parts we need to increase the capital we move. So it's just managing the right balance. Is there another question?
Just one more is reality the difference in petroleum investment and typos.
Yes. So certainly, I think all this is part of banking 101 in terms of doing so. So in our case, the part that is sitting on overnight money that for this part, we put -- as of now, the majority of it is being so there is that exact math. And that's the other part where it's coming in, in the form of fixed deposits between 1 year to 12 months or even 24 month deposits. So for that, then we take that by investment reform, mainly and average acuity for us is actually quite short in 1 year. So that is a relatively good match.
Okay, we have 2 more questions from. Congratulations on our results, can please share more about the institutional customer transferring of their equities, which resulted in lower net inflows for 4Q?
Yes. That actually is related to 1 company, the stock booking business who use us for access to Singapore Exchange. So they started around our business in Singapore by routing to us since we ASX member. But as a volume built up co-directly to the bank exchange. And that's why there's some transfer of that. It's actually happen. Traditionally and the bulk of our EA actually coming from financial advisers for some banks and insurance et cetera. But I suppose increasingly, there's a group of customer or in the stockbroking side of the business. So they also use us on the B2B basis. Yes, so that's the effect that you actually seen. We saw -- yes, we gave the breakdown in a sense also to show that the overall platform that we have, that the inflow is actually quite healthy on an overall basis. So this is one-off kind of the effect that actually is.
Okay.
So just to go back on the bank. So the 1% spread last half the bank present by fourth quarter. So even after the new EPS cans to grow profitability from next year onwards. You mentioned on earlier you currently have the appropriate license starting commissions.
Yes. So we actually -- so historically, we talk of year-on-year. So we have a unit trust and year-on-year and so on. So we receive cash that's on the form of money market plan because coming on cash account we take Singapore, for instance, where it's not on our balance sheet, but we take that is in our trust account parts or other banks. That's not going back. So there's cash coming in in the bond deposits. So that we see that as as well for us. except that this 1 we take on easing? Picking on our balance sheet as advantage and disadvantage, advantage really is we're in a position to attack it a lot more to simple product. We can just say what is a great than the big amortations, higher margin, right? So if you look at our bond business traditionally, our revenue in terms of, let's say, recurring revenue as a percentage of EUV have tended to be about say at 6%. So we have cash talking particularly 1% of credit. So we see that the FDA is something that is like AUA that we give to grow that and that we will then able to consistently grow it over time, and that will give us the increasing recurring revenue and cutting improvement. So that's how we see this power business. In a sense, there's some that even the buying investment grid bond technically, we're lending to the lease company, obviously. It's top of lending, but it's a quite efficient part than lending as return to other individual administration towards time by client, et cetera. We expect our cost that as we move on, there will be some loan that we give. The initial service that we have paid out about to grown on the margin financing, which is something that as a wealth -management platform is only natural. So we'll make some margin. So that will grow. And then as we move on, then we'll look at what our loan product. But we don't think we need to line up the majority will be really conservative and also not to deposit is -- yes. But -- so the short answer to your question is, yes, we look at it at AUA that we have to grow in the main spread on that.
The budget balance is for the group. It's not specifically from the global banking.
It's effect definitely in Singapore as covalent are there, but we bring in the bank.
Just welcome to this. So in the licensing requirement of U.K. bank to test, and when the little, we will see the margin will train restriction on to type of users, they can end to this various in.
Deposit is a full access back so you can take deposits from anyone around the world where local is that people from Hong Kong or whichever country as long as we do our money -- anti-money laundry checks a problem, so there's no restriction. In terms of loan, the same safeguard that we watch over typically has -- yes, we can -- typically with more -- yes, I have that work individual and so on also actually the 3 million.
You have a release a question, you assure proper capacity of depositors from 60-plus countries around the world? What is the risk of that access becoming clients of the bank?
Yes. I think the PBT rule and so on, parcels or the business of any financial, effect not just demand in the various country that we're operating in that. It has always been the case. You, for instance, we have 200,000 customers in Singapore. And for each and every one of them, we have to do our QSC on the line at the point of boarding as well as on an ongoing basis. That's my possible for what we need to do. So it's something that we are actually quite used to. And Singapore also has lines from various countries as well. There's no restriction because of not being able to overseas customers. So this -- yes, it's being done in Singapore. And likewise, our U.K. bank debt has to be done. The most banks tend to prefer not to have the open account for overseas customers unless the customer brings $2 million, $3 million, et cetera. That's why most banks are actually not doing it. But we see the retail business as being a segment of estates competitive. We essentially need to ensure that we can do our administration, our checks and different power processors efficiently. The KYC onboarding, et cetera, there's certainly quite a bit a point onboarding as well on an ongoing basis. And of course, to help ourselves manage some of that better than the online KYC that we are actually using for customers on a number of different countries so that we can process the onboarding, a lot of efficiently where some days we'll check on services that will help us to ensure that the compliance checks and so on can be done a lot more efficiently. So it's about the processors and how we can actually manage that world. So -- but essentially, yes, the business is there for us to do. Many banks choose not to do because we prefer to focus on the high level in the region. In our case, we find a high net worth individual is actually a more competitive business of the retailers.
Okay. Perhaps can address a few questions on our bonds for us. I would like to plan up more about to recognize market operator license from Malaysia all of the debt to license change quite we're doing right now with pontoon.
I suppose one way to look at it is to -- so think in terms of buying stock on the SGX. So you see -- you can see the actual price today, but going forward then -- but -- okay, so you have Level 1 data the price, we have level 2 data, the other debt, et cetera. To be able to do that, you basically need to be a marketplace for an exchange where the clients can put in the bid and offer quotes into the system, right? Today, as a dealer, we cannot allow clients to put in quotes into the system, and then match the order rate. We come to them to be able to allow the be an offer for different bonds and then allow the others to be matched, then you need a RMO license. Yes. So that's why we need a RMO license so that it's like something close to exchange. Essentially, that's what it is. So from a client perspective, then going forward, you will be able to see the price. They can see the offer price and some volume on the offer for the different price, and they can transact -- sorry, we, right? Today, it's typically more of a request for quote, the way the person be done in the industry. We will request for a quote. And then, of course, it's given to you that in rebuy and then you go through that manual process. So we want system whereby you can see the price, then you just hit it by yourself and transact.
So how we tend to sell the business globally by proposition? So the later slide we see banks from Singapore and the other countries and where will it be protector.
So the way the business will be done, let's want to give an example of a U.S. exchange, right? So today, the investors in Singapore you're buying U.S. stocks, but you don't need to do anything in the U.S. We as a broker we actually are doing that. And in fact, U.S. exchanges having business from all over the world because there's demand for U.S. loss. So that is a highly scalable business model essentially. So for bonds, we are looking at a similar kind of model. So to start off, we are looking at countries that we have already in Singapore, Hong Kong, Malaysia where there are various investors and partners that are already using us. That will be starting from. But as we move on, you can imagine that there are different intermediary, different sales firms that we work with in different countries that can have a similar arrangement. So that is something that allows us to scale. Now of course, Singapore itself increasingly but so targeting global customers. So if you have a client coming from Hong Kong, China, Malaysia as a trooper account of Decas Global Bank in U.K. and then we decide transfers some money to our Singapore account and then they buy. So we are able to serve a global customer to Singapore. And then when you buy the bond from Singapore, then the order will appear on the RMO in Malaysia. So that coverage is actually already there.
Information that you also try to provide margin trading services via the global bank. So it will be done in the SM platform on the cycle.
Yes. Yes. So in Singapore, for instance, recently, we actually launched our budget financing services. So because in Singapore, we are not a bank. So we want the funding support from the bank. So actually, we moved other bank in Singapore. But the same time, we also have a co-global bank that can also entirely the.
So the -- you saw the arrangement cost a is 4.5%, so to do margin train.
That's yes, that is starting, so a different currency at cost. As of today, we are probably Okay. yes. So the cost and how competitive we are then is something that we have different levels of readiness as we grow, but because when it's living the group, it's also easier for us to manage because there's no need for duplication from margin.
So can you comment about or so far better your peers? Are you performing work industry beyond you in your own understanding?
Yes. We -- the way we look at our business, we look at it as an overall wealth management platform in how -- we look at it as an overall were management platform. You are trying to see the core product, but it online, that's bonds. And we're not working, what comes is the cash count in. So because we don't do contracts so clients put money in the cash account, and we actuals from that on. So we see the business from that perspective, somewhat different from what the other players in Singapore that we look at it. Where we are today, we -- yes, we are clearly not a leader in Singapore. But in terms of the model that we're doing, in terms of overall service or deliver to any plant we are actually happy that we are able to deliver turns business.
From Benjamin, on Wealth Management business, PBT over the last 2 years, but is a fair assumption for core Hong Kong PBT growth for hereon.
Yes. I assume that we see a revert to our historical business of wealth management. I think, yes, so if you support ePension that wealth managed at of the business last year was an exciting. In fact, I think there's some reduction in profitability of the debt. A key reason for that really is the actually poor model condition for China stocks. So that actually affected the volume very substantially. The fact that to some extent, so. On an ongoing basis, we still expect that that will grow, I think -- but to be able to grow in healthy new one, the situation where market doesn't keep dropping price to we so as soon the market doesn't keep dropping. You have a balance up and down the time that we are in a position to grow the wealth management platform.
From what portion of the revenue guidance of it to Hong Kong Wealth Management business peers versus pension having plays. And when the ePension product is only about, what level of quarterly revenue is contracted?
On the first part of the question, I don't have the exact percentage offhand in terms of what level of debt side contribute to that. Second part of the question is...
What level of revenue should we expect from the Hong Kong business -- sorry, we have really addressed this. Pension product is on a what level of proximately revenue.
Yes, we're not able to give the exact detail in terms of the actual revenue for the ETF project because confidentiality requirements, which is why we have given. But in order to investors in the state, but that's why we look at it in terms of the overall burden for the Hong Kong business. So we view the ship ambition to have investors the system test.
Okay. Crosgan, on the new -- sorry, for the new guidance for the PBT numbers is also earnings expected as well?
Yes. Well, the initial part of the OZO business have been taken into account. Of course, beyond that, we hope to have even more business. Yes. So if we can go that well, then that can.
Okay. We have 2 more questions on operating leverage and operating expenses from leaking. Is there any time lines to obtain operating leverage? When do you expect operating expenses with regards to the ePension division to peak?
I think the -- the mid ramp-up release in 2025, going to 2026, there could still be some increase in expenses together with some increase in revenue. But based on average debt growth is not so much. In terms of operating leverage, as well as a group, we are seeing some operating leverage. Now which is why the ramp-up of profitability in 4Q 2023 has been backward even though the revenue didn't wrap up so well because in the last 2 years, we launched new services, we bought the bank. So we have to do some test expensive before the revenue arrows -- yes, our ramp revenue will ramp up more than starting see the operating expenses. So as opposed to 2024, 2025, we'll see more of the impact gain taken through more market.
Okay. From Andrea, other OpEx was particularly higher than 4Q. Can we have some color on which components drove the bot on this increase to break down other OpEx included advertising tax currently operation of pension and impairment loss allowance on investments and debt securities. And what does the impairment loss allowance on investments to debt securities really to a how much of this.
This question, Jim or David, do you have any comment on the other OpEx came out?
One of that, I will say during December around the ramp-up of the operation. And...
Yes. So Jamie, our CMO was mentioning the 2 factors there. One is some additional expenses as we ramp up our U.K. back activities and so on. And the other 1 is that there was some provision because since 2 years ago, we also did some China bond even though that at that time, it looks like it's a very strong company. So it shouldn't be an issue. But I suppose in the last 2 years, tons of a strong companies at financial operation that has been brought on. So because of that, we need a full impairment on that reform.
So we have 1 more financial-related question. What was the rationale for the drawdown of bank loans in the quarter?
I'd say few -- 3 reasons. One is we started a bit of our margin financing business. But the way that's done is we take loans for other banks, and then we sort of extend that up to the end client. So you see that in the books. Second reason is we injected additional capital into the bank. As a group, the numbers are very healthy and so on, but in terms of -- at a different level of our subsidiary, for -- we released a drawdown on that loan and then we inject additional equity into the bank. Third reason is, yes, the ramp-up of the activity for the ePension business, some ramp-up in terms of initial capital expenditure and ramp-up expenses and so on. So that ramp up first before the actual payment actually get received for this initial period. So that's why there was some of that ramp-up. So a combination of areas.
One last question relating to the global bank. So just how do inspires relatively new at to inspire customers to put money on bank and do to marketing activities to -- for more margin and happier the service of Singapore is the cool lines. And we know that we can possibly.
It's open to customers globally, including -- yes, Singapore want to do so, even though we're not exactly balancing price as a main customer. I think second for will actually find it for foreign currency, particularly, we actually give pretty good attractive rates. So we actually make sense even though Singapore. In terms of the marketing, we have done some of that. Not in a big way yet. Partly to social media, partly to liaising and U.K, et cetera. We have not ramped up in a big way because of surmises processor in rollout and as we run more and more services, then we'll ramp up our marketing more and once. And already, even with just limited amount marketing, advertising, I think you'll find that customers actually come in quite not ready. Our bank in the centers, there is that deposit insurance as well. So that is something that's been buying from the customer. So in U.K. is GBP 85,000, right? So actually, the technically, you could see that GBP 85,000 is soft, by a guarantee product in sterling is 4.25% to 5% -- I think we show 4.29%. I think with 20 deposit, deposit 4.29%. Technically, it's gating from the perspective of a client, and I be a good new that is same and easily understood. So that's why it's a very simple -- it's a fiber form of growth expert's quite easy for clients to pay. That's why we're actually confident in the years at this can make a big difference as we ramp our modeling further as we roll out. Okay. I think that brings us to the end of our results briefing in the Q&A session. Last for a -- thank you very much.
Thank you.