iFAST Reports a More Than 10-Fold Increase in Net Profit for 4Q 2023: 5 Highlights from the Fintech’s Latest Earnings

iFAST Corporation Limited (SGX: AIY) recently announced its fourth quarter 2023 (4Q 2023) and full-year earnings report.

The fintech did not disappoint.

iFAST reported its second-highest net profit on record as contributions from its Hong Kong ePension division in 4Q 2023 catapulted its net profit more than 10-fold year on year.

The group also reported a more than tripling of net profit for 2023 as it looks forward to a better year ahead.

Here are seven highlights from the fintech’s latest earnings report.

1. A stellar financial performance

For 4Q 2023, iFAST saw a sharp improvement in performance as revenue for its Hong Kong ePension contract flowed in.

Total revenue jumped 69.3% year on year to S$82.2 million.

Operating expenses rose just 46.5% year on year for the quarter, which led to operating profit rising more than six-fold year on year to S$16.8 million.

The fintech saw its 4Q 2023 net profit come in at S$13.2 million, more than 10-fold increase compared  to last year’s S$1.3 million.

For 2023, total revenue increased by 22.8% year on year to S$256.5 million while operating profit more than tripled year on year to S$37.1 million.

Net profit for the year more than quadrupled year on year to S$28.3 million from S$6.4 million a year ago.

2. AUA hits a new record high

The group’s assets under administration (AUA) grew by 13.8% year on year to hit a record high of S$19.83 billion as of 31 December 2023.

iFAST saw net inflows of around S$2 billion for 2023, though this was slightly lower than the S$2.1 billion inflow in 2022.

The year-end AUA level is also 3.7% higher than its previous quarter’s AUA of S$19.12 billion.

3. A significant boost from the Hong Kong ePension contract

Looking at the fintech’s Hong Kong division, net revenue for 4Q 2023 received a strong boost from the ePension contract, rising more than four-fold year on year from S$6.1 million to over S$28 million.

For the year, Hong Kong’s revenue more than doubled year on year to hit S$52.6 million.

The group expects Hong Kong revenue and profitability to enjoy a marked improvement this year as the ePension division contributes a full year of revenue.

However, iFAST has downgraded its revenue targets for the ePension division amid tough financial conditions in Hong Kong and some timing delays for the contract (see slide below).

Source: iFAST FY 2023 Presentation Slides

Despite the lowered revenue guidance, the group has kept its targets for profit before tax (PBT) constant.

The good news is that for 2023, iFAST has exceeded its targets for both net revenue and PBT, with the latter coming in at HK$ 139 million, higher than the projected HK$100 million.

4. iFAST Global Bank targets breakeven by 4Q 2024

iFAST Global Bank (iGB) has made progress in attracting a higher level of deposits.

The bank’s deposit base grew by 258% year on year to GBP 213.5 million (around S$358.6 million), with the increase contributed by the new digital personal banking (DPB) and digital transaction banking (DTB) divisions.

These deposits were held with the UK Central Bank or invested in investment-grade fixed-income securities.

For 2023, revenue for iGB soared by 50.8% year on year to S$12.3 million.

However, net losses also ballooned for the division, rising 70.8% year on year to S$8.6 million.

Despite the higher losses, management is confident that iGB will post a lower loss this year compared with 2023.

The digital bank is also targeting to break even by 4Q 2024 as it grows its net interest income in tandem with the increase in its deposit base.

Management also believes that iGB will become an important growth driver for the group in 2025 and beyond.

5. Maintained its final dividend

A final dividend of S$0.014 has been proposed for 4Q 2023, in line with what was paid out in the previous year.

This brings the full-year 2023 dividend to S$0.048, unchanged for the third consecutive year.

CEO Lim Chung Chun has remarked that there is “room for an increase in dividends” this year with profits expected to “substantially increase”.

Should iFAST continue to post healthy top and bottom-line growth, investors can expect the fintech to pay out more than it did last year.

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Disclosure: Royston Yang owns shares of iFAST Corporation Limited.

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