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iFast aiming for Malaysia digital bank licence, $100 bil AUA goal 'not a big number': Lim

Jovi Ho
Jovi Ho2/8/2021 04:51 PM GMT+08  • 5 min read
iFast aiming for Malaysia digital bank licence, $100 bil AUA goal 'not a big number': Lim
“To get to $100 billion by 2028, I don’t think it sounds too far-fetched if you look at the size of the market for this business."
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Despite losing out on a digital banking licence in Singapore, financial services company iFast will be throwing its name into the ring for a similar framework in Malaysia.

iFast has been studying the matter and will be submitting an application for a digital banking licence there, says CEO Lim Chung Chun in a virtual briefing on Feb 8.

“We expect that we will be bidding for it as well… I think further details can only be provided in the quarters ahead,” says Lim.

Plans for Malaysia’s digital banking framework were first announced in March 2019. Malaysia’s central bank, Bank Negara Malaysia, announced on Dec 31, 2020 that up to five licences will be issued to successful applicants in 1Q2022.

The web briefing comes on the back of another record-breaking quarter for iFast, with earnings up 127.5% y-o-y to $6.83 million for 4QFY2020 ended Dec 31, 2020, reported on Feb 5.

The rise in earnings was largely due to a record assets under administration (AUA) of $14.45 billion, up 44.5% y-o-y.

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For the whole of FY2020, the company reported earnings of $21.12 million, up 122.3% y-o-y, on the back of a 35.5% y-o-y growth in revenue to $169.3 million.

See: iFast reports record quarterly earnings of $6.83 mil, AUA of $14.45 bil at all-time-high

On Jan 29, the Mandatory Provident Fund Schemes Authority (MPFA) of Hong Kong announced that it had awarded PCCW Solutions with the contract for the eMPF Platform.

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iFast had participated in the tender for the eMPF Platform project with PCCW Solutions as their Prime Subcontractor for a category that includes MPF scheme operation services, transformation services and user delivery services.

While Lim declined to provide further details on the terms of the contract, the tender states that the contract will start from 2023 with a two-year implementation period and a seven-year operation and maintenance period, which may be extended for one to three years.

The MPFA expects the platform to be built by end-2022 before turning fully operational in 2025.

‘Not a big number’

Asked about a ten-year, $100 billion AUA target set in 2018, Lim says there is a “decent chance” iFast can make good on its word.

“The way the opportunities are lining up a whole industry, we feel that there's a decent chance for us to be able to reach $100 billion [in AUA] by 2028.”

In fact, Lim thinks the company will surpass that figure, thanks to the sheer size of its five markets in Asia: Singapore, Malaysia, China, Hong Kong and India.

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“I think it's worth noting that $100 billion is, in itself, not a big number,” says Lim. “I think if you look at some of the US players, a platform like Charles Schwab, for instance, you’re looking at something about US$4 trillion AUA, and that comes mainly from the US.”

“We're talking about us being present in Asia in five markets. So, to be able to, at some point, get to $100 billion by 2028, I don’t think it sounds too far-fetched if you look at the size of the market for this business.”

Lim adds that the company had initially lagged behind its projected AUA growth rate of 28% per annum in the first two years after the 2018 announcement. However, things accelerated last year.

“I would say it accelerated for a couple of reasons. One, of course, is the increased pace of adoption and digitalisation has actually helped,” he says.

“We have been looking, in the last five to six years, to ensure that we have an integrated wealth management platform that can handle all the different products.”

By markets

iFast received some $3.77 million in government grants for the full year 2020. “These were due mainly to support granted by local governments in Singapore and Hong Kong to mitigate unfavourable impacts due to uncertainties caused by the outbreak of Covid-19 in the year,” says the company.

Ahead, iFast will receive one final contribution from the Jobs Support Scheme in 1QFY2021.

The AUA of iFast’s Singapore operation grew 52.8% y-o-y and 18.0% q-o-q to a record high of $10 billion.

As such, Singapore accounts for a lion’s share of iFast’s AUA, at 69.2%. This is followed by Hong Kong (18.4%) and Malaysia (9.2%), with China and India making up 3.2% of total AUA.

Net revenue for the Singapore operation increased by 50.2% y-o-y to $16.24 million in 4QFY2020, and rose by 34.3% y-o-y to $56.33 million in FY2020.

The growth in net revenue was due to the robust growth rates in AUA, sales and net inflows for FSMOne.com, its B2C business division, as well as for the iFast B2B business division, says the company.

“With more wealth advisers joining the industry and as the B2B platform signs on more new B2B partners, the growth trend seen in Singapore's B2B business in 2020 is likely to continue into the new year,” says iFast.

As at 4.40pm, shares in iFast are trading 27 cents lower, or 4.15% down, at $6.23.

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