iFAST 3Q22 review

iFAST is becoming stronger and less vulnerable to bear markets.

For the third quarter of 2022, net inflow was SGD600 million of net inflow lower year on year but still higher than per-pandemic levels. Diversification into cash management and bonds is paying off!

Increased bond turnover on iFAST platforms stood out with bonds offering higher yields in a rising interest rate environment.

Access to bonds is limited for the average retail investor because a single trade requires SGD250,000. iFAST previously spoke about their plans to apply for a bond marketplace license. Securing a “recognised market operator” license will improve efforts to develop a retail bond marketplace for individual investors and will differentiate iFAST.

Assets under administration (AUA) fell 7.6% y/y and 3.9% q/q to SGD16.9 billion as a result of falling share and bond prices but this trend was roughly in line with the company’s peers.

As expected, 3Q22 net revenue (-1% y/y) and net profit (-73% y/y) was poor because of UK bank expenses and preparation work for their big ePension contract in 2023. With the ePension contract scheduled to begin in 2023, iFAST is expecting earnings to reach a new high in 2023.

Results season is almost over for the investment platforms. The big winners were platforms which have their own bank (Schwab) or those managing a lot of cash (Interactive Brokers). Their net interest income spiked resulting in big increases in net revenue.   iFAST is planning to roll out more UK digital bank functions over the next six months which includes online account opening and multi-currency deposits. These initiatives should lead to AUA and recurring interest revenue accelerating. iFAST net interest income is tiny now but has the potential to be a big revenue driver someday.

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