SINGAPORE: iFAST Corporation, the investment products distribution platform, posted a 35.3% decline in 3Q16 earnings to S$1.9 million from S$2.9 million a year ago, on the back of its loss from its China operation, which was recently launched and is still in the start-up phase.
Excluding the loss from the company’s China operations, which increased 257% y-o-y to S$1.06 million in the quarter, 3Q net profit was down 8.4% on higher expenses, which grew 9.6% due to the group’s “continued push towards broadening the range and depth of [its] products and services”.
In Singapore, net profit was down 7.6% to S$2.6 million from S$2.8 million the year before, which iFAST notes is still the major contributor of the group’s revenue. The drop in profitability resulted from the combined impacts of decreases in net revenue, due to the “negative global financial market sentiment”, especially in 1H16.
Besides the negative global financial market sentiment, iFAST’s Singapore business also saw higher operating expenses from efforts to enhance platform FinTech capabilities and improve the range of investment products and services provided to customers in the period.
Revenue in Singapore grew 3% from the quarter as compared to a year ago. This was partially due to significant increases in investment subscription amounts, including transfer-in amounts, in bonds and ETFs, says iFAST. Profit generated from Malaysia and Hong Kong for the quarter grew 15.1% to S$137,000 and fell 9.8% to S$275,000 respectively.
In a Friday filing to the SGX, iFAST notes improvements in its 3Q profitability following “a difficult 1H16”, highlighting its quarter-on-quarter increase of 59.3% in net profit due to a 6.6% q-o-q increase in the group’s AUA to S$6 billion as at Sept 30.
“While the investments into China and the push towards broadening the range and depth of our products and services have affected the short term profitability of the group, the directors are of the view that the investments will pay off in the next few years,” it adds.
The company’s directors have proposed dividends of 0.68 cents per ordinary share for the quarter, in line with the first two quarters of FY16.
