Hi everyone. Welcome to iFAST Corporation's 4th 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 the other sections. In our key summary, starting with the first slide, in 2023, our net profit increased by 340% year-on-year to SGD 28.3 million, on the back of a 22.8% increase in our total revenue to SGD 256.5 million. The increase in profitability was driven by initial contributions from our Hong Kong ePension 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 SGD 19.83 billion, driven by net inflows of SGD 2 billion during the year.
iFAST Global Bank's customer deposit amounts grew 53.4% quarter-on-quarter and 257.9% year-on-year to GBP 213.5 million, equivalent to about $358.6 million as of 31 December 2023, contributing to higher net interest income. Going forward, as part of our three-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 varying 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 break even by 4th 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 propose a dividend of SGD 0.014 per ordinary share, similar to the same period in 2022. The proposed final dividend will be subject to approval by shareholders at our annual general meeting to be held on 26 April 2024.
On the next slide, our group AUA, as I mentioned, hit a record high of SGD 19.83 billion as of 31 December 2023. We show the breakdown between the B2B and B2C sections. 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. For the full year of 2023, our net inflows stood at SGD 2 billion. In 4 Q 2023, our net inflows was about SGD 0.33 billion. Net inflows in 4 Q 2023, before the transfer out of stock AUA from an institutional client, was higher at SGD 0.78 billion. Our gross unit trust subscriptions ended the full year 2023 at SGD 4.49 billion. In the 4 Q alone of last year, gross unit trust subscriptions was at SGD 1.11 billion. Moving on to Section 1 for our financial results.
Starting off with the financial results of the group for 4 Q 2023 compared to 4 Q 2022. Total revenue stood at SGD 82.19 million in 4 Q 2023. That's a 69.3% year-on-year change. Net revenue was up 92% year-on-year to SGD 57.13 million. OPEX was up 46.5% year-on-year to SGD 40.71 million in 4 Q of last year. Net profit was up 917.1% year-on-year to SGD 13.18 million in 4 Q 2023. Moving on to the financial results for the group again, but for the full year of 2023 compared to full year 2022. Total revenue was up 22.8% year-on-year to SGD 256.54 million. Net revenue was up 36.7% year-on-year to SGD 161.66 million. OPEX was up 21.6% to SGD 126.23 million. Net profit was up 340% year-on-year to SGD 28.27 million.
But of course, if we exclude the impairment loss of SGD 5.2 million related to the India business, which was recognized in second quarter 2022, 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 five full years. So I won't go into the details. Moving on to the financial indicators for the non-banking operations on a quarterly basis. So total revenue was up 57.2% year-on-year to SGD 75.66 million in Q4 2023. Net revenue was up 94.3% to SGD 53.86 million. Net profit was up 390.7% to SGD 15.75 million in Q4 2023. Similarly, for financial indicators for non-banking operations, but for full year 2023. So net revenue was up 35.7% to SGD 149.31 million. Net profit was up 121.3% to SGD 36.88 million.
On the last slide for this section, so on the proposed final dividend for full year 2023, the directors, as I mentioned, propose a dividend of SGD 0.014 per ordinary share, which is subject to approval by shareholders at our AGM, which will be held on 26 April this year. The proposed final dividend brings the total dividend to SGD 0.048 per ordinary share for full year 2023, which is similar to full year 2022. I'll now invite Chung Chun to carry on with the business update in section two and Chung Chun.
Thanks, JP. So for me, what I'd like to do is talk about the plans that we have for the next three years. We, yeah, typically like to communicate our vision, our plan for the group's business. You may have noticed that all these years typically, when we run our business, quite a lot of business models are new. And we emphasize being able to progress consistently through all the rapidly changing business world and taking advantage of the opportunities that arise because of the way the internet has changed the world. So to be able to do that, it's important that we plan ahead. And we also like to ensure that the shareholders understand what we are trying to achieve. So that's what we typically talk about, our plan. So in the past, we have talked about a five-year plan, four-year plan, three-year plan.
Last year, we talked about a three-year plan. Now we've updated to a three-year plan for us to communicate with. The three main points 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 fintech platform with a truly global business model. A few points in that statement. The first is the global digital bank. We have added a bank to our overall group fintech ecosystem. We believe that with that within the group, that will actually help us to accelerate the overall potential of the group. I'll elaborate more later on. The other point really is what we call the truly global business model. I think historically, most businesses are very much constrained by geographical boundary. But clearly, internet has changed the world.
It actually brings up threats 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 into the opportunities that arise. I think we have seen that actually, many industries have been transformed by the internet, I think, going about businesses right now run on a global basis. If you take something like Google, for instance, it's essentially a global model, even though it's a U.S. company, but they're tapping into customers around the world. You have companies like Netflix, Spotify, right? They are basically tapping into customer base from around the world, but only operating from one or a few countries. I mean, 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 model.
What most banks do is to really go to every country, get a license set up, operation set up, branch before they tap into customer base in those areas, despite the fact that banking wealth management doesn't actually involve a physical movement of goods. So our belief is that in time to come, banking and wealth management will be increasingly run on a truly global business model. And this is where we see a huge opportunity, huge untapped opportunity, an opportunity where most banks are still not even tried to. So that is something that we are more and more emphasizing. Second point really will be about our Hong Kong business. So Hong Kong, broadly speaking, there are two parts of the business. One is a wealth management platform that will be running all these years.
The second part is the part that's relatively new, the ePension part of the business. ePension itself, you have the eMPF, and then you have the ORSO part of the business. So the eMPF part of the business has started to contribute in a bigger way recently. So in the last four months of 2023, you see that they have started to contribute quite well in terms of revenue and profitability. So that has actually helped to lift the overall profitability of our Hong Kong business as well as that of the overall global. We are clearly still at the early stages of this ramp-up, and 2024 and 2025 will see the bigger ramp-up of this overall business and bigger contribution coming from this. So the challenges here for us really is to ensure that we are able to deliver on our services smoothly without too much operational issues.
For eMPF, it's a business where we pay a certain service fee. That fee is not dependent on market condition. That fee, more or less, is already low based on the milestone in terms of a certain base level of work and as well as an additional amount that comes about arising from a higher onboarding rate. So the fact that it's not dependent on market condition, I think, is a positive thing because historically, wealth management platform business tend to have some volatility resulting from the market condition. So this will help us ensure that the overall group profitability will be smooth and good. The third point that we like to touch on really is on being able to continue to develop innovative financial services that are complementary to our core business as a wealth management platform and also services that are complementary to digital banking.
For example, in terms of what some of the new things that we'll be doing will be say for a bond business. Bond business today, investors can buy bonds through us. But you'll find that the bond business is one where, unlike the stock broking business, right, bond dealing is actually still done in the bulk of the industry in a relatively non-transparent way. I think the bulk of transactions, say, if you take Singapore, most customers will buy through the bank. Then the bank, when a customer wants to buy the bond, then they get a quote from the RM. RM will get a quote from their bond desk. And then each other may put on different varying level of markup, etc. So that's still a relatively primitive way, I would say, of doing the business.
I think the future clearly will be one where things are done on an electronic basis. So our vision really is to be able to help make the bond dealing as close to that of the stock dealing as possible. So that's where the bonds world comes in, the need for a Bond Marketplace comes in. I'll elaborate a bit more on this. The other area that we are increasingly trying to develop, but we're still at the early stages, will be payment-related services. 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 we can make it easy for customers is payment. Payment will include, say, debit card or online payment, the equivalent of PayNow in Singapore, things like that, or even cross-border banking.
So these services are important in ensuring that we can develop well in the overall digital banking. Yeah. So these three points more or less are not the core focus for us in the next three years. And let me elaborate a bit more on each of these points. So this chart here that we show is the iFAST FinTech ecosystem that we have actually been showing for the last couple of years. There are some updates periodically in terms of number of customers, etc. But the other update that I'd like to draw attention to that we're putting here is on the left side of the chart where you see we put in the central bank together with fund houses, etc. So the way to understand this chart really is that iFAST, as a platform, is sitting at the middle. We provide a range of services.
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 includes, firstly, our B2C channel, FSMOne. Secondly, it includes all the different financial advisory companies that use us and banks and stock broking firms or even internet firms in China, especially, that use us for our services as a platform. But on the left side is really the different products. We started with fund houses. Then when we put on the stock broking ETFs and so on, then we essentially start to link the users of our platform to the stocks and ETFs that trade that data. So we have added in the central bank because now we own the 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, when we take deposits from the client, as of today, we pay 4.25% for current account savings account to the retail client, all right? The retail client, whether it's from U.K. or from overseas, from Hong Kong, from whichever country, they'll open an account with us, and they can place deposits with us. These are overnight money. Again, we withdraw money anytime in terms of a PayNow equivalent type of service. And we're paying 4.25%, right? But when we pay 4.25%, we're not taking risks, right, to be able to deliver that. We basically take that to this interest rate environment. We give it to Bank of England, right, the central bank. And into this interest rate environment, they give us 5.25%, all right?
So we basically, in the past, [offered] some very good interest rate to consumers. 4.25% will be one of the highest for us, essentially, current account savings account, right? Yet we are just making 1% without taking any balance sheet risks. So that's why my owning a bank, we're basically having access to the central bank. And that is part of our part and parcel of our model. And we feel that that in itself actually allows 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, etc. We are going to do some lending, but we expect to be conservative. We actually feel that a big part of what we do with the deposit is essentially adopting a very safe approach.
So if you look at our balance sheet today, there's a lot of cash. So that's because a big chunk of the deposits that we take, we pass it to the Bank of England. And for that, we can just take a decent spread without taking the balance sheet risks. Then the other part is we buy investment-grade bond, which is we're happy with a spread of 1%+. Yeah. So that's what we do. So anyway, back to this chart, FinTech ecosystem. Yeah. So we are increasingly building an ecosystem whereby we're connecting the various product providers as well as exchanges and central bank to the various end customers as well as financial institutions or users of our platform on the right side. So that's something that we'll continue to build upon as we move on.
You will also notice that, yeah, we list out all the various services. Many of these stock exchanges, central banks, fundhouses, etc., are in different countries. As I said, it's an increasingly borderless world. Yeah, we'll continue to build on that and expand our overall business. Next slide. So just a couple of points about the bank. We see the addition of digital bank to our overall group as something that will help us accelerate the overall growth of our wealth management platform. If you look at most countries around the world, especially those in Asia, including Singapore, you'll notice that the biggest wealth management players are, in fact, the banks. So the question is, why is that the case? Is it because banks are the best advisor or distributor or have the best technology that allow them to do the wealth management business well?
The truth is not the case, right? The reason why banks are generally the biggest wealth management players are simply because they have a simple advantage of having the client's cash with them. So iFAST has grown over the last 24 years without this particular advantage of having the client's cash within our system. So in a sense, in the last few years, we have come to a point where we feel that we want to also have some of these advantages that the banks have traditionally enjoyed. That's why we decided to buy a bank 2 years ago. And I suppose the other difference really is most banks, actually, we look at this business, especially the business that relate to the retail consumers. They look at it in a localized manner. But we look at this business as a global business.
So having that overall bank and a global bank will allow us to be able to accelerate the growth of our overall wealth management platform. Yeah. So with a bank, we're looking at being able to attract deposits globally from various countries. A large part will stay with the bank. But we also expect that in time to come, a decent portion will also find its way to platforms like, say, Singapore, where Singapore platform is linked quite seamlessly with our UK digital bank. So we can just transfer money to the Singapore platform and be able to invest in the whole range of our investment products as everything else. So with that, that will allow us to capture a global business in a digital manner. In Singapore, there are lots of private banks, and they're doing huge business. But most private banks are essentially doing non-digital business.
They are relying on RMs and so on. And they're going after the big customer. I think the mass market client as well as the mass affluent client are not being served. Those are on the cross-border basis because to be able to do that, you need to rely on digital solutions. So for us, we're actually basically developing all that. And that's how we see ourselves being able to progress. Moving on. Yeah. So as I mentioned, we see the bank as an accelerator for us. So at this point in time, the bank is still making losses. Last year, we made a loss of over SGD 8 million as a group.
Of course, if you look at SGD 8 million loss, over SGD 8 million loss relative to the number or group profitability last couple of years, it didn't look like the bank is for some people, it didn't look like it's such a good idea to actually own a bank. But if you just think in terms of the potential that having a full-licensed retail bank within a group, what it can help us do in the future, then you realize that certainly, some of these initial losses are more than meaningful. There are quite a number of digital banks around the world these days. But we actually find that most of them really lose a huge amount of money when they launch, massive amount of money, SGD tens of millions or SGD hundreds of millions. It's actually quite common.
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 startup banks. That's why they actually have to incur massive losses. For us, we feel that a loss of SGD 8+ million at this stage is a small number relative to what the bank can do for us in time. The three local banks in Singapore, they are clearly the biggest profit generator in the whole country. It looks like it continues to be the case in the foreseeable future. We see the bank being able to help us drive quite a bit of growth, especially 2025 and beyond. That's how we see this. Moving on. Yeah. The second point really is about Hong Kong, as I mentioned earlier. Hong Kong has started to contribute more significantly.
So for Hong Kong, the year as a whole in 2023, we saw a contribution of SGD 23.8 million. There was a substantial pickup in the last 4 months of 2023 because of the initial contribution from the eMPF pension part of the business. Going forward, we expect that, yeah, we will see further growth. In April 2022, almost 2 years ago, we actually gave guidance in terms of group targets for our overall Hong Kong business. We gave guidance in terms of revenue targets as well as targets on profit before tax. We gave guidance for 2023, 2024, and 2025. So our 2023 numbers have actually shown that we have achieved our revenue targets for 2023. And we have exceeded our profit before tax target for 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 the targeted profit before tax. Yeah. So the next slide. Yeah. So this particular slide on the left-hand side, we show the original guidance that we gave. And then now the updated targets that we're actually giving. In essence, as far as our profit before tax are concerned, we are maintaining our targeted PBT for 2024 and 2025. But as far as revenues are concerned, we have actually brought down the targeted gross and net revenue 2024 and 2025. The reason for bringing down the targeted revenue is because on the wealth management side of the business, Hong Kong has gone through very tough two years because China market has performed very badly.
China market tends to affect Hong Kong more than the country of Singapore, Hong Kong, and Malaysia. So because of that, we are assuming global contribution, yeah, in 2024 and 2025. The other reason for the reduction in revenue target is because there's some timing differences, timing delay for the eMPF part of the business. But timing delay essentially mainly affects the pace of onboarding rate or the pace of onboarding. But reducing revenue, but our expenses have also been brought down because since there's some delay in terms of the onboarding timetable, then the ramp-up expenses has also been brought down as well or pushed back in terms of timing. So on the whole, then our PBT target has not changed. So that's on Hong Kong. Moving forward. Next slide. Yeah.
So just to elaborate a bit more on the top point I was making, instead of introducing complementary services, or sometimes I say services that are adjacent to, yeah, our overall platform of our core business of wealth management and digital banking. So this is, as I mentioned, the bonds business is one example. Our vision is that eventually, we would like to bring to the individual investor, right, improve bond transaction capabilities. I think the experience of transacting or trading in bonds is still way off compared to the experience of transacting in stocks around the world. The answer really is having a digital solution. To be able to do that, it also essentially means having something that is close to being a bond exchange, right? We're not calling it a bond exchange, but we're essentially trying to build something like a bond exchange.
To be able to do so, we need a license called the Recognised Market Operator License. In January, we actually were officially given the in-principle approval for this RMO license, Recognised Market Operator License, which will allow us to run a Bond Marketplace in Malaysia. Even though the license is in Malaysia, the way we're running the business, you actually benefit our investors from the various countries we're in. The way to think about it is the Bond Marketplace. You think in terms of U.S. stocks, right? The Singaporeans investing in U.S. stocks, you don't need to go to U.S. or open an account, right? You transact through your local broker. Local broker do a linkup to the U.S. exchanges.
So for the bonds business, when we have a Bond Marketplace in Malaysia, then there is going to be the internal linkup as well. Then investors will benefit from the price transparencies as well as being able to execute on some of these bonds directly and immediately. So that is essentially what we are working on that we target to officially launch this in the second half of 2024. Yeah. So as a group, we always felt that in order to make sure that we remain relevant in the long run or being able to ensure that we can grow in the long run, then I think the business model needs to progress. I used to be in the stockbroking industry in the 1990s. Back then, there's no internet.
In order for the investors to know the share price and to call up the dealer or the buy a sha re, things were done on that basis. Commission rates were regulated and so on. But today, it's a completely different environment. So financial sector business environment changed all the time. I think in order to stay ahead, we need to pick the business model as we move on. And that essentially means trying to add more and more value to investors. So these are five parcels of the overall thinking and the ongoing effort that we put in as a group. Yeah. Next slide. Yeah. This slide is regarding our bonds business, just showing how the volume has grown. I think in particular, you find that in the last two years, the volume has grown quite significantly.
The high interest rate environment has actually made things more interesting because you find that even if you're buying government bonds, U.S. Treasury, for instance, right, then you can get your 5% return and so on for something that's very safe. So government bond, investment-grade bonds start to become interesting for individual investors as well. So that actually improves the overall volume for our bond business. And I think going forward, we would like to have the Bond Supermart, the Bond Marketplace to help enhance the overall experience for investors and help grow our business as well. Next slide really is a summary of our outlook. So we are essentially expecting that 2024 should see robust growth in revenue and profitability compared to 2023.
In 2024 and 2025, the iFAST eP ension Division in Hong Kong will be an important growth driver while the overall wealth management platform is expected to continue to show healthy progress. Singapore wealth management platform, for instance, has generally been able to quite consistently grow even though there's some market volatility. Yeah, so that ongoing healthy progress of our wealth management platform, we expect to continue to see that. In addition to that, we're upbeat that going forward in 2025 and beyond, the iFAST Global Bank will start to become an important driver for the overall group as well. Yeah, so this is another part that will also be quite exciting for us for the next 5-10 years. That's how we see our overall growth business. With that, I'll stop here.
I'll be happy to take on any questions, yeah, from all of you.
Yeah. Hi, everyone. For our Q&A segment, for our physical attendees, you can just let us know if you have any questions. For our virtual attendees, you can leave a text message. Or if you prefer to speak to us, you can just use the raise hand function on Zoom. And we will unmute you for you to ask your questions. So perhaps we can start with our physical attendees first.
Thank you. And congrats on your results. I'm Jovi from The Edge Singapore . Thank you. So just a few questions here to start. So I know the AUA target of SGD 100 billion has been extended by 2028, the last quarter, between 2028 and 2030. Could you tell us a bit more about this decision? Does this forecast rule out any further special catalysts in your existing markets? And also, does this rule out any entry into new markets?
Yeah. I think internally, we still want to shoot for 2028 for the SGD 100 billion. But I suppose last two years, things have grown more slowly because of the tougher market conditions. So we essentially feel that, yeah, at this point in time, it would be good to look at the target in terms of the range between 2028 and 2030. To hit that in 2028, you're looking at CAGR of about 36%. To hit that in 2030, you're looking at CAGR of 26%. I think, yeah, 26%-36% or 37%. So that's the kind of range. Yeah. So it's an update of, yeah, the actual number as we take into account what actually happened last two years.
Thanks. My next question here is on the ePension division in Hong Kong. You say this will be an important growth driver in 2024 and 2025. Could you just walk us through how much of the entire project has already been in operation from December 31st, currently, and by the end of 2024?
What we saw in recent months really is essentially still at the initial phase of all the various testings, all the various rounds and getting ready for the growth. The actual onboarding hasn't actually officially started. It will be starting in second quarter of this year. The full onboarding will end by the end of 2025. As an onboarding ramp-up, that's when you see initial contributions.
Sorry, put more here before I jump in. Two questions on dividends here. So could you just provide some color behind the unchanged dividend for this year because EPS has surged the most year-over-year over the past five years? And also, what is your payout ratio for FY 2022?
Okay. 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 were paid out worked out to a payout ratio of about 50%, just over 50%. That's why we kept the dividend unchanged. So the previous year, in 2022, even though profitability was negatively affected, we retained the dividend. So in 2023, in a sense, profitability is sort of catching up. Going forward in terms of 2024, we expect to be raising our dividend per share.
I think we are essentially balancing between the ability and the intention to reward shareholders to pay out 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' equity of SGD 250 million is still a small number. So there's still the thinking, the old time, we wanted shareholders' equity to continue to grow. Yeah. So for 2024, our dividend per share will be increased. We don't think that we'll be paying out 50% because payout ratio, it should be less than 50%.
More actually, but you're welcome.
Okay. Perhaps we'll start with a few questions from our virtual attendees. So we have a question from Kufa. The fonts are a bit small. Yeah. Okay.
For Hong Kong, the revenue targets are lower than what you mentioned earlier, but 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?
Yeah. So the PBT is a function of revenue and cost, certainly. So the reason why the revenue targets have been reduced is partly because the phase of ramp-up of the onboarding has been, yeah, slower. It is going to be slower in the initial one year, for instance. But since the phase of ramp-up is slower than the phase of how fast we built up our human resources to do the work required, it's also been reduced. So that's why the projected increases in cost also have been brought down. So because of all that, then the targeted PBT number has not changed.
Okay. We have a similar question for our Hong Kong ePension business from Shuolan. For Hong Kong ePension, are there one-time project fees that will be paid out once implementation is over? If yes, how much are these fees? What is the revenue level of HK ePension business when fully ramped up beyond 2025?
Yeah. If we go back to 2022 and initial part of 2023, there was some one-off implementation fee. But those numbers were actually quite small. So for us, the main revenue really will be an ongoing service fee that we have started to see for the last four months of 2023. So this part is not one-off. It's recurring. And it's, in fact, going to increase as onboarding rate grows. And that's why we expect that, yeah, you see more than 2024.
Then in 2025, you grow compared to 2024. Beyond that, we still expect some growth as well, at least for these first seven years. But beyond 2025, the growth won't be as substantial in terms of a percentage. But it won't drop off because the overall service will continue at least for seven years.
Okay. Perhaps we can just follow up with a few other Hong Kong eMPF and also related questions from Royston. Thank you for the great set of results and more questions. Since we are now in 2024, could my experience provide guidance for the MPF eMPF revenue and PBT targets for 2026? Any updates on the ORSO eMPF services? What is the status of this at present?
The eMPF revenue and target for 2026, we haven't pinned down an exact number. We probably won't be giving an exact number. We would expect that there will still be some growth in 2026 compared to 2025 and likewise for the subsequent few years. The growth won't be as big in terms of percentage, right? Any update on the ePension part of the business? For this part of business, we're expecting that there will be some initial contribution in the later part of 2024.
Okay. For Royston, I think we have already addressed your question three. We will proceed to the fourth question. Noted that the loss for iFAST Global Bank stood at GBP 8.6 million for 2023 compared with GBP 5 million for 2022. Losses have increased despite revenue rising to GBP 12.3 million for 2023. Why is management confident that break-even can be achieved by 4Q 2024 despite the losses seem to be higher year-on-year?
So losses have gone up to a large extent because the costs have increased as we launch our new division, as we increase the resources to launch our new division and implement the launch of this new division, the digital transaction linking, digital personal banking, etc. So that's actually the key reason for that. In terms of how we expect to achieve profitability, actually, 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-based 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%, 1.25%. And the net interest income will ramp up.
So the expectation in terms of being able to reach break-even end of this year is on the basis of what we're expecting in terms of the ramp-up of the deposit base. So it's, yeah, nothing too complicated.
Yes. Just a follow-up question on this one. Let's say the rate you're paying for the customer, the fixed customer, you're paying 4.5%, right? So what are your other competitors' payout rates? And since you can get 5.2%, 5.5%, is there any limit, essentially limit, that you can't pass? So that's a cap on your capacity base.
Yeah.
And also because you are all focused on your current account, savings account, so there's a mismatch of the tenure of your asset and liability. How do we manage?
Yeah. So firstly, the question on, yeah, what are the competitors' payout rates? So the competitors, you could say these are all the traditional banks, right, because the power of deposits are actually with them. Generally speaking, if you're talking about an account where you can take the money out anytime, overnight money, and you can use it for payment, like you're paying out a bond plan, in the UK, we call it FPS, Faster Payments Services. For that, they generally pay very little, a bit like in Singapore, right? I still use DBS. I'm guessing I'm getting 0.05%. On iFAST Financial, we have our cash account.
Cash account, we're paying 2% now, right? At 2%, we actually are making a comfortable margin. So imagine that at 0.05% DBS, certainly, it's making a huge margin on that. So banks historically pay very little on this part of it. And they pay very little because they can afford to pay very little.
Money still remains with them. That has been the way the banking system works. It continues to be the case. I've always said that the banking system or banking industry, from our perspective, is this competitive part of the financial sector simply because you don't have too many new players coming in. And of course, the traditional bank and so on, they still have a lot of legacy systems and processes where that sort of discourages them from paying higher interest rate for retail customers because they feel that there's administration costs, blah, blah, blah. But in our case, we can, yeah, pay out 4.25%. Yeah. So that's the current situation. Technically, I think in Singapore, I think you can actually just I think Trust Bank is retailing at a higher rate. And I'm sure they're attracting lots of money. Trust Bank is a new bank.
They look at the number. They say, "Oh, okay. You can make good money by paying 2%." And chances are the other banks won't react in a substantial way. Your question on how big can that be? For a bank, typically, the ability to ramp up the volume, there are a few considerations there. One of the considerations, really, is a risk. So you take a deposit. What do you place it in, right, because you need to earn the interest income? So if you're lending, traditionally, of course, banks do lending. In our case, we haven't started our lending business. So what we are doing is mainly, yeah, depositing with the Bank of England. And we buy investment grade bonds. That's what we're doing.
So if you take the part where we pass the money to a central bank, that essentially is something where the capital cost is effectively rated at zero, almost zero, right, because if you buy investment-grade bonds, there's a certain risk rating for your assets. If you place it in a central bank, that's rated at zero. So in theory, you could say that you can raise SGD 1 billion, SGD 10 billion, and so on and just make a 1% spread.
And we can just keep ramping that up, that volume. So there's technically, right, no limit. Yeah. So that's the way you see it. Yeah. So that's why the ability to do that. That's why I typically say banking is actually the less competitive part of business and higher margin business, simplest product, higher margin. But of course, there's still the consideration of having to have the capital as well.
So in our case, we see ourselves as a wealth management group. But adding banking to it, wealth management group is essentially a business where fee-based, we don't need to ramp up the capital too much as the volume grows. Banking, you'll be accommodating certain parts where capital requirement is not so high. But there'll be other parts where you need to increase the capital to improve. So it's just managing the right balance. Is there any other part of the question?
Yeah. I think this one more is managing the different maturity, the mismatch of tenure of your investment and the deposits.
Yeah. So certainly, I think all this is a part of banking 101 in terms of doing so.
So in our case, yeah, the part that is sitting on overnight money, then for this part, we put—as of now—the majority of it is with bank. So there is that exact match. Then there'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. We buy investment-grade bonds mainly. And the average maturity for us is actually quite short, less than 1 year. So there is a relatively good match there.
Okay. We have now a few more virtual questions from Calvin. Congratulations on your great results. Can you please share more about the institutional customer transferring off their equities, which resulted in lower net inflows for 4Q?
Yeah. That actually is related to one company in the stockbroking business who uses us for access to Singapore Exchange. So they started the business in Singapore by routing through us since we're an SGX member. But as the volume built up, then they go directly to the SGX. And that's why there's some transfer of that. Essentially, it's actually what happened. Traditionally, the bulk of our AUA are actually coming from financial advisors or some banks and insurance, FA firm, and things like that. But I suppose, increasingly, there's that group of customers who are in the stockbroking side of the business. So they also use us on a B2B basis. So yeah. So that's basically one of the effects that we actually see.
We sort of, yeah, gave the breakdown, in a sense, also to show that the overall platform that we have, that inflow is actually quite healthy on an overall basis. So this is sort of a one-off kind of effect that you're actually seeing.
Okay. Sorry, just to go back on the bank. So suppose that the 1% spread does help the bank break even by fourth quarter. So even after the BOE pivot, so what are your plans to grow profitability from next year onwards? You mentioned loans earlier. Do you currently have the appropriate license to start issuing commercial loans?
Yeah. So we actually historically, we talk about our AUA. So we have the unit trust, AUA, ETF AUA, and so on. So we see cash as a form of AUA as well. It could come in the form of a money market fund.
It could come in the form of a cash account in, say, Singapore, for instance, where it's not on our balance sheet. But we take that as in our trust account. We pass to other banks. That's sort of AUA. Now that we own our own bank, so there's cash coming in in the form of deposits, so we see that as sort of an AUA as well for us, except that this one, we take on our balance sheet, right? Taking on our balance sheet has advantages and disadvantages. The advantage, really, is we're in a position to attract it a lot more easily because simple product. We can just say, "Well, it's a great average give out." Then the other big advantage, of course, is higher margin, right?
So if you look at our platform business, traditionally, our revenue in terms of, let's say, recurring revenue as a percentage of AUA have tended to be about, say, 0.6% or so. With cash, you are talking about typically 1% or higher. So we see, yeah, the FD is something that it's like AUA. Then we aim to grow that. And then we will then aim to consistently grow it over time. And that will give us the increasing recurring revenue. And we continue to grow from there. So that's how we see this part of business. In a sense, there's some lending. Even the buying investment products, technically, we're lending to at least the company, mostly, is sort of lending. But it's a quite efficient part of lending because we don't have to go through all the individual administration work client by client, etc.
We expect, of course, that as we move on, there will be some loan that we give. The initial service that we are talking about to roll out will be on margin financing, which is something that, as a wealth management platform, is only natural. So we'll make some margin there. So that will grow. And then as we move on, then we'll look at what are the other loan products. But we don't think we need to lend out the majority of our yeah. We'll keep we'll be relatively conservative in terms of loan-to-deposit ratio. Yeah. So the short answer to your question is, yeah, we look at it as an AUA. Then we aim to grow and then make a spread on that and continue to grow. For the margin financing, it's for the group. It's not specifically from the global bank.
It's tapping into our platform in Singapore, Malaysia, Hong Kong since the clients are there. But we bring in the bank. We give the loan.
Just following this loan thing. So in terms of, let's say, the deposit, is there any licensing requirement of this U.K. bank to take in deposits from overseas depositors? And when they extend loan liability, would you say the margin goes right? Is there any restriction on the kind of type of license that you can extend to these various businesses?
Taking in deposit, it's a full-licensed bank. So you can take in deposits from anyone around the world, whether local resident or people from Hong Kong or whichever country, as long as we do our anti-money laundering checks properly. So there's no restriction. In terms of loan, there's some, yeah, safeguards that we have to watch over. Typically, yeah, we're looking at all the, yeah, high-net-worth individuals and so on for us to actually be doing the lending.
Cool. Could you have a released question? Could you ensure proper KYC on depositors from 60+ countries around the world? What is the risk of bad actors becoming clients of the bank?
Yeah. I think KYC rule, anti-money laundering measure, and so on are part and parcel of the business of any financial institution. In fact, not just the bank. In the various countries that we're operating in, that has always been the case. Singapore, for instance, we have a few hundred thousand customers in Singapore. For each and every one of them, we have to do our KYC on the client at the point of onboarding as well as on an ongoing basis. That is part and parcel of what we need to do.
So it's something that we're actually quite used to. Singapore also have clients from various countries as well. There's no restriction in terms of not being able to onboard overseas customers. So this, yeah, is being done in Singapore. And likewise, for U.K. bank, that has to be done. The most banks tend to prefer not to have to open account for overseas customers unless the customer brings GBP 1 million, GBP 2 million, etc. That's why most banks are actually not doing it. But we see the retail business as being a segment of business that's far less competitive. We essentially need to ensure that we can do our administration, our checks, and different part of processes efficiently. The KYC onboarding, etc., there's certainly quite a bit of work at the point of onboarding as well as on an ongoing basis.
And of course, to help ourselves manage some of that better, there's the online KYC that we are actually using as well for customers from a number of different countries so that we can process the onboarding a lot more efficiently with some of these World-Check One services that will help us to ensure that, yeah, the compliance checks and so on can be done a lot more efficiently. So it's about the processes and how we can actually manage that well. But essentially, yeah, the business is there for us to do. Many banks choose not to do because they prefer to focus on the high-net-worth individual. In our case, we find a high-net-worth individual is actually a more competitive business than a retail business.
Okay. Perhaps we can address a few questions on our Bondsupermart. I would like to find out more about the Recognized Market Operator license from Malaysia. How will that license change what you are doing right now with Bondsupermart?
I suppose one way to look at it is, so if you think in terms of buying stocks on, say, SGX, so you can see the actual price today. But going forward, okay. So you have your Level 1 data on the price. You have Level 2 data, the market depth, etc. To be able to do that, you basically need to be a marketplace or 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 the bid and offer quotes into the system and then match the order. We can't do that.
To be able to allow clients to put in the bid and offer for the different bonds and then allow the orders to be matched, then you need an RMO license. Yeah. So that's why we need the RMO license so that it's like something close to an exchange. Essentially, that's what it is. So from the client's perspective, then going forward, they'll be able to see the price. They can see the bid offer price and some volume, the volume on bid offer for the different price. And they can transact straight away, right? Today, it's typically more of a request for quote, the way the business is done in the industry. You request for quote. And then the quote is given to you. Then it decides whether to buy. And then it goes through that manual process. So we want a system whereby you can see the price.
Then you just hit it, right, buy or sell, and transaction is done. That's what I would give.
So just to confirm, so how do you intend to sell the bonds? Not just iFAST Global, but from Malaysia. So does the license allow you to receive funds from Singapore or any other countries? And where will it be cleared or settled?
So the way the business will be done, that's why I gave an example of a U.S. exchange, right? So today, investors in Singapore, you're buying U.S. stocks. But you don't need to do anything in the U.S. because the broker will actually be doing that. And in fact, the U.S. exchange is having business from all over the world because there's demand for purchasing U.S. stocks. 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 the starting point. But as we move on, you can imagine that there are different intermediaries, different securities firms that we can work with in different countries that can have a similar arrangement. So that is something that can allow us to scale. Plus, of course, Singapore itself, increasingly, we're also targeting global customers. So if you have a client coming from Hong Kong, China, Malaysia, etc., open a bank account with iFAST Global Bank in the U.K., then they decide to transfer some money to our Singapore account. And then they buy. So we are able to serve global customers through Singapore.
Then when they buy the bond through Singapore, then that order will appear on the RMO in Malaysia. So that global reach is actually already there.
You mentioned that you also try to provide margin trading services via the global bank. So it won't be done on the FSMOne platform. Or you can still operate on the FSMOne platform, but yeah, global bank.
Yeah. So in Singapore, for instance, recently, we actually launched our margin financing services. So because in Singapore, we are not a bank, so we want the funding support from other banks. So actually, we work with other banks in Singapore. But at the same time, we also have our own iFAST Global Bank that can also directly lend to the end client. So there will be some of that arrangement. Right now, cost there is 4.5%.
So if you do margin trading, you'll be quite, yeah. That's in sterling. So different currency, different cost. As of today, we are probably okay. Yeah. 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 within the group, it's also easier for us to manage because there's no need for duplication of margin and so on.
Can you also comment about your stockbroking profitability so far compared to your peers? Are you performing well in the industry based on what you mean, your own understanding?
Yeah. The way we look at our business, we look at it as an overall wealth management platform. So if I take iFAST Financial, we look at it as an overall wealth management platform. You need to try to steal the core product.
Stock broking bonds, ETF, that's part and parcel. And with stock broking, what comes in is a cash account as well because clients will because we don't do contra business. So clients put money in the cash account. And we actually make a spread from that cash account as well. So we see the business from that perspective, somewhat different from what the other players in Singapore tend to look at it. Where we are today, yeah, we are clearly not the leader in Singapore. But in terms of the model that we're doing, in terms of overall service we're delivering to end clients, we're actually happy that we are able to deliver a value
-for-money organization. Okay. We have a couple of questions for our Hong Kong wealth management business from Benjamin. Core Hong Kong wealth management business PBT was static over the last two years. What is a fair assumption for the core Hong Kong PBT group from here on?
Yeah. I assume that when you say core, you refer to our historical business of wealth management. I think, yeah, so if you strip out the ePension, then the wealth management part of the business last year wasn't too exciting. In fact, I think there's some reduction in profitability of that. And the key reason for that really is the extremely poor market condition for China stocks. So that actually affected the volume very substantially, affected the AUA to some extent as well. On an ongoing basis, we still expect that that will grow, I think. But to be able to grow healthily, you want a situation where market doesn't keep dropping, right, all the way.
So as long as market doesn't keep dropping, you have a balance up and down from time to time, then we are in a position to grow the wealth management part of our Hong Kong business.
Okay. From Ryan, what's the question of the revenue guidance target distributed to Hong Kong wealth management business weakness versus ePension timing delays? And when the ePension product is fully onboarded, 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. I think both sides contribute to that.
Second part of the question is. , what level of revenue should we expect from the Hong Kong business? Oh, sorry. We have already addressed this. When the ePension product is fully onboarded, what level of quarterly revenue is?
Yeah. We're not able to give the exact detail in terms of the actual revenue for the eMPF project because there's some confidentiality requirements, which is why we have given but in order to let investors understand things better, that's why we look at it in terms of the overall target for the Hong Kong business. So we feel that that should be sufficient to help investors do their study.
Okay. From Adam Pechart from DBS Bank. For the new guidance for the PBT numbers, is also earnings factoring as well?
Yes. Well, the initial part of the eMPF business have been taken into account. Of course, beyond that, we hope to have even more business. Yeah. So if we can go that well, then that can add on to it.
Okay. We have two more questions on operating leverage and operating expenses from Lee Hui-Ming. Is there any timeline to obtain operating leverage? When do you expect operating expenses with regards to the e-Pension division to peak?
I think the mid-ramp part really is in 2024, 2025. Going to 2026, there could still be some increase in expenses together, some increase in revenue. But the pace at which that grows, yeah, it's not so much. In terms of operating leverage, I suppose as a group, we are seeing some operating leverage now, which is why the ramp-up profitability for Q2023 has been quite good, even though the revenue didn't ramp up so well. Because, yeah, in the last two years, we launched new services. We bought the bank. So we have to cover some of those expenses before the revenue timing properly. But as, yeah, our revenue ramp up more, then you start to see the operating expenses. So I suppose 2024 and 2025, we'll see more of that effect coming through market revenue.
Okay. From Andrea, other OPEX was particularly higher in the 4Q. Could we have some color on which components drove the bulk of this increase to break down of other OPEX, including advertising, tax, security, operation of ePension, and impairment loss allowance on investments in debt securities? And what does the impairment loss allowance on investments in debt securities relate to, and how much was this?
Yeah. This question, Jimmy or David, do you have any comment on the other OPEX thing?
One of the items was actually the impairment that we did for Q4. And one also, the ramp-up of the U.K. operation. So in the interval of three years.
Yeah. So Jimmy or CFO was mentioning two factors there. One is some additional expenses as a ramp-up of UK bank activities and so on. And the other one is there was some provision because since two years ago, we were holding some China bond. Yeah. Even though 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 two years, all forms of a strong company have had the financial pressure that has been brought down. So because of that, we did a full impairment on that in 4Q.
Okay. So we have one more financial-related question. What was the rationale for the drawdown of bank loans in the quarter?
I would say a few main reasons, three main reasons. One is we started a bit of a margin financing business.
But the way that's done is we take loan from other banks, and then we sort of extend that out to the end client. So you'll 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 subsidiary for the we did drawdown on certain loans, and then we injected in the form of additional equity into the bank. Third reason is, yeah, the ramp-up of the activity for ePension business, there's some ramp-up in terms of initial capital expenditure and ramp-up expenses and so on. So the ramp-up first before the actual payment actually gets received for this initial period. So that's why there was some of that ramp-up. So a combination of these reasons.
Sorry, Ken, one last question relating to the global bank. So, just want to how do you inspire because you are relatively new. How do you inspire customers to put money in your bank? And do you do marketing activities to promote more deposit taking? And have you actually rolled out the service in Singapore since it's a full license, right? Can we now open an account and then start depositing?
It's open to customers globally, including, yeah, Singaporeans who want to do so, even though we're not exactly targeting Singaporeans as a main customer. I think Singaporeans will actually find that for foreign currency, particularly, we actually give pretty good, attractive rates. So it actually makes sense as well, even though Singaporeans are not that keen. In terms of the marketing, we have done some of that, not in a big way yet, partly through social media, partly through online advertising in the U.K., etc.
We have not ramped up in a big way because the services also were in the process of being rolled out. As we roll out more and more services, then we'll ramp up our marketing more and more. And already, even with just a limited amount of marketing advertising, I think you find that customers actually come in quite readily. For banking, in a sense, there is that deposit insurance as well. So that is something that's in the mind of the customer. So in the U.K., it's GBP 85,000 per person, right? So technically, there's no technically, you could say the GBP 85,000 is sort of guaranteed. So you buy a guaranteed product in sterling, it's 4.25% or 5% or 4%. I think with 12-month deposit, 4.9%, U.S. dollar deposit, 4.9%.
Technically, it's a guaranteed product from the perspective of a client and then pay good yield and is safe and easily understood. So that's why it's a very simple. It's the simplest form of wealth management product. That's why it's quite easy for clients to actually come in. That's why we're actually confident that in the years ahead, this can make a big difference as we ramp up our marketing further, as we roll out even more services. Okay. I think that brings us to the end of our, yeah, results briefing and Q&A session. I'd like to thank everybody for attending. Thank you very much.
Thank you.