Hey, everybody. Welcome to iFAST Corporation's results presentation for Q2 2024, and H1 2024. My name is JP. I'm from the Corporate Communications team at iFAST Corp. Together with me, we have Mr. Lim Chung Chun, CEO of iFAST Corporation. I'll be running through the key summary and section one before inviting Chung Chun to carry on with section two, and after that, we will have the Q&A as well. So in our key summary, in Q2 2024, the group's net profit increased by 346.1% year-on-year to SGD 16.03 million.
That's on the back of a 72.9% increase year-on-year in our gross revenue to SGD 93.75 million, and a 93% year-on-year increase in net revenue to SGD 61.38 million. The increase in profitability was driven by contributions from the ePension division, as well as improvements in our core wealth management business. At the end of Q2 2024, our assets under administration, or AUA, increased to a record high level of SGD 22.37 billion, driven by net inflows of SGD 0.79 billion during the quarter. iFAST Global Bank's customer deposit amounts grew to SGD 646.62 million as at 30th of June 2024. This is an increase of 80.3% year to date.
This contributed to a 265.3% year-on-year growth in our net interest income at the bank, to SGD 1.85 million in Q2 2024. We mentioned this in our previous quarter as well, and we reiterate this point, that iFAST Global Bank adopts a conservative stance in terms of our balance sheet strategy, with the vast majority of the client deposits being held as cash with the Bank of England and with other banks, as well as a short-duration sovereign bond and investment-grade bonds. We have a little bit more details on this point later on. iFAST Group is steadily increasing its capability and presence as a global digital banking and wealth management group, with iFAST Global Bank as part of this global fintech ecosystem.
The group expects iFAST Global Bank to become an important growth driver in 2025 and beyond. The ePension division in Hong Kong will be an important growth driver in 2024 and 2025, while the overall wealth management platform business is expected to continue to show healthy progress. On an overall basis, and barring unforeseen circumstances, the group expects 2024 to see robust growth rates in revenues and profitability compared to 2023. For the second interim dividend for 2024 full year, the directors propose a dividend of SGD 0.015 per ordinary share, and this compares, which is higher than the second interim dividend for 2023, which was at SGD 0.011 per ordinary share. Moving on to our quarterly update slide, which is on the group's AUA.
So as you can see, the group AUA increased 18.9% year-on-year, so it's to a new record high level of SGD 22.37 billion as at 30th of June 2024. In terms of the split between the B2B and B2C divisions, it's roughly in the region of, 68% contribution from, B2B and 32% from B2C. Moving on to the next slide, which, shows the net inflows and gross unit trust subscription numbers. So as mentioned just now, in terms of our net inflows in Q2 of, this year, net inflows stood at SGD 0.79 billion, and for the full first half of 2024, net inflows, stood at SGD 1.47, billion dollars, which, compares, favorably compared, to the first half of last year.
Very similarly, for gross unit trust subscriptions as well, the first half 2024 numbers are higher than first half of last year. I'll move on to section one, which touches on the financial results before inviting Chung Chun. For financial results for the group in Q2 of 2024. Looking at total revenue for Q2 2024, it was at SGD 93.75 million, which is a year-on-year change of 72.9%. Net revenue grew by 93% year-on-year to SGD 61.38 million. OPEX grew by 50.2% year-on-year to SGD 41.37 million in Q2 . For net profit, there's a year-on-year growth of 346.1% year-on-year to SGD 16.03 million.
Similarly, for the financial results for the group, but over the first half period comparisons. So for first half 2024, total revenue stood at SGD 179.71 million. This is a year-on-year change of 66.2%. Net revenue grew by 90.2% year-on-year to SGD 119.49 million in first half 2024. OPEX grew by 48.5% year-on-year to SGD 81.54 million in first half 2024. And for net profit, it stood at SGD 30.54 million in first half 2024, which is a year-on-year growth rate of 364.8%. The next slide shows our results overview for the group for the last four years and first half of this year.
I will not run through the details. So moving on to the information that we provide as well for our non-banking operations, so that investors can also have a better understanding of the progress of the core wealth management business. So for Q2 2024, total revenue was at SGD 82.37 million. That's a year-on-year change of 64.8%. Net revenue grew by 95.9% year-on-year to SGD 56.79 million, and net profit was up 195.6% year-on-year to SGD 17.6 million. So for the non-banking operations as well, but over the first half period comparisons, so for first half of 2024, total revenue grew by 59% year-on-year to SGD 158.79 million.
Net revenue grew by 94% year-on-year to SGD 110.67 million. Net profit grew by 227.3% year-on-year to SGD 34.39 million. For the last part of this section, touching on the dividend, so for the second interim dividend, for full year 2024, so the dividend per share at, SGD 1.5 cents per ordinary share. The payment date will be on 21st of August this year. I will now invite Chung Chun to carry on with the business update, as well as our last sections. Chung Chun?
Hi, everyone. Yeah, so, on the business update, yeah, we have some slides that are somewhat similar to what we, spoke about in the previous quarter. But just to, repeat the point again, I think for the next three years, the, the priority for the group really is, firstly, make solid progress as a global digital, banking and wealth management, platform with a truly global business model. So, we keep emphasizing the word truly global, because we want to have a business model where we can basically operate from a few countries, particularly the financial centers, and particularly, U.K., Singapore, you know, Hong Kong, and be able to tap into, customers from around the world.
So that is the core thinking, and we want to be able to make good progress during the next couple of years. Second point is, as we have stated before, accelerate Hong Kong's growth. I think you have seen the in the numbers that we've reported, that that has indeed you know started to materialize, and I think we're we're gonna see further progress as we move on. Certainly effectively develop innovative fintech services that are complementary to digital banking and the wealth management platform. I think in this regard, the areas that we spoke about include the payment-related services such as debit card and the bond marketplace.
So the Bond Marketplace, we, we have, you know, received approval for a RMO license in Malaysia, a Recognized Market Operator license, so we will be operating a Bond Marketplace. We basically aspire to have something that's as close to a bond exchange as possible. So that's part of it, and that part will be, you know, officially launched in the later part of this year. The debit card is something that is in progress. I know that I already have a question over here regarding the status of debit card for IGB customer. We are basically working on it. Currently, the latest expectation is that we will be able to launch the debit card for IGB customer at the end of this year. Moving on.
Yeah, this is a chart that we have always shown about fintech ecosystem. It's a ecosystem that continue to progress as we move on. Next. This particular slide is on the iFAST Global Bank. We basically show some numbers to actually demonstrate that yeah, we have adopted a conservative balance sheet strategy. The reason why we are showing some of this information is really to tell investors that yeah, even as we have a bank within our group, some of the basic thinking that we have historically when we run our business continues to prevail.
Some of this basic thinking is essentially to have a business model where we continue to be a company that have a very safe balance sheet strategy. In the past, of course, you know, we're essentially generating fee-based income, but now we are a bank. That requires a bigger balance sheet. But even as we do so, we believe that we're able to do so in a way that is actually quite safe from a balance sheet perspective. So, we will not have some of the risks in a big way, the way some banks in some parts of the world have seen in the past.
So, as we grow, then we pin down some of these numbers here to show that, yeah, the assets that we have are actually very safe. So that is really the key thinking for highlighting some of these numbers. Moving on. This page also related to the ratio for the bank. Again, it sort of illustrates some of the points that we've thought about. We want to be in a position where we can actually have a conservative balance sheet strategy. Not just in terms of the type of assets that we hold, but also in terms of liquidity ratio, capital ratio, and so on. I think, quite often, for many startup digital bank-...
When they get into digital banking, one of the key business model really that they like to go into is to actually provide lending to what is typically called the underbanked segment. But we typically feel that the lending to underbanked segment can be relatively risky. So on our part, actually, we have a somewhat different thinking. It still revolve around accumulating AUA, but AUA now pretty much also include deposit, and that will allow us to be able to accelerate our growth in a better way. We believe that we can actually have a strategy that allow us to have capital ratios and liquidity ratios that are actually well above the capital requirement. Next. Next section is a performance trend.
I'll just touch on a few pages. Yeah, this table here shows some of the financial indicators. The first line there, it talks about EBITDA. We historically don't really emphasize on this because we always report the net profit. And we look at net profit as a key number. But just for illustration, to show where we are as far as the EBITDA numbers are concerned, I think in first half, we're at SGD 56 million, right? Operating cash flow number, that include the banking business, so you see that the number have jumped to quite a sizable level, because cash deposits start to come in, and then we deploy them in a very conservative manner.
CapEx, yeah, that actually relates to quite a bit to the IT expenses that we have to incur in terms of IT infrastructure, IT development. I suppose by now, if you look at the number, relative to our overall operation of the group, CapEx is no longer a big number. Yeah, the shareholders' equity, we have actually been growing, and the latest number is SGD 278 million. We hope to cross, you know, or hope to get to the SGD 300 million region end of this year. Next. This is another slide that we're putting in a sense to also, again, demonstrate a similar point, all right?
Which is that, we have a balance sheet that is actually quite safe, quite conservative, and we keep it quite liquid. This is despite the fact that we actually do have some borrowing now, right now in the form of iFAST, iFAST bond, particularly. I think you would have known that in June, we actually did a bond issue, issue a iFAST bond. The reason why we... The key reason why we want to do a bond issue really is because we want to increase the capital for the bank. But even as we do so, if you look at us on a group basis, we're essentially still in a net cash position.
So, okay, if you look at this particular table, it's not, we're not exactly using the word net cash, but I think we are, basically saying that if you take the cash plus the liquid assets that we have, then net of borrowing, then we are in a positive position, on that. And so we are in a pretty comfortable position. So that's a key point that we actually wanted to make. Next. The PBT margin for the group. So the PBT margin here is expressed as a percentage of net revenue. So if you look at the chart, you have noted that, back in 2022, we had some decline in PBT.
But in the last two years, we have started to improve to quite you know decent numbers again. In 2022, the reason for the decline was firstly you know there was a stronger market downturn that affect our core that led to some slowdown in our core wealth management platform business. And that happens at a time when costs were also increasing. We did acquisition for the bank, so that have some initial losses, so that led to the decline in the margin. But as we progress, then we start to have a higher profit as a group, particularly with the ePension division contributing well in Hong Kong.
Then the wealth management platform business that we have also have been growing again. Now we're in a record high territory in terms of AUA, so margins have improved. So going forward, we hope to continue to have, or we expect to have, continue to have a quite a good PBT margin. Next. Return on equity. Return on equity, first half is 22%. Again, one of the point I'd like to touch on really is that, the...
Yeah, as we, I mean, investors who have been our shareholders all these years know that we have a business model that's quite cash generative, and we can essentially have a good return on equity when the businesses are operating at a good optimum level. Now that we have gone into banking, we actually need a bigger balance sheet. But our belief is that given that part of our revenue as a group are still based on a fee-based income, so even with the bank in the group, on an overall basis, we expect that we will be able to have quite a decent return on equity. And yeah, so that's one of the point I wanted to mention.
This is a group operating cash flow. As I mentioned, it include the bank numbers, that's why the numbers have grown to quite substantial level last two years. This is a chart on the capital expenditure. I noted earlier that CapEx for us right now is not so big relative to the overall size of our business. Now, the current year forecast for the CapEx for the full year will be about SGD 20.5 million. So I will stop here. The rest are additional statistics and so on. I will not run through them. We'll move on to the Q&A section.
Yes. Yes, sure. Yeah, we'll move on to the Q&A. So we already actually have a few questions from our participants. Thank you very much. So, we'll run through that. But of course, the other way for the participants to ask questions will be to also raise hands, so you can also choose that option. But, let's start with some of the questions we already have in the Q&A. So we'll start with Reggie's questions. So he asked for an update on the efforts to have direct links to U.S. markets, and second, on the status of launching debit cards for IGB customers, iFAST Global Bank in the UK.
Yeah, on the direct link to the US market, we have made some progress. We have actually officially received the approval for a broker-dealer license in the US. But there are additional approval that we actually require, because we intend to be our own custodian, so there's additional regulatory requirement that we need to go through. So we... Yeah, we are still in the midst of that process, but certainly there's been the progress since that we have a US broker-dealer license now. Second part, as I mentioned earlier, then on the debit card for IGB, we expect to be able to make that available at the end of this year.
Thank you, Chung Chun. So we'll move on to the next couple of questions from Andrea. So, she noticed that the Q2 of 2024 taxes were lower than usual. Could we get some color on this, please? And how should we think about taxes for second half of 2024?
Is Jimmy on the line?
Jimmy is in, yeah, that's-
Yeah. Can you take this question about the-
Yeah, I think this Andrea is referring to our effective tax for the quarter to quarter. So of course, last quarter, she saw that it's quite high, because we do on a blended, because it's a consolidated basis. And then when you compare to this year, this quarter, right, it's lower. And then, because we made progress, profit in this quarter itself, that's why you see a lower tax rate by itself. And then, of course, in the second half, as we progress to make more profit, right, then we will see increase in our tax payable in the coming second half also.
So, just to add on, I think, currently as a group, we are not, if you look at the overall group number, we are not, our tax rate is high relative to the normal corporate tax rate, and the reason for that is because we're still making losses in some part of the businesses. So that actually increases the overall effective tax rate on a group basis. But if you look at individual country, then I think, Hong Kong, Malaysia, we are paying the normal corporate tax rates for those countries. In Singapore, we have a slight tax break, so we're paying slightly lower tax rate, tax rate than the normal corporate tax rate.
On a group basis, because of the fact that certain countries are making losses, that's why the numbers tend to be high. But as we move forward, as the overall base of profit grows, then the effective tax rate as a group can improve.
Yeah, thank you. So Andrea has another question, which is, on the ePension part. So her question is this: MPFA announced that the trustee onboarding has commenced. How can we gauge the pace of iFAST's revenue recognition as the trustees get onboarded?
Our revenue recognition will increase as the overall onboarding level goes up, but it's not a number that changes every month or every quarter. So I think probably the way to look at it would be, yeah, first three quarters of this year is probably kind of a similar kind of yeah revenue. And then that starts to increase to a higher level, maybe end of this year and going into next year... and then as we go into 2026, then there will be, you know, some additional increase. So that should be the way to look at it. So it's not a number that increases every month or every quarter, but more on a step basis as we move on.
Lee Keng has a question as well on the ePension, so we'll probably take that now. So can we get an update on the progress of the ePension project? How is it progressing versus last quarter? Should we be expecting a tapering of operating expenses going forward?
The progress, yeah, of the project, you know, has been quite positive. I think as it has been announced by MPFA, the project is officially operating right now. So in terms of onboarding, the first trustee has officially been onboarded. I think end of this month, we expect the second one to officially be onboarded. So that's something that is progressing. As far as expenses are concerned, we do expect that there will be some increase in operating expenses in the quarters ahead, as we ramp up the overall headcount further for the project, and so on.
But as I noted, yeah, so expenses will go up, but along the way, during certain period, there'll be some increases in the, yeah, revenue as well. Yeah, so that's why the... As far as the overall ePension and Hong Kong business is concerned, I think the kind of guidance that we gave previously, that remains.
Thank you, Chung Chun. We have another question related to ePension, so it's from Royston, but it's specifically on the ORSO ePension. His question is: Can you please provide an update on the ORSO ePension launch? What is the status of this? Is the timeline for the beginning of contributions still slated for Q1 2025?
Yeah. We're expecting the beginning of contribution should happen in Q1 2025. That remains the same.
Okay, we'll move to Glenn's questions, which are a mixture of ePension and core wealth management. So his first question: Could you give a breakdown on how much the ePension and core wealth management platform business contributed to the growth in profitability? That is, what percentage did each stream contribute, and will this proportion continue for the rest of the year?
I think if I look at the numbers for the Q2 or the first half, then the bigger increase in contribution was from the ePension, certainly. But of course, the core platform business also improved. So yeah, we don't give the exact breakdown in percentage, yeah, because of some confidentiality requirement. But if you look at the numbers in terms of the increase in Hong Kong versus increase for the group or for Singapore, I think that give you some idea that the ePension has been a bigger driver, yeah, during the last six months. So that for the year as a whole, then certainly ePension will continue to be a biggest driver. Yeah, so that should be the way to look at it.
Glenn's other question, it's: What are the main products seeing growth and interest in the wealth management business? Any particular reasons why, there's a sudden uptick, and is it sustainable?
Keith can go show our AUA, Group AUA chart. Okay, yeah. Yeah, so if you look at our Group AUA chart, all right, and you analyze the trend, then you actually find that in the long run, generally it's on a uptrend. But from time to time, there's a dip, all right? And if you look carefully, you find that that dip typically coincide with a period where financial markets or stock markets go through a very bad patch, right? So if you look further back to 2008, for instance, the global financial crisis actually led to a big selloff down in stock market, so that led to quite a significant decline in AUA.
But subsequently, things start to recover, as things stabilize, and then the momentum resume. And along the way, from time to time, you see some of that. So 2022 was a period where we actually saw quite the financial markets going through quite a bad patch. I think we saw the selldown in the overall tech sector. The, after a booming, you know, in year 2000, 2001, I think by 2022, we saw quite a big selldown in the overall markets. I think globally were actually somewhat affected. I think if you look at the China financial market in the last two years, it's been pretty tough as well. So as...
Of course, even bonds, we're actually seeing quite a bad patch in 2022. So as financial markets were going through the tough market condition, then AUA took a hit. That's why it dipped, and that affected our group profitability. But subsequently, when things stabilized, then you find that the overall AUA start to improve because the net inflow continued to come in, or net inflow then recover from the depressed level. Then that start to drive the overall growth of the AUA again. And the other part would be as equity markets start to recover, then that will also be bring additional upside to the AUA number.
So I think in the last couple of quarters, you start to see that, yeah, those kind of recovery trends start to actually happen. That's why the group AUA numbers are growing again, are hitting record highs again in the last couple of quarters. So that is essentially the effect that you're seeing. So as far as which asset class is concerned, I think we're seeing growth in all the various asset classes. The equity portion, including equity funds, as I mentioned, 2022, they went through quite a tough patch, and first half 2023 also wasn't easy. But that have started to grow. And then things like bonds, ETF, et cetera, they're also growing.
Yeah, so that should be the way to look at why the AUA start to resume the growth again.
Thank you, Chung Chun. So we have a participant, Reggie, who has raised his hand. So, Reggie, can we get you to unmute and ask your question? Reggie, would you like to ask your question? I'm not sure whether you may be caught. I just mentioned... Let me just check again. Yeah, I think Reggie no longer raised his hand, so, yeah. We don't have any more questions in the Q&A box as well at this point. Maybe just one more round of questions from any other participants. Okay, we have a couple of participants raising their hands. We'll start with Benjamin.
Hi, good morning. Thanks, Chung Chun and JP, for the opportunity to ask questions. Yeah, I just wanted to check on your, the margin financing product that you introduced at IGB, in Q2. I just wanted to check whether you'll be able to share the margins that you're getting from this product, and how big is the portfolio currently, and how big do you expect this to be, next time? Yeah.
Mm-hmm. For us, the margin is around about 1.5%, I would say. That should be a way to look at it. The number is not a big number yet. It's growing steadily, but it's not a huge number. I think we intend to sort of let that grow slowly. You're probably looking at the numbers being in the region of SGD 20-30 million currently. We roll out this service, but we don't see this as something that will become a key driver for our business.
Neither do we intend for it to be a key driver, but we feel that there's a service that some of the client would like to have, particularly the higher net worth client and so on. So we basically want to have this service to have a more complete service for our overall platform. But we, yeah, typically don't want to encourage to higher a leverage, so we do not see that as the major driver growth going forward.
Okay. Thanks, Chung Chun. Are there plans to introduce other lending products in the future as well? Are there any plans in the pipeline?
Well, yeah, we have a full licensed bank, and as we grow, move forward, as our deposit base continue to grow, we expect that there will be other lending products that will be that we will be introducing. But we will continue to adopt the thinking of having lending strategies that are sufficiently safe. We won't take too much risk, and we are not rushing in a big way, because we want to let the deposit base build up well. And yeah, we want to also be able to have a deposit base whereby our cost of deposits are sufficiently low enough, so that when we do start lending out more, then we also can be competitive for the very safe client.
So that is a broad thinking that we have. So we are not rushing to roll out products that have very high interest rate, because typically to actually do so, then you need to have customer base that, you know, may not be the prime customers that you actually want. Yeah, so the short answer to your question is, yes, we expect to have other lending products, but it's not something that we are going to rush to introduce at a very rapid rate.
Right. Thanks, Chung Chun . I have just two more questions, very quick ones. The next one is on whether was there a recent capital injection into the global bank, and at what valuation was it at, if you can share?
There is a recent capital injection into the global bank. We did that at the end of June. And when we inject, we typically inject at the book value of the bank. Yeah, so if you look at it at the bank level, at the subsidiary level, that is at the book value. So our effective stake in the bank has steadily gone up. We expect that eventually we'll own 100% of the bank.
Understood. Okay, the last one is on the Hong Kong guidance. I think, so far in the first half, your PBT for your Hong Kong business has already met 62%-63% of your guidance. So the question is, what is holding you back from revising this guidance upwards? I think last quarter you were pointing out that you were a bit more cautious on the Hong Kong and China business. But then, I think over the last quarters, we have seen very strong growth in the AUA, even on the wealth management side. So just want to get your thoughts on what's holding you back from revising this guidance upwards, and if there's any possibility of doing that in the next few quarters. Thank you.
So yeah, based on the results of the first half, our current expectation is that for 2024, we should exceed the guidance that we have given on the PBT level for Hong Kong. I think we should be able to, yeah, quite comfortably be able to exceed that guidance. But we actually intend to just leave the guidance, which we last updated in February 2024, as it is. We don't intend to officially change that guidance. Yeah, even as we currently expect that we should be comfortably exceeding that number.
All right. Just one very quick follow-up. Do you think... I think this is very positive, 'cause now that you're mentioning that you feel that you can exceed the guidance, but just from, on this change of your, like, slightly more positive stance, do you think it's coming more because the ePension contribution is coming in better? Or is it because the Hong Kong core wealth management business is exceeding expectations just because the past few quarters, the growth has been quite strong on the AUA side? Which one is the main contributor there?
I think when we did the guidance, we also provided some buffer for the 2024 number. So I suppose that's the reason why we're able to... Yeah, one of the important reason why we're able to exceed the guidance. And yeah, so when we did the guidance, we felt that it's prudent to be able to allow ourselves some buffer. That's the thinking that we actually had.
Okay, got it. Thanks, Chung Chun. Thanks, JP.
Yep. Thanks, Benjamin. So we'll move on to another participant who had raised hand. So that's Xian Liang. Xian Liang, would you... Yeah, I'd like to-
Yeah. Hi, thanks. Can you hear me?
Yes, we can hear you.
Okay. Thanks so much for the opportunity to ask questions. My question is regarding the bank. Could you just give us a bit of a understanding as to who are the main depositors, which country are they from, and what are the main currencies that they are depositing their money in?
Yeah, so for the bank, we have our Digital Personal Banking division that is currently having the biggest source of the deposit inflow. So if I take the Digital Personal Banking division and talk about the source of deposits, so for this division, about two-thirds of the deposits actually come from non-U.K. residents. So U.K. residents contribute about one-third of the deposit base. Two-thirds actually come from non-resident. The non-residents they are contributing the part of it come from Asia, currently. The single biggest market that contribute to deposit is actually Hong Kong for us. I suppose that's happening partly because of the historical linkage between Hong Kong and U.K.
So Hongk ongers do have a lot of confidence about UK, and I think there is also an increasing level of demand, all right, from Hongk ongers to actually have some of their wealth or assets or bank deposits outside Hong Kong itself. So that is actually contributing quite significantly to that demand. Yeah, so Hong Kong is the single biggest, and we also have depositors from other countries like China, Malaysia, some from Singapore, not a big percentage, but there are some from Singapore. And then the rest are spread out among quite a lot of different country, each of them contributing 1% to the overall number.
The official number of countries where we have customers coming from currently stands at around 90 countries. But of course, the top few will contribute to the bulk of it right now, but it's a list of countries that's expanding, and over time, we do want to continue to have the broader base coming from different country. In the UK, currently is one-third of the numbers. But we actually feel that where we are now, we are actually still making a very, very small impact in the local market. But I think the potential from the local market is definitely huge and tremendous. But to be able to be more successful on the local market, then our services need to be...
We need to roll out a more complete service. So one of the important ones will actually be the debit card, so that's a work in progress. We hope to be able to make that available end of this year. So when that is available, then we basically have a situation where we're able to provide a current account that pays one of the highest interest rates to the customer. Because most banks, I think they tend to. I think that tends to be a case in Singapore as well, and certainly in U.K., and in, I think, most countries.
The portion of deposits in current account, savings account, I think typically here they call it CASA, that tend to be very little interest rate tend to be passed on to the client. I think for historical reason, because historically, the current account money, right, has a higher administration cost and so on. So banks are used to paying, passing on very little, and that practice continues till today. But in a digital world where we can do the business efficiently with the use of technology, there's no real need to penalize a customer so much just because they are putting their money in a current account instead of a fixed deposit.
Yeah, so when we are able to, when we have rolled out our debit card services, then, then that benefit will become a lot more obvious, and then we expect that, we can make a bigger impact in the, residents market as well. So yeah, so in short, I think we, we want to be able to grow, from, customers from both, onshore, within the country, the UK resident, as well as, people from, all over the world who, who, who see, iFAST Global Bank as a, a, a good place to, to actually maintain the, a bank account with a deposit in different currency.
In terms of our currency, the biggest deposit is still in sterling, but I think we're talking about that contributing for probably about 60% of the deposit. The second biggest will be US dollar. So that's contributing probably over 20% of the deposit base for DPB, for digital personal banking. And then we have other currencies, Hong Kong dollar, the Singaporean dollar, and so on, that also contribute. We have just introduced a yen account as well, by giving zero, but the positive thing is not negative. So in terms of breakdown currency, it'd be sterling, followed by US dollar, followed by Hong Kong dollar currently.
Thanks so much. That's very helpful. Could you just share a bit about the... How do you fund the deposits? Like, do you easily pass it on to another money market fund so that, you know, iFAST doesn't need to pay from, you know, incur negative margin from this? And then the follow-up question to that would be, how should we think about your group ROE? 'Cause as the bank grows bigger, you know, bank ROEs are typically, I don't know, 10%+, so how should we think about your profile ROE as the business starts to scale? Yeah. Thank you so much.
Keith, can you go to the page on the... Yeah, correct. So this particular slide actually shows what we shows the assets of the bank, all right? So we bring in the deposit, so then as you mentioned, we need to place the deposit somewhere, right? So that we earn a spread. So if you look at these numbers, you will find that the biggest challenge is in fact with the central bank, Bank of England. That's where it is currently. So we have a cash with central bank, then we have a sovereign bond, other government bond. Then we have quite a sizable portion of investment-grade corporate bond. Short duration, essentially. Short, I think averaging just below one year currently.
And then we have some that we place in money market fund. That's where we are currently. So as you can see from this table, that is actually being handled in a conservative manner. And yeah, of course, to be able to take on the deposit, and then the use it in a conservative manner, and yet make a decent spread, right? I think it requires that we are able to have an average deposit cost of deposits that is not too high. And in our case, that's... We're able to do so because we are aggregating deposits from various individuals. We don't just focus on high-net-worth individual, or corporates, and so on. So we take deposits from many different individuals, and in different currency.
Especially if you take the current account equivalent part of a deposit, we are in fact paying good deposit rates relative to most of the banks, right? Even as we are able to have a cost of deposit that's on average not too high. Yeah, so that's where we are right now. The second part of the question on the ROE. Yeah, so if you look at most banks, what you would notice is that most banks have a majority of their revenue or net revenue coming from net interest income. So that's basically from the deposit and then lending it out.
I think banks typically have net interest income contributing to 60% or 70% of their overall net revenue, right? So that's... So they mostly start with high net interest income, and then they want to build the non-interest income, the fee income part of the revenue, so that they are able to have a better ROE. So that's a typical stance. But you look at iFAST. iFAST actually starts the other way, all right? So we actually start with 100% fee income, right? Before we have our bank, then we basically have 100% fee income that doesn't require our management. So today, as well, you find that the vast majority of our net revenue is also still fee income.
In fact, even in the years ahead, we expect that the fee income will continue to be the majority of our net revenue, of our revenue. It's not just the ePension business, but and the core wealth management platform business is essentially fee income. And even as we grow, for the bank, even as the bank grow, deposit base grow, we actually expect that there will be some spillover benefit that we'll see coming from iFAST Global Bank to the other part of the platform. So, for instance, some customers that have opened a bank account with us in iFAST Global Bank, they subsequently open an account with us in Singapore as well as Hong Kong.
And then, you know, there are some assets that also gets passed on to our platform in Singapore or Hong Kong. Reason being, because that's where we have a complete wealth management platform. Yeah, so as we move on, then we'll get this effect whereby, yeah, we see the different parts of the platform, the different country as, you know, increasingly having synergistic benefit. Yeah, so the thinking therefore would be that it's not just the net interest income that will grow a lot more. I think the non-interest income will continue to grow. So we expect that a majority of our net revenue will continue to be fee-based.
Yeah, so in other words, you know, since it's going to be fee-based, I think, on a majority basis, then we should still be able to enjoy quite a good ROE compared to most banks. So that's the thinking, and that's the planning as well.
Okay, great. Thank you so much. That's all from me.
Yep. Yep, thank you, Xian Liang. So, we'll move on to some of the questions we have received from in the Q&A box. So we'll start with Kelvin's question, which is: Is IGB still aiming to break even in 2024?
IGB is aiming to break even in Q4 2024. So that's that continues to be our current target, to break even in Q4 2024, but not the year as a whole. The year as a whole, we certainly will still be making a loss, but we're talking about on a quarterly basis.
We'll move on to Lynn's question: Can you help us get a sense of the current challenges of the banking business, just to gauge progress going forward?
I think the challenges of banking business, I would say that. Yeah, so if you look at the bank that we have, the core business for the bank when we acquired has been the remittance business. So we have the brand, Ez Remit. So there's a business that have been there, that actually bring, you know, fee income for us. That part of the business continues to be there. But I think from quarter to quarter, then you sometimes find that there's some fluctuation in the number. It's not as steady as if it's a net interest income. But that continues to be there.
You'll see some volatility, overall, but we continue to aim to be able to grow this part of the business. Won't be the biggest driver, but it is an important part of the service of the bank. Then the other division that, as of today, contribute the biggest portion of deposit would be our digital personal Banking. The current challenge, I would say, the starting point really is that this is a relatively unique business model. Most banks around the world don't adopt this business model, despite the fact that for us, it's very clear that this is a huge opportunity. It's a blue ocean opportunity.
I think most banks, including startup banks, tend to try to enter the business by having red ocean strategy, then they burn lots of money, subsidize the clients quite substantially so that they become the client at the start and so on. Hoping that eventually, they'll make money, and then you see banks making losses of SGD 300 million a year. Those are quite common. For us, we don't throw money the way, you know, other banks do, or the way other startup banks do. Our cost of setting up a technology tend to be a lot more efficient, a lot lower than the other startup digital banks. Yeah, but in the business model that we adopt, are relatively new.
So, so if it's new, then there are just some of the different issues, different dealing issues and so on, that we actually need to sort out. That's part and parcel of building a new business, especially one with a new business model. But we see that as yeah, part of building business all these years. I think most of our business that we built in the last 24 years, they tend to be a new business model as well. And that's why you- we also have fewer competitors, and then we can, you know, steadily go on the path that we want to build. Yeah, so that's how we actually look at the banking business.
So challenges, yeah, there'll be some issue here and there, but I think that's part of the journey that we'll go through.
Thank you, Charles. We have one last question from our participants, so it's from Reggie. Any update on the payment institution license iFAST hopes to secure?
We are, yeah, currently in the process of applying. There is a bit more progress, but I think it's still a process that we have to go through, and we hope that we can secure that by first half next year, hopefully.
Okay, we don't have any more questions from our participants, at this point.
Okay. So with that,
With that, we can maybe bring the briefing to a close. Yeah. Thank you so much to all the participants for joining us today.
Thanks, everyone. Thank you.