Hi, everyone. Welcome to iFAST Corporation's Third Quarter 2026 and Nine Months 2026 Results Presentation. I am JP from the corporate comms team. From the iFAST team, we also have our Group CEO, Chung Chun, and our Group CFO, Terence, with us. We also have members from our corporate comms and finance team. I will run through the key summary, as well as the business update before having Terence go through the financial results, and thereafter, we will have the Q&A session. I will start off with the key summary. In third quarter 2026, the group posted a 24.5% year-on-year increase in net profit, which stood at SGD 32.37 million. This is on the back of a 23% year-on-year increase in total revenue to SGD 167 million.
The increase in profitability was driven mainly by the group's core wealth management platform, as well as our bank in the U.K., which is iFAST Global Bank. The group's Assets Under Administration, or AUA, increased 20% year-on-year to a new record high of SGD 36.76 billion at the end of third quarter. Our net inflows in third quarter 2026 was a healthy SGD 1.24 billion. iFAST Global Bank built on its first full year of profitability in 2025 by reporting a 964% year-on-year increase in pre-tax profit to SGD 3.29 million in third quarter of 2026. The sharp increase in profitability was achieved on the back of a 67% year-on-year increase in net revenue for the banking business. Both the digital personal banking division as well as the business banking division contributed to the good growth rates in our bank.
The group is on track to report robust growth rates in revenues and profitability in 2026, with net profit in the first nine months of 2026 having grown by 34.4% year-on-year to SGD 90.27 million. iFAST Global Bank's pre-tax profit is expected to exceed SGD 10 million for the full year of 2026, which will be an increase of over 200% compared to the SGD 3.1 million in 2025. Looking ahead, the bank is expected to play an increasingly important role in driving the group's revenue and profitability growth. The group continues to work towards an AUA of SGD 100 billion by 2030, which will imply a compound annual growth rate or CAGR of 26.5% or higher over the next four to five years. The group is targeting an improvement in overall profit margin in 2027.
As our profitability continues to improve and our shareholders' equity continues to grow, the directors are comfortable with gradually increasing dividend payouts while maintaining flexibility to support future growth opportunities, capital requirements, and business needs. For the third interim dividend for FY 2026, the directors declared a dividend of SGD 0.032 per ordinary share, which is 39% higher compared to last year. On the next slide, most of the data here have been mentioned. The only one to just highlight will be the EBITDA number, which is at SGD 51.59 million in third quarter 2026, which represents a year-on-year growth rate of 22.8%. For our Group AUA trend, as mentioned just now, it is at SGD 36.76 billion. It is a record high. It is up 20% year-on-year. On a Q-on-Q basis, it is up 1.74%.
The contribution from our B2B and B2C divisions are respectively, SGD 23.6 billion for B2B and SGD 13.16 billion for B2C. About 64% of our group AUA comes from our B2B division, with 36% coming from our B2C. Both divisions have grown well, with B2C growing at a slightly faster pace year-on-year of 23%. The next slide shows our AUA breakdown by markets and products. I think if you look at the AUA breakdown by markets, Singapore remains the largest market at 68%, followed by Malaysia and Hong Kong at roughly about +11% each, and 8% composing of China and our U.K. bank business. In terms of products, unit trusts remain the mainstay in terms of the contribution to our AUA, so it has a 55% share in terms of our AUA, followed by stocks and ETFs.
If you look at this pie chart, you will notice that stocks and ETFs have been growing at a faster clip compared to the other products in our ecosystem. The net inflows trend, I talked about the third quarter number coming in at SGD 1.24 billion. For nine months of 2026, our net inflows stand at SGD 3.8 billion. Year-on-year for third quarter, that is up 2.3% for nine months in terms of net inflows. If you look at our unit trust numbers, in terms of the subscription, for nine months, we are at SGD 10.43 billion, which is up 33% year-on-year. I think for each of the quarters this year, we have done consistently over SGD 3 billion in terms of unit subscriptions. I will go to the business updates and highlight the key points.
I think I mentioned about the bank's progress and report card, which came in strongly. Looking at this slide, in terms of the profit and loss, third-Q PBT for the bank at SGD 3.29 million, that is up year-on-year by 964%. For nine months of this year, PBT stood at SGD 5.9 million, which is a year-on-year increase of 193%. In terms of some of the observations we have noticed from the bank, I think the sharp increase in profitability, we have seen that coming from both, as I mentioned just now, from our B2C division, which is the digital personal banking division, as well as our B2B, which is the business banking division. In terms of the profit expectation, the bank's top line growth puts the bank on track to exceed pre-tax profit of SGD 10 million for the full year of this year.
We have previously communicated that the bank targets a net interest margin of 125-150 basis points, which reflects the deposit-taking side of the bank's business. If we include the non-interest revenues such as fee income from our remittance business, the bank's overall targeted revenue margin is higher at 200 basis points. The other development at iFAST Global Bank is that the bank is in the midst of broadening the reach of its multi-currency debit card to seven markets. In March 2025, we announced that the debit card was launched in iFAST Global Bank, but it was just for U.K. customers. I think this is a broadening of the service for more customers globally. In this case, to customers from these seven markets are mentioned here.
For the dividend information, for that quarter, I mentioned just now, SGD 0.032 per ordinary share, so that is 39% higher year-on-year. For FY 2026, we had previously also communicated that we are looking at expected dividend of SGD 0.12 or more, and that would be a year-on-year increase of 43% or higher for FY 2026. The next slide shows some of the additional details regarding the dividend schedule. Payment date will be on 19th of November 2026. I will wrap up with some of the statistics here. I will not run through everything for the individual markets updates. I mentioned just now that AUA was at a record high for the group. If we look at the different individual markets, it was a record high quarterly AUA for almost all of them, Singapore, Hong Kong, Malaysia, and the U.K. The only exception was China.
You can see the various growth rates for the business divisions within each of the wealth management centers. I think if you look at Singapore, for example, the B2C did pretty well, 22% year-on-year increase in AUA. If you look at Hong Kong, the B2B also had a pretty stellar year-on-year growth rate in terms of AUA at 22.5%. For Malaysia, if you look at our B2B, iFAST Global Markets division, as well as B2C, all three actually grew pretty strongly year-on-year. Of course, the U.K. business saw the highest growth rate Q-on-Q in AUA at 12%. The deposits, AUA has exceeded SGD 2 billion for our U.K. business division.
I will now invite Terence to carry on with some financial results.
Yeah. Thanks, JP. A very good morning to everyone. I will just take you very briefly through some of the key highlights of the financials. If we can jump to slide 17. Right. This shows the third quarter performance year-on-year. I think, you can see all the measures of profitability, the revenue, total revenue, net revenue, PBT, and of course, net profit, all increasing more than 20% year-on-year. This is a very good reflection of the kind of progress that the group has been making, on the wealth management business as well as the banking business, which I think you have heard some points about previously. In the next slide, you will see that this is the nine-month performance, so very similarly strong performance. I think the same measures all up in excess of 30% year-on-year.
Right, so very good growth and profitability for the group, driven by, again, those same reasons and factors. If you jump ahead, I guess this is more of the progress over the years. You can see these numbers, right? I think the main observation there is that if you are looking at whether it is net revenue, profit before tax or net profit, they are all approaching levels that we have achieved for the full year of 2025, right? This is just nine months of performance. I think it is very clear that we are on track, right, to deliver the very robust growth rates in both revenue and profits that we have been highlighting, right, in the previous quarter as well as in this quarter. I would like to spend a bit of time talking a bit about the geographical segment breakdown, right?
Just to give you a bit of color in terms of how the different countries and business lines are progressing. I think the first part, you have heard about the very strong wealth management growth. I think for Singapore and Malaysia, these are of course very pure core wealth management businesses. You can see very good profit growth there, both for nine months as well as for the third quarter. This is a very good reflection of the kind of operating leverage because these markets have definitely been benefiting from the strong growth in AUA. That has translated to very good net revenue growth. And of course, the profit growth you can see are much stronger than those revenue rates of growth. That is the first comment there.
I would like to highlight also for Malaysia, I think JP also pointed out a few of the divisions have done really well. I think Malaysia and the whole group, yeah, very strongly, I think almost 30% year-on-year in terms of the AUA growth. I think for Malaysia, there was also an added benefit of some IT development revenue. They actually added to the overall revenue and profitability for Malaysia. You are seeing quite exceptional performance there. But also just to highlight that if we strip that out, then Malaysia has also still demonstrated very good profitability and revenue growth, even without that addition of this IT development income. Just moving on to talk about Hong Kong, I think you can clearly see that while we have done really well even on the nine months or year-to-date basis, so profits are higher.
I think just want to point out for the third quarter why there is this bit of, I guess, a flatlining or slight dip in the profitability. Probably just want to remind our investors here that for Hong Kong, the business is not purely wealth management. There is a large ePENSION division inside that is a significant revenue and profit contributor, especially over the past couple of years to the group. For the Hong Kong business, I think what we have highlighted previously was we had an addition of headcount since I think the second quarter of 2025. That has continued all the way till the middle of this year. So clearly the cost base on the Hong Kong business has increased by quite a fair bit compared to the year ago period.
But I think just also want to point out that we have also mentioned that headcount has peaked in the middle of this year. If you look at our third quarter staff cost line, which we report every quarter as well, you will see that that line has actually flat. There has been a flatlining of staff cost there. And on a Q-on-Q basis, actually, that measure is down about 3%. I think clearly, the headcount has peaked already, and you are not seeing these further increases or large increases on this particular expense item. I just want to also highlight the China operations. I think China, on an AUA growth basis, has done really quite well. Even though it is not at record highs for the end of the third quarter, but it is still up in excess of 50% year-on-year.
That has given us, I guess, very strong footing to get towards a more break-even situation eventually. I think you can see the losses narrowing on the Hong Kong geographical segment. Moving on to the U.K. This is our banking operation. I think we have heard a bit of detail earlier from JP. I think there are a couple of things that we have mentioned new in this quarter. I think we have been talking about this net interest margin of 125- 150 basis points. I think the further clarification we have given here is that that is not the overall margin we expect on the bank. We are actually saying the bank, we are targeting something like 200 basis points if we include the fee income component. The bank has done really well.
If you look at our year-to-date numbers, and if you look at the recurring income base, I think if you look at that against the deposits or the average deposits over the period, I think the overall margin has been in excess of about 2.5%. I think the bank has done really quite well this year. At the same time, just looking at the recurring income side, that margin is probably in excess of about 1.5%, 1.55%. Total net revenue for the bank in excess of 2.5%. I think the recurring to non-recurring split of the bank is currently about 60/40. These are some of the highlights for the different businesses.
Just want to point out also the tax expense line. I think this is something we have mentioned in previous quarters. Tax expense is not growing as quickly as profit before tax. That is really because we are recognizing a bit of a deferred tax asset related to past losses at the iFAST Global Bank entity. Now that the bank has turned profitable, we are recognizing a deferred tax asset that actually reduces the tax expense at the group level and accrues to net profit after tax.
Okay, so these are some of the things I just wanted to highlight, and probably pass it back to JP and we will go into the Q&A.
Thank you, Terence. We will now move on to the Q&A segment of our presentation. It is a hybrid presentation, so I think maybe what we can do is to invite our investors in the boardroom to perhaps kickstart with any of the questions you have, and we would then also invite those online to either raise hand or type your questions for us.
Maybe just to zoom in on the bank. On the remittance business, can you give us a sense, where are you seeing the most flows? Is it like sterling to yen or sterling to SGD? And, Terence, just now on your comments, split between recurring and non-recurring for the bank, what will you classify as non-recurring? Because a business like remittance also tends to be recurring after a while.
Okay. I will take the second question first. The bank, I think recurring income is quite clear-cut. This is the net interest income component. I think one of the changes in the way we have presented these numbers in the recent quarter is also to add on this FX related impact due to certain hedging activity that adds on an interest rate differential. I think this is related to, I guess, some of the loans business where the funding currencies are not the same as the local currency, and therefore there is a hedge implemented, and this actually accrues to recurring income. This is part of the deposit-taking business. The non-recurring income is related to FX revenues, remittance revenues, and like you rightly mentioned, the EzRemit division, that is also a very large contributor on the fee income side of things.
That is actually the largest component of non-recurring revenues for the bank. The earlier question on the kind of currencies, I think the currencies, we explained a bit about the remittance operations. I think the way we look at it is there is origination done and there is also termination done. I think the termination is in the local currencies of large remittance corridors. I think, if you are aware, some of the largest corridors, at least in Asia, South Asia, probably the likes of Pakistan, Bangladesh. India is also a very large remittance corridor. So those remittances will be paid out in those local currencies. The funding currencies are actually in the GCC currencies. These are all currencies that are essentially pegged or very closely linked to the USD.
In a way, that is where the remittances originate, right? And then the payouts are actually in those local currencies of the remittance corridors. Hopefully that clarifies.
So if I may follow up on the bank. I will assume that the big jump in profit is also largely driven by operating leverage. When I look at your last year 2025 numbers for the bank itself, your cost income ratio is about 90%. Your cost base is about GBP 18 million. How should we expect this cost base going forward, and the kind of cost income ratio that you are targeting?
Yeah, so the bank clearly is in the initial years of profitability still. I think we expect that the ramp-up in profitability can be quite rapid from where we are. But in a sense, we are still some distance from the optimum. We do have our internal planning in terms of how we want to target our cost to income ratio. I think for the current year it is still, is it something like 70%, 80%?
Yeah. I mean, the cost to income is probably about 80%.
80%, yeah.
Thereabouts.
But internally, we look at it and we say, okay, let's say by 2030, and in our scenario planning, we say, okay, maybe we can achieve a deposit base of say SGD 15 billion. Right? And when the scale has gone up at that kind of a scale, what kind of a cost income ratio should we be targeting? We feel that we should be targeting a cost income ratio of 35%-40% at that point in time. The banking business in a sense for us, our model is, I would say, relatively straightforward relative to most banks. Yeah, as the scale builds up, I think the cost income ratio can improve quite significantly, and then we get the benefit of that flowing down to bottom line.
So maybe last one from me. The way you're investing on the asset side is still mainly going to be bonds, money market funds. Do you expect to be lending anytime soon? I think that's one slight on image. Do you expect to be lending?
We currently do have some lending, and that is essentially in the form of product financing and premium financing. Product financing, the margin financing fund, collateralized on the stocks, UT, ETF, et cetera. And premium financing, that's collateralized on the insurance.
Sorry, I mean for the bank.
Premium for the bank. The bank is actually the main lender for this part of the business, because the client will open an account with the bank, and that is actually doing so. I will say that maybe by the end of this year, you will be looking at loan to deposit ratio of +20% for the bank. That is where we are. It is essentially these two category of loan, and then the rest we invested in investment grade bond, government bonds, Bank of England, et cetera. That is where things are.
Thanks, Tang Jie , for your questions. We have someone who raised hands from our Zoom session. I think it is Jayden.
Hi, Jean. Can you hear me okay?
Yes, we can hear you, Jayden.
Great. Yeah, thanks for the opportunity, and well done on a solid quarter. I just wanted to ask a bit about the cost side and especially on the Hong Kong side. I think the overall OpEx was pretty steady versus the second quarter, and I think the Hong Kong profitability was a bit lower year-on-year. Can you sort of remind us what the expectations are for the evolution of costs now that we're sort of through all the bulk of the ePENSION sort of ramp-up? It'd be great to have some views there. Thank you.
Yeah. Jayden, maybe I'll just rephrase a little bit. I believe you're asking about the evolution of cost for our Hong Kong division, especially with ePENSION in mind, because I think Terence was giving some colors just now on how that has been changing, especially Q-on-Q and year-on-year.
Yeah. Thanks, Jayden. Yeah, sorry, couldn't really catch the question in full. Yeah, so I think the evolution of costs at the ePENSION division, which is related to Hong Kong, right? So I think Hong Kong, as I explained earlier, there's a wealth management business, but of course the ePENSION division is quite a sizable part of that segment. So I think the main cost we're talking about on the ePENSION business is really headcount related, right? So I think that's where you're seeing most of the cost escalations on a year-on-year basis compared to the lower base in 2025, right? Because I think what we communicated back then was from first quarter of 2025, that's when we said we're going t o add on quite a considerable number of new people working on this project.
I think we have also basically said that headcount has peaked in the middle of this year. And I think if you look on a quarter-on-quarter basis, as I mentioned earlier, you are actually seeing the headcount costs. And this is the overall group headcount cost, which includes even growing areas of the group, right? So there could be some areas where we are adding headcount, but I think the communication we have done so far is that by 2028, just to remind everyone that we are saying that headcount will be lower, right? So I think that there is this progress towards being more efficient on the headcount side of things. This also applies to, I guess, the ePENSION division, right?
I think in terms of that cost thinking, yeah, I think it is quite obvious to see that if you are not adding on a lot of new headcount, right, then you probably would not expect any cost escalations on this front, right? So I am not sure if that gives you sufficient context, but yeah, that is really the thinking on Hong Kong expenses.
Yeah. Thanks, Terence. Can the costs actually come down, though?
Sorry, the question was, have the costs come down a bit?
Yeah. Can the costs come down, or should we just assume that they're flat?
Can the costs come down?
Okay. Can the costs come down? Yeah. I think the Yeah. We are always looking for a bit more optimization in the processes, right? I think that's something we are planning for. But of course, yeah, I think as we have said in previous quarters, yeah, we don't want to prematurely make any large reductions in the resources we have on this project, because we are still very keen on making sure we execute well, right? I think that's, yeah, consistent with the comments we have made previously.
Okay. Thank you.
Thank you. Yes, we have Wee Kuang .
I have a few questions on separate parts of the business. Firstly, maybe we can start off with the U.K. banking division. I guess now we are seeing that operating leverage kick in when it comes to your deposit-taking business. But I just want to understand in terms of the positioning of this personal banking and business banking divisions that has kind of allowed iFAST to continue attracting such kind of strong deposits growth that we see quarter-on-quarter. What kind of positioning we are in the market to actually attract the flows?
From perspective of the deposit side of the business, there are two main business unit there. One is the personal banking, the other one is business banking. On a personal banking side, which today contribute the majority of the deposit, the positioning is that of a global bank. We call it iFAST Global Bank because we feel that in today's world, there's no reason why banking businesses should continue to be essentially confined to the geographical market they're in. The world has changed, and for sure banking business will change as well. It's our belief that in time to come, investors and deposit savers and so on, from various countries around the world will look for the best-in-class wealth management platform and digital banking platform, and put some of the money there. So that from our perspective is a huge market. It's a tremendous market.
The comparison I've always made is to the I spoke about Netflix and Spotify, but I think in a banking world, the comparison that we make will be to the private banking in Singapore. Private banking is actually a global business, right? The private banks are based here, but customers come from various parts of the world and put lots of money here. And Singapore has done very well in that area, and I think most of the local banks as well have done very well in this area. But this globalized model, essentially, in today's industry, tend to be seen only in the high-net-worth space. So private banking is a key example. Our belief is that, in the internet world, and increasingly our world is driven more by AI, the huge opportunity really will be for customers who are one or two notches up.
Not just high net worth, but mass affluent as well as retail customer. That is a segment that is very much undertapped, underdeveloped, because most banks are not too interested in developing this part of business. But that is also where you see the least amount of competition, and that is the area where we feel give the best growth potential for iFAST Global Bank. If you look at our personal banking division in iFAST Global Bank, I would say a majority of the deposits are actually still coming from local residents, but we do have quite a sizable percentage are coming from non-resident. And of the non-resident as well then you also have people who have come from other country and then they migrated to U.K., settled there. And this segment, I think we are quite strong in that particular segment, especially among the Asian.
The positioning is that of a global bank. As part of that vision, we have been beefing out our services so that we can serve our global customers better. I would say that we are still in the process of improving the services. We have made quite substantial progress in the last few years, but there is still areas for us to improve on, and we will continue to do so. One key part, of course, is the ability to not just deposit money in the bank, but the ability to then use it, right? In various country that they are in to make payments, et cetera.
That payment-related services, therefore, is something that increasingly we have been looking at as a group and that will basically something that will help to bring about the overall vision that we have of a global model, and allow things to accelerate better as we move.
Okay. Maybe just the second one, I wanted to ask about the Hong Kong side of things, when it comes to the ORSO progress, whether we are on track for fourth quarter or are we actually pushing into next year?
Unfortunately, for ORSO, there's a further delay, right? In terms of when this project will kick off. The current expectation is sometime next year, so it won't be there in the fourth quarter this year. I think there's also a question online asking about this, and will the UAE be added in 2026? The answer is no, right? The UAE will not be added by the end of 2026, so the current expectation is sometime 2027.
Okay. Lastly, just wanted to ask about the launch of the four new ETFs that we have on SGX recently. How should we look at the nature of the recurring fees that are generated through them? Should we look at the size of the issuance on SGX only? How are the fees kind of split between yourselves and Xtrackers, for example?
Yeah. So far the ETF. I think globally we've seen the ETF market segment has been growing very strongly in U.S., Europe, various country. That's actually been growing. In Singapore, the volume on SGX has been growing quite well in percentage terms as well, in recent times. Our belief is that we're still at the initial stages of where things are. The number of ETF in Singapore is still very few, because most fund managers prefer not to have to worry about having to launch ETF and manage all the operational IT issue, market making, et cetera. But I think we are in a position to be able to do this well. That's why we decided to go into this part of business.
Our approach really is that we will continue to work with the various fund managers direct, because there's no reason for us to want to reinvent everything. I think there are lots of fund manager we've been working with that have very good products from around the world with the scale already. We basically are looking at a model where we can tap into that part of capability and product base that they already have, and then use our distribution capability to the best of our advantage. I think we are therefore in a good position, I would say, to be able to become, over time, an important player in Singapore. So that is our thinking. In terms of revenue base, I would say there are some. There is the management fee that we charge, right, at the ETF level.
If you look at the management fee that has been charged, that probably gives some reflection of the kind of margin that we could be taking. When we feed it into the other funds like Xtrackers and so on, for some of the funds, there is some rebate of the management fee that comes from the Xtrackers, whichever fund manager we work with. The rebate then will typically be put back into the fund. Our fee will be the separate management fee that we charge. That should be a way to look at the fee that we will get on the management fee side. But I think ETF business is one where there are also some other components of fee that will come about market making and so on over time when the scale is there. That is the way we look at this.
Okay. I will go back to our virtual attendees because a few of you have raised hands to ask questions. We will start with Toh Xuan .
Hello, am I audible?
Yes, Toh Xuan .
Yeah. Thank you so much for the opportunity and congratulations on good set of results. Just want to dive in on the U.K. bank a little bit more, which has performed incredibly this quarter. If I look at the net revenue, I assume that's net interest income plus the fee income, that sequentially have moved about SGD 5 million. Do you mind break us down a little bit between NII and non-NII movement quarter-on-quarter that contributed to that SGD 5 million increase?
Yeah. Hi, Toh Xuan . The question was the breakdown of the SGD 5 million increase. You're talking about Q-on-Q, is it?
Q-on-Q U.K. net revenue. That's about SGD 5 million increase, right? SGD 10 million last quarter. And then about SGD 15 million this quarter, right? Net revenue.
Yeah. As I mentioned earlier, without going to the specifics of the numbers, I think one of the things we have tried to do this quarter was to bring back some of that FX impact. Earlier, I mentioned this on the interest rate differential, so we've actually included this in the third quarter. So actually the third quarter, you do see a bit of a more significant year-on-year increase in the net revenue number. I think the more representative number to look at is actually the nine months effect. So the nine months effect, I think the net revenue, if you look at that versus the deposit growth, and all that, then I think it does align a bit better.
And then I think some of the margin numbers I mentioned earlier in terms of the NIM or the kind of revenue percentage on deposits, right? I think that is really off the nine-month figure, right? So I think the main effect on the third quarter, right? Other than the strong growth in the performance of the bank, right, there was also a reclassification of some of the operating expenses at the bank. So the FX used to be on an operating expense line, and then we have brought that into revenue, right? So I think that explains part of the increase in the third quarter. But again, on the full year basis or year to date basis for nine months, right? I think that number is a lot more representative.
So adjusting for that reclassification, the Q-on-Q net revenue increase is roughly how much?
I do not have that figure with me, but I think definitely there was good progress on a Q-on-Q basis.
And that is driven by, and the core Q-on-Q revenue improvement is driven by net interest income or driven by fee income?
It was actually driven by a combination of both. So the deposit growth was quite healthy. So of course that added the net interest income component. On the fee income side, I think one of the things we have been talking about is, of course, the EzRemit business, where I think margins were unnaturally high previously. Then we went through a period where the margins normalized, and I think we have been pointing to the progress on that business as well, where we have started recognizing, again, more revenue, and more profitability on that part as well. So I think sequentially on a Q-on-Q basis, there was also good progress on the fee income side of things.
Also coupled with, I guess adding more customers on the transaction banking side of things where there are certain fees that we do charge on those accounts, whether it is for FX or for payments. So I think all that put together, we actually saw quite a good third quarter.
Got it. That is very clear. And on the Hong Kong eMPF business, I know you guys do not disclose the exact revenue and the cost number, but it seems like the revenue have declined quarter-on-quarter for the Hong Kong eMPF business. Is that correct? And then also, we saw a little bit of decline last quarter as well, if I recall correctly. So is that trend going to continue?
I would say that, sometimes on a quarter-on-quarter basis, there are certain adjustment items. So sometimes you may have, for instance, third quarter last year, there was a quarter where there was a bit of some additional revenue that was booked. And then today, when you look at it on a year-on-year comparison, then it looks like this. Yeah. It is not as good, but on the whole, the revenue base for the business is one where, for the year as a whole, you will essentially still be growing. But quarter-on-quarter, certain part of the recognition sometimes changes a little on a quarter-on-quarter basis.
Let me put it this way. The eMPF revenue for Hong Kong, which it seems to have declined sequentially for the second quarter, right? I am just trying to confirm whether that is the case on the Q-on-Q basis.
Yeah. Sorry, maybe I just add on to that. I think we haven't made public the revenue recognition model, right? I think we have mentioned that this is linked to the operational work that we do, and of course, I think to Chung Chun's point earlier, I think the revenue base that we earn, right, on this project is really at quite a high level, right? I think the first quarter and second quarter, if you recall the onboarding schedule, right? There was, I think onboarding of the largest trustees finished, I think, by January in 2026, right? Then I think going into April, I think there were still certain small schemes that continued to be onboarded. There were still some onboarding effects on the overall revenue recognition.
When you get to third quarter, essentially these effects are no longer there, right? But I think you can clearly see that the revenue base is still very high, right? So I think this is pretty consistent with what we've been communicating, that this is again, a very strong recurring income business for us. It's just that we are losing parts of that onboarding benefit, although it's, again, not materially different, right? So I think the earnings base is still quite sizable there.
Got it. That's very clear terms. And last question, if I can, is on the medium-term plan. We have the SGD 100 billion AUA, of which we talk about a little bit over 20% CAGR for Singapore AUA. Now, we have been doing that quite consistently over the past eight quarters. So this quarter where the market is again, being as conducive, we saw 17% AUA growth in Singapore. So I am just wondering, to achieve that 2030 AUA target and 20%-odd CAGR, are we assuming a decently conducive market on a sustainable basis?
I would say that we are assuming that we will continue to see a market that does well sometimes, and doesn't do so well at other times. Financial markets are volatile all the time, but in the long run, of course, it tends to grow. So on an overall basis, we typically will be able to see growth in the overall market, but we tend to be able to grow better than the growth of the overall market. So these numbers that we have assumed, the 20% over , yeah, basically has taken into consideration the fact that markets will tend to move up in the long run. But from time to time, we go through some negative patches that will short-term decelerate the AUA growth. Yeah, that's the kind of pattern that we've been seeing on.
Got it. Thank you so much.
Thanks, Toh Xuan. We will move on because we have a few of you online as well who have raised hands. We will go to Dana. Dana, can you hear us?
Hello, am I audible?
Yes, we can hear you now.
Perfect. Thank you so much. Thanks a lot for the opportunity. I just wanted to ask two questions. Firstly, I just want to understand the bank a little bit more because just now it was mentioned that on the asset side, we have been doing some lending, including product financing and margin financing, of which we have collateralized on the stocks, UT and ETF. So for the customers of this margin financing, are they mostly customers of our wealth segment who are also now a customer of the bank? Is this the right way to understand this?
Most of our customers who are borrowing money from iFAST Global Bank actually come from Asia, because these are customers that come from our ecosystem. Because we are in a wealth management business, then we do have natural advantage in the product financing and premium financing space. We have customers who are already using us, our FSM business, our B2B business, and then we have other various advisors that we are already working with in Singapore, Hong Kong, et cetera. That is why, for this part of the lending business to grow, that actually comes quite naturally for us because it is an ecosystem effect.
I see. Would you be able to share what is the percentage of our customers for the bank that is resident versus non-resident?
You are talking about the loan?
No, just generally, of all the accounts in terms of our banking customers.
Yeah, so there are different parts of business. So the personal banking, if I take the personal banking business, in terms of the number of accounts, if I go by number of accounts, a majority are actually non-resident. That is what we have. But if I go by amount of deposit, I would say more than half are still coming from the resident, because the resident would tend to put a bigger pool of money.
Yeah, but number of accounts, we have customers coming from over 100 countries, but Asia contribute disproportionately a bigger amount. Non-residents are an important customer segment for us. If you take the business banking side of the business, then it still tends to be U.K. institutions who are bringing in the business for us, because we do transaction banking there, so most of them are U.K. EMIs who are working with us.
I see. So, say for this margin financing, the rate would be tied to U.K.'s risk-free rate, is it?
Yeah. The margin financing and premium financing business, the rates will depend on what currency you're borrowing in, and you reflect the interest rate environment for that particular currency. Our natural base of deposit tends to be more of sterling and U.S. dollar, and that forms a natural base. But we do lend out in other currencies as well, for instance, in Swiss franc. But in doing so, we will actually do a swap into the Swiss franc. Because there's such an activity, that also explain the reason why there's increasing amount of the FX revenue that we are recognizing in recent times.
Understood. Thanks. Last question from me is, just want to ask what is our M&A strategy? Because obviously we've been doing really well. We're building up capital as well. I noticed earlier this year we made an acquisition, acquired a 30% stake in Financial Alliance. Can you maybe talk a little bit about that and then, going forward, how should we be thinking about M&A opportunities? Thanks a lot.
The acquisition strategy.
Yeah, M&A strategy.
Yeah. That's right. I suppose the way we plan the business, typically the starting point is that we want to make sure that we do have a business model that will allow us to grow organically. I think it's important that we have a business model, an ecosystem that allow us to grow organically, and yeah, because if we can't grow organically, then it's telling us that our business model isn't strong enough, because we need to be able to grow at a robust pace just based on the organic growth itself. Having said that, along the way, we do make some acquisition from time to time. Some of it is related to strategic reason. It could be because of the fact that we want to get into a certain business segment. I think the best example will be the U.K. Bank.
Early 2022, we acquired the U.K. Bank and, yeah, that was our way of getting into the banking business because if we're not already in the banking business, trying to apply for a banking license is something that's actually very difficult. That acquisition, first and foremost, was strategic reason, and then from there we build on it and evolve from there. There are also times whereby we look at acquisition, if it helps to increase the pace at which we're able to grow, but because our business model tend to be relatively unique, then the number of businesses that fit in perfectly, there probably aren't too many. There are other acquisitions, such as for the Financial Alliance case, whereby we are doing it because we feel that that will help to strengthen the overall ecosystem in the market that we're working in.
Specifically for Financial Alliance, our belief is that, as we move on, there is an opportunity in Singapore for a listed financial advisory firm, a sizable, growing and listed financial advisory firm because till to date, there isn't one. We are of the belief that there can be one, at least one, that will be able to do well and big enough to be listed and will continue to grow. We believe that Financial Alliance is an entity that can do that, especially if we take a stake and then we work more closely together to achieve that mission. When we do so, then we feel that that will make the overall financial advisory industry more vibrant. We basically are trying to play a part in making the whole industry more vibrant.
When the industry is more vibrant, then that will actually be good for the B2B part of our platform business. That is the overall thinking for us. It is, in a sense, a bit of a strategic reason, but of course, from an investment perspective, we expect that we should be able to make good long-term return from that investment as well. The acquisition, there are the different parts of consideration, but typically, strategic reason is an important consideration when we do make some acquisition.
Okay. Maybe we'll just clear a couple more questions from our virtual attendees who raised hands before we move on to questions in the boardroom once again. We'll go to Aakash.
Hi. Thanks for taking my question. I hope you can hear me.
Yes, we can hear.
Yeah, great. The first one, just on ORSO, are you able to say what is exactly causing the delay? You said it will start showing up next year, but any more specific timing on that? Which quarter can we expect ORSO to come through? Also, if you could just remind us what is the magnitude of the revenue and AUA that one should expect from this new income line? Then I have a couple more questions after this. Maybe we can go one by one.
Aakash, we can't hear you very clearly, but maybe I'll just rephrase what you asked just now. For your first question, I think it was related to Hong Kong ORSO, is that right? Basically some colors as to why there was a delay in the implementation.
And specific timing, like which quarter next year should we expect this to start coming through?
Yeah. The reason for the delay, I'll say, is related to the fact that the whole pension industry in Hong Kong has gone through this big change in the last couple of years. EPF, eMPF onboarding, of course, has been the key change the whole industry has gone through. Of course, the eMPF business and the ORSO business are somewhat different segments of the business because the entities involved are the same entity, the industry player involved are the same entity. From an overall industry consideration, I think there is that consideration along the way by both the company as well as regulators to do any further changes at a time where things have settled down a lot better. That really is the key overriding reason why there's been some of that delay.
As to which part of next year, a bit difficult for me to pin down the exact date, but I feel let's assume that it'll be some time in the second half of next year.
Great. Thank you. What about the magnitude of revenue and AUA?
I would say that given that the group as a whole has actually grown quite a bit in the meantime. I think since we started talking about ORSO, it's been two years. In the meantime, the group's business has grown, not just because of Hong Kong eMPF, but the overall wealth management platform business has grown quite a bit. The banking business has also grown substantially from being a negative contributor to bottom line, now is contributing quite well on a positive side, and we're expecting a further robust growth. If you take all that into consideration, then the incremental profit and revenue that we expect from this ORSO business, there will be additional growth that we are going to see, but I do not think it is something that will substantially change the magnitude or the group profit once it kicks off.
Yeah, because the overall base of the group's business has actually grown in other various segments.
Okay, got it. Thank you. On the Hong Kong business, if you look at the net revenue to assets over the last few quarters, it has roughly declined by around 100 basis points in the last few quarters. This is net revenue to AUA for the Hong Kong business. I think you said that there were certain specific one-offs in the onboarding process, which might have resulted in a higher revenue. I am just wondering, is the current level of net revenue to assets, is this the number we should use going forward? Is this a sustainable level?
Yeah. Hi, Aakash. Maybe I will just take this one. I think for the markets like Singapore and Malaysia, which are wealth management centers for us, I think the net revenue to AUA definitely is quite representative of the business. I think in the case of Hong Kong, as I mentioned earlier, I think because of that very large ePENSION contribution, the ePENSION business does not contribute to our AUA. I think there are some nuances on that business as the revenue profile changes. It does not have a direct link to the AUA on the Hong Kong business. Therefore, I think you are seeing some of these things that cannot be explained by the AUA alone. Hopefully that helps to clarify.
But has that revenue profile stabilized now because the onboarding process has been completed for a couple of quarters? Or do we still think that revenue line can change materially?
Yeah. So I think as we discussed briefly earlier, right? So I think there were some questions on why, I guess you see a slight dip Q-on-Q, right? For the third quarter for the Hong Kong revenue segment. Again, this is also because of that very large contribution from the ePENSION division, right? So even with the progress on the wealth management side, it is not enough to sort of cover some of these effects, right? From this particular project. I think that being said, I think the points made earlier were that there was some onboarding benefit to the revenue side of things, right? I think for first quarter, second quarter, we still saw a bit of that.
Third quarter, I think quite clearly there is no longer any onboarding, and then therefore you still see some of those Q-on-Q changes. But I think more importantly, I think the way we plan for the Hong Kong business is not on a quarterly basis. I think we have also had some of these questions about expenses on a Q-on-Q basis and so on. And probably also take the chance to sort of answer this because I also see some questions in the Q&A, right? On why the margins on a Q-on-Q basis get some improvements, some decreases here and there. But at the same time, I think the way we have tried to explain this is, I think on a quarterly basis, you do see some fluctuations, right? Some lumpiness sometimes on the expenses side.
Revenue profile, as I have mentioned earlier, sometimes you do see a bit of changes. But I think, again, because we already have that very large base of operations, which allows us to recognize high levels of revenue, right? Then I think the right way of looking at this is over a longer period. I think we have mentioned, if you look at this over a year, right, then the margins and the expenses, the revenue all make sense. Q-on-Q, yeah, some of these differences are sometimes a bit hard to explain, very specific to some of the changes in a quarter, right? So I think we have even included a comment on the other operating expenses for third quarter.
We did say there were some slight adjustments on some of the accruals done previously on expenses that we have then reversed, right? So I think there is still some of these things that happen Q-on-Q. But I think on a full year basis then the numbers will make sense against the revenue as well.
Okay, thanks. If you include costs into this, if you just look at the ePENSION business, we can roughly estimate what the PBT margin is, which has gone up quarter-on-quarter, because as you also said earlier, costs have come down. This PBT margin, which we estimate to be around 35%, still remains below the 40% level that we've also seen in the past. I'm just trying to get a sense, is this 35% heading towards 40% in the coming quarters? Or, as you said, there's not much more reduction in cost, so we should assume a 35% sort of level from here. This is the PBT margin for ePENSION.
Yeah. Maybe I'll take a stab at this. The nature of the Hong Kong operations, the wealth management side, you will see some benefit of operating leverage. As you scale the assets, of course, there'll be some benefit. That has already been hidden because of the very large contribution from the ePENSION side of things. The ePENSION side, I think the revenue profile, I think we've established that, we are not looking at very large potential increases in revenue on this business because we are already operating at what we consider full operations on this business. I think the other factor in the margin number would then be the cost. I think the cost then relates to what we have communicated in terms of the headcount.
We did bring on quite a lot of people on this business to make sure we got past, I guess, the finishing line to onboard all trustees. Now that we are in a more steady state operations, as I think many of the times we hear this question about what are we doing to improve profitability there? I think one of the things that we can do is, of course, with higher efficiency, we can do the same amount of work with slightly fewer people. I think emphasis on slightly, I think we have clarified we are not looking to dramatically reduce headcount and resources there. But I think over time, it's quite natural that we will become more efficient at what we are doing there.
Of course, that will reduce the expenses. The potential on the margin expansion side would then relate to some of these costs, particularly on the headcount.
Okay, got it. Just very last question on the banking business. As you scale the business to SGD 15 billion deposits and 40% cost to income from the current 70% cost to income, what lines in the income are going to scale? What are the major growth drivers for this business? Maybe the top two that you can talk about.
Good question. What will be the major growth drivers for the bank as we scale towards the 2030 target of SGD 15 billion for IGB?
For the bank, we have the two main divisions, the personal banking, and we have the business banking. There is the lending, but lending, of course, in a sense, uses the deposits that is brought in by personal banking and business banking. We do expect both personal banking and business banking to actually have quite a good growth going forward. We are still at a stage where we feel that the scale at which we are operating at is actually quite small. If I may just use a comparison to Singapore example. Actually, the deposit base that we have currently is SGD 2+ billion . I think in a scenario planning that we have put up last quarter, and now I think it is in the appendix. We have this slide. We talk about one possible scenario is that the deposit at iFAST Global Bank grows to SGD 15 billion.
SGD 15 billion from the current SGD 2 billion may seem like a substantial group. But if you take a step back, you think of the banking business, the banking industry, a SGD 15 billion, to look at it in context, is actually equivalent to 3% of the deposit that OCBC has or UOB. Each of the local bank, today's deposit that they have, you take 3% of that is SGD 15 billion. Question is, for us running iFAST Global Bank business, looking out the next four years, can we grow to SGD 15 billion in terms of size? I would say that if you look at the overall ecosystem that we have been building up, look at the potential of how the world is changing and the demand for global digital banking and wealth management, then I would say that, truly the growth potential is actually there.
We are still, I would say, at the very early stages of the growth path for us. The business banking as well, is an area that we feel have a very substantial potential. Within business banking, the transaction banking part of the business, the main client base there are the electronic money institutions. Payment-related businesses. That is an area that we believe will continue to be able to grow. Then there are various different kind of corporates that we are also targeting, and I think that will form a quite good growth potential for us as well. As our overall deposit base grows, then our ability to lend out comfortably will accordingly be growing. We are not aiming to have very high loan deposit ratio. I mean, we want to run a bank where we can withstand big swings in the amount of deposits.
That means being able to keep the balance sheet liquid. Loan-to-deposit ratio, if it just grows to 30% or so, we are fine with that. So that is the way we look at how we want to grow the banking business.
Okay. Thank you.[crosstalk].
Thanks very much.
Yep. Thank you, Aakash. And one last question from our virtual attendee, Rui Wen , before we go to Sharon. Rui Wen , are you there?
Hello, can you hear me?
Yes, we can hear you, Rui Wen .
Thanks. Just two questions shortly. I think there was some mention on the target LDR by end of the year is 20% at IGB. Can we have a sense of what is the current LDR, and what kind of LDR are you expecting in 2030 when you plan for your internal planning for your cost to income to hit 30%-40%? Lastly, is there expectations that revenue yields can actually outperform that 200 basis points that you have spoke about, given that we have room to reprice the short duration assets as well as into a higher interest rate environment next year? Thank you.
Yeah. On the loan-to-deposit ratio, our current ratio, I believe is in the high teens. All right? End of year, we expect that to be around 20%+ for loan-to-deposit ratio. In terms of internal planning, we're looking at something like 30% annual next year for loan-to-deposit ratio as a current planning. The other part of the?
Yeah. The question was whether it's possible to outperform the 200 basis points.
Right. Yeah. We are currently actually well above 200 basis points. Do we have a number?
Yeah. Maybe I'll just offer some color on this. Yeah. I think this year, the bank, as I mentioned, has done quite well. We are above the 200 basis points internal planning. Right? I think we are currently at about 2.6%, I think, if you look at the average deposits over the nine-month period. So I think the thinking for us is really as the bank gets larger in size, then you will have ability to definitely improve your pricing power. I also saw a question on the interest rate environment. So I think generally, higher interest rates are good for banking. Right? Allows us to generate slightly more net interest income. Because I think depositors don't really feel the impact if you give them quite a sizable deposit rate already.
But the actual base rate or the way you can deploy those deposits, the yields are actually much higher. I think the part of the thinking on that 200 basis points is what we are planning to date. But of course, there are certain factors. One is the interest rate environment, I think. But the other more important one is, of course, as we start scaling up and the interconnectivity, the types of customers that depend on the bank and use those services, then they become more and more, or should I say, they become less and less interest rate sensitive. So the deposits become stickier, and that's also an opportunity to then expand margins over time.
I think this is more general, but that's what we are thinking about for the bank. So not answering directly whether we can outperform this on any immediate target. At the moment, we are above 200, but we still communicate that 200 basis point plan.
In the short term, currently, this year, next year, we are at a situation where the EzRemit contribution to the business is still quite sizable. And that adds on in terms of basis point margin relative to the deposit base. But as our deposit base gets bigger, then we assume that maybe the EzRemit commission income may not grow at the same pace. That's why we allow for some potential reduction in the margin to say current base is fine. But in terms of where we are currently, we are comfortably above 200.
Rui Wen , do you have one more question?
No, thank you.
Okay. Thank you, Rui Wen . We will go to Sharon.
Okay. Thanks, JP. Yes, just two questions for me. First of all is regarding the higher interest rates. Terence just gave us some element, but more broadly, what is the impact of the higher interest rates on the different segments of the group?
On wealth management, maybe on the corporate loan, brokerage on the energies.
Firstly, for banking, I think higher interest rate generally is positive for iFAST Global Bank for two reasons. One is there should be a potential uplift in margin for us. The other factor that is also important is that at this stage in our growth path, where we are trying to grow at rates that are well above the overall growth rate of our industry, then having a higher absolute interest rate environment would actually help us to scale up better, because a lot of the traditional banks, they pay next to nothing for your current account.
All right. If the interest rate is, say, 1%, and then even you compare 1% to 0%, it is a pick of 1%. But if the interest rate is 4%, all right, relative to the 0% or the 0.5%, then that is a pick of 3.5%. That would then allow us to accelerate the growth path at a faster pace. Yeah, so a higher interest rate generally should be something that we see to be positive.
For wealth management?
For the bank, right? That one should be quite clear cut. For the wealth management, I would say that it depends on which segment of business as well. For the stock market, of course, it is a more complicated kind of a part because sometimes investors are afraid of high interest rates and the market doesn't do well, so there is all that related effect. But if you take some segments of our business that we have, like the bonds business, I would say the high interest rate would be a positive effect because then investors can have better investment opportunity in the bond. A generally high interest rate environment would actually be something that actually help us.
For the group as a whole, on balance, I would say that higher interest rate is actually likely to affect us positively.
And second question is regarding our China business. To what extent this business is dependent on the sentiment on Chinese equities? Because of course, we have seen Chinese equities have been down recently. Does this have a negative impact on our progress?
I think in the short term, certainly, it does affect the short-term number of the business because a Chinese market can be quite volatile. First and foremost, it really affect the absolute level of the AUA. That is the short-term effect. But I think longer term, we expect that to be a market that will move up sometimes and move down sometimes, but it is a structural positioning that actually matter, that should allow us to grow.
But our Chinese customers, they are mostly exposed to the domestic market or do they have a broader exposure to global markets?
Both, right? For those that are in China onshore, then I would say that they are still mostly exposed to the local market. There are some that have money on the offshore part, then that will actually be more diversified.
Okay. Yeah. Okay, thanks.
Okay. Are there any more questions, Paul?
Just to check on the U.K. deposits, especially from the locals, what is the attraction to deposit with the iFAST Global Bank? Is it just rates or actually fixed deposit or like current account approach?
I think for the local, I suppose the differentiating factor will be firstly, you take current account. I think most of the main banks still pay either zero or very little on their current account. If you want to have an interest rate, then you move it from your current account or savings account. So, there are still some of those kind of differences. I would say the other part of it would be multicurrency. All right. Because multicurrency is something that is actually not well developed in most markets, including even Singapore, I think, for retail customer to open a USD account and get good interest rate on that, I think it is not quite there. So I think iFAST Global Bank offer multicurrency current account, as well as deposits. So, the rates generally would actually be more attractive.
In our initial years before our payment services are fully developed, then perhaps the differentiation between us and others may not be as obvious. But as the services continue to improve or even overtake a lot of the local bank, then it becomes increasingly clear that we offer good propositions. For our growth customer, the new migrants or those who are non-resident yet, then I think that segment is very clear. I think we offer a very good proposition because most banks are not even keen on that market segment.
Are there any more questions from the analysts in the boardroom? If not, we will wrap up with a couple more questions from the Q&A from our virtual attendees. I think most of the questions that have been asked have been answered by Chung Chun and Terence, so we will not repeat them. We will just wrap up with a couple of questions. I think there was one from Calvin on 2027 growth prospects for iFAST. I think that is one.
I think 2027, we continue to target a robust growth on the overall basis. I think if I take the ePENSION division, we are not expecting huge growth, but we still do expect some growth. We do expect quite a strong growth to continue on the banking business. I think as scale increases, as the different division continue to progress, we expect that profitability can actually pick up. I suppose by 2027, the contribution from banking business is reaching a level where, yeah, it is making a bigger impact on the overall group number. I think in third quarter of this year, we expect the banking business to be the third biggest contributor to us. I think the banking business profitability, yeah, can grow quite substantially in 2027 and beyond. So that will help the overall growth rate of the group.
Wealth management platform, of course, is something that we always have been targeting to grow at a robust pace. The caveat is, of course, that if the market goes through a big bear market, then that will affect our short-term profitability. Otherwise, the various growth initiative has always been there, and that is something that we aim to be able to grow at over 20% a year all the time. So yeah, on the whole, I think we are looking forward to good growth for 2027.
Yep. One last question from Lynn. Could you comment on generally higher growth rates for B2C versus B2B?
I think the B2C part of business in recent times seems to be growing at a higher pace. I would say probably two main reasons. One is, I think FSM has actually grown quite well for us, especially in Singapore in recent times. So that is showing up in the higher contribution. The other reason would be the fact that for U.K., the deposit that we have, that actually gets parked under B2C. As of today, we have included the whole amount under B2C, even though we do have a business banking part of the business, but the way we have classified today, it comes under B2C, so that, of course, is growing at a faster pace. So that is the other reason that caused the overall number to grow faster on the B2C side also.
Thank you, Chung Chun. Are there any more questions from those of you here in the boardroom? If not, thank you so much for joining us, and take care. See you soon.
Thank you.
Thank you.