iFAST Corporation Ltd. (AIY) Earnings Call Transcript & Summary

Ladies and gentlemen, a very good day to all of you. Welcome to iFAST Corporation's Pre-AGM Virtual Information Session by live webcast. Thank you for taking the time to join us, and we hope you are keeping yourself safe and healthy during this time. In light of the medical measures regarding the conduct of our general meetings, the company has limited the number of attendees this year with safe distancing measures in place. During the time that we speak, we will not be wearing masks so that you can hear us better. My name is Jean Paul from the iFAST Corporation Corporate Communications team. Here with me today, we have Mr. Lim Chung Chun, CEO and Chairman of iFAST Corp.; Mr. Matthias Yao, Lead Independent Director; Mr. David Leung, our Group CFO; as well as Mr. Kok Chee Wai from our Corporate Communications team. Our directors, Mr. Kok Chee Wai; Mr. Peter Ng; Mr. David Toh; Ms. Janice Wu; Mr. Lim Wee Kian; and Mr. Goh Bing Yuan are also attending this meeting via live webcast. Today's agenda will be as follows. First, together with David, our CFO, I'll be running through the key points from our first Q 2020 results presentation, which we have released this morning by SGX net. You can retrieve the results information from our website, ifastcorp.com. Secondly, Chung Chun will run through some of the agent-related matters as well as the questions being coursed to us by our shareholders and investors, including those questions that they have submitted before this meeting as well as the questions that you can submit during this live webcast via the Q&A function. I will now start with the first Q 2020 results presentations, our key points. In our key summary, these are the key points that we have covered in today's results presentation that we released this morning. So the Group reported a record...

Are we sharing?

Yes, we are sharing. So you'll be seeing the slides, I believe, as well. So I'll be running through the key summary points here. So the Group reported a record quarterly net profit of SGD 3.64 million in first Q 2020, which is an increase of 126% compared to first Q 2019. This was achieved on the back of a 25.3% year-on-year increase in net revenue as well as a 41.5% year-on-year increase in gross revenue. The record high of both profit and revenue in first Q 2020 was achieved despite a major sell-off in financial markets globally during the quarter. The second point here, the Group's AUV declined 4.6% to SGD 9.54 million during the quarter. Considering the extent of the sell-down in global financial markets that quantum of the decline in AUA is not huge. This was because in first Q 2020, we saw a record quarterly net inflows of SGD 590 million in client assets in our platforms. In Singapore, our net revenue grew 24% year-on-year to SGD 12.19 million in first Q, while net profit before tax rose 76% year-on-year to SGD 3.52 million in first Q 2020. The improvement in net revenue and profit numbers for the Singapore operation was due to record inflows into the various investment products and improving margins. Despite the challenging COVID-19 situation globally, China's AUA grew 24% year-on-year at 17.8% Q-o-Q to about SGD 120 million as of 31 March. AUA across both the B2B2C and iGM business divisions in China saw record positive -- saw positive growth in first Q 2020 despite volatile market conditions resulting from COVID-19. The global economic crisis resulting from COVID-19 has negatively affected many businesses globally. For the Group, the negative impact has so far had been manageable as it is able to do most of its business digitally. On the next slide of the key summary. In Singapore, our B2C division, FSMOne.com, has just started on a close to 100% work-from-home policy, given the current elevated COVID-19 mitigation responses in our country. For the Singapore office as a whole, there's a 90% work-from-home policy during this circuit breaker period. The Group's services, however, remained essentially fully operational. In the group's other markets in Hong Kong, Malaysia, China and India, there have been varying degrees of work-from-home policy. But there has been no disruption in the services offered to our clients. The Group's financial state performance for the rest of this year will partly depend on how the COVID-19 situation develops, including the impact on the global financial markets. As at April 22, 2020, the Group has regained the SGD 10 billion AUA milestone that we clocked up at the end of 2019. Barring on substantial worsening of the global financial markets from the current levels, the Group expects full year 2020 performance to show higher profits and revenues compared to 2019. In the medium to long term, the COVID-19 crisis is expected to lead to an acceleration of the pace of digitalization of financial services, and the pace of adoption of Fintech services by consumers. As a leading Fintech wealth management platform in Asia, the Group expects to be less adversely impacted than the general economy and may see positive outcomes due to our online-based business model. I will now move on to the next slide, which shows our group AUA chart. So our group AUA fell 4.6% quarter-on-quarter. But on a year-over-year basis, the AUA for the Group grew 9.1% to a level of SGD 9.54 billion as of 31st March 2020. On this slide, you'll see the slit between the B2B as well as the B2C divisions. On the next slide, it shows the net inflows and subscription excluding switching. So as mentioned previously in the key summary, we saw net inflows number of SGD 590 million in first Q 2020, which is quite a bit higher than first Q of last year. The subscription, excluding switching numbers have also been strong in fiscal 2020. I will now invite David, our CFO, to run through some of the financial numbers with you. David?

Good morning, ladies and gentlemen. I'm going to present the financial results for the Group for first Q 2020 versus first Q 2019. As you saw, we will present the financial results, excluding and including the China operation. Okay, this slide is showing the financial results excluding China operations for first Q 2020 and versus first Q 2019. Our gross revenue increased by 41.5% to SGD 38.2 million. Our net revenue increased by 25% to SGD 18.56 million. The reason is because despite the market volatility in March this year, we still are able to achieve a significant increase in the stock and ETF processing fee and also with the foreign currency conversion service income. All this contribute to the increase in the nonrecurring net revenue. Our other income fell to about close to 10% of our SGD 550,000. The reason is because due to the mark-to-market for some of our investment that we had some loss during the first quarter of 2020. However, this also offset by the government plan from Singapore government. Our expenses increased by about 13.5% to about SGD 13.69 million, mainly due to the -- our effort to enhance to our investment platform capability. So there's some increase in the depreciation of fixed assets and also the intangible asset. The next slide, we recorded net finance income in first Q 2020 of SGD 590,000 versus a finance cost of [indiscernible] because we have some significant increase in our client account so that this also results in an increase in our bank interest income. On the other hand, we have fully repaid the bank loan relating to the application for virtual bank license in Hong Kong in Q1 last year. So this also contribute to the decrease in the finance cost. As a result, it's an overall net finance income versus net finance costs. We have recorded small share loss of associates of about SGD 30,000. So PBT increased by 80.5% of about SGD 5.5 million. PAT increased by 73% of about SGD 4.7 million. Six months, including China, the gross revenue and net revenue, there's no significant movement and also the other income. Expenses increased by 12% at about SGD 16 million. No change for the net finance income and also the share of associates. Our PBT including China achieved about -- actually about 135% increase at about SGD 4.4 million. Our PAT increased by 132% at about SGD 3.6 million. Excluding our nonmaturing interest, the net profit attributable to owners of the company increased by about 127% at about SGD 3.60 million. And our EPS at the end of Q1 2020 was about SGD 1.35, which represents 125% increase. Dividend per share or the first interim dividend is SGD 0.75. So this chart is showing the breakdown of our AUA by market and by product. So the left-hand side is the AUA breakdown by market. Our Singapore operations still account for about 2/3 of the total AUA followed by Hong Kong and Malaysia and India and China. On the right-hand side is the breakdown of the AUA by product. UTs still account for close to 80%, but you will see that there's also some increase in the percentage of stock and ETFs, bonds and cash account. Next Side, please. So this chart saw the trend of the recurring net revenue versus nonrecurring net revenue from 2004 until 2019 and also first Q 2020. So the average contribution from recurring net revenue as opposed against nonrecurring net revenue in the period from 2016 to first Q 2020 80.9% which is slightly lower than what we've recently been seeing because of the increase in the nonrecurring net revenue, mainly from the stock and ETF processing fee and gross margin income. Next one, please. Okay. This chart showing the net revenue as a ratio of average AUA. As mentioned earlier, because of an increase in the nonrecurring net revenue, our ratio is for the nonrecurring net revenue about 0.2%. But on the other hand, the percentage for the recurring net revenue is still quite stable. It's roughly around 0.59%. This table is showing the net revenue by country. So at the first Q 2020, Singapore account for about SGD 12.2 million net revenue, followed by Hong Kong SGD 4.8 million; Malaysia SGD 1.55 million; and China SGD 260,000. So the Group had net revenue by SGD 18.8 million. This is P&L by country. So Singapore achieved a 76% increase in the PBT, which is about SGD 3.5 million; Hong Kong 134% increase, about 1.5 million. There's a slight drop in the PBT for Malaysia. The reason may be because of the completion of some IT projects sometime last year, so this contributed to the slight decrease in the PBT for Malaysia. Other represent a share loss associate. So the PBT, excluding China, is about SGD 5.5 million, up 81% increase. Tax expenses there is some increase, the reason is because of the increase in the taxable profit in Singapore operations and also the unutilised tax losses in Malaysia, the amount was fully utilized in last year already. So as a result, the PAT is about SGD 4.7 million, about 73% increase. China, we record lower loss, which is about SGD 1.08 million about 4% lower compared with first Q 2019. So our PAT, including China operation, is about SGD 3.6 million and 127% increase. Next slide. So this chart does show the P&L by country from 2016 to 2019, also first Q 2020. Lastly is the first interim dividend for the first quarter 2020. The dividend will be SGD 0.75 per ordinary share. Next dividend date is 22 of May 2020, record date and time will be at 5:00 p.m. on 26th of May and payment date will be on 5th June 2020. That's all for my presentation.

Thanks, David. We'll now move on to some of the matters regarding the AGM. As we noted, this is a pre-AGM session. It's not the actual AGM itself. So we have these sessions because before shareholders submit their vote, that certainly you need -- a lot of shareholders who probably want chance to ask directors and mention some questions. So that is one of the key mention on this particular session. At this point, I'll let Jean Paul to touch on some of the points about the AGM reporting.

Thank you, Chung Chun. So I'll just run through a few points of our shareholders taking their vote regarding the AGM which will be held on Monday, 27th of April at 10 a.m. We strongly encourage investors, especially the shareholders, of course, in this case, to exercise your voting rights as shareholders by submitting the voting instruction by proxy form. The cutoff time for this proxy form submission is 24th of April 2020 at 10 a.m. So that's Friday, 24th of April 2020 at 10 a.m. But you can do so conveniently by e-mail. You don't have to submit the forms to us. You can email your proxy forms to us to this email address, [email protected], which you can see in our presentation deck currently as well. And shareholders may pose questions related to the AGM resolutions using the Q&A function that you can see in the live webcast currently. The company will endeavor to do its utmost to address the substantial questions at the AGM. So for more information, please visit our website, www.ifastcorp.com or please email us at [email protected]. So with that, I will invite Chung Chun once again to run through some of the AGM matters.

Well, just to note that I think all of Directors are actually present here as panelists. Five of us are here in iFAST office. But the rest of Directors are essentially at home, but they have on it, I think you can see their faces. So feel free to pose a question later on for the purpose of -- yes, to any specific Director that you actually reached. We chose to essentially conduct this session at the time when we release our first Q numbers as well, because we feel that it's good for us to actually release the first Q result to show more details of the progress and then we take the various questions from shareholders at this point in time. Today's session is actually the chance you have to pose your questions before you actually submit them. I think, as Jean Paul earlier told, the deadline to submit your form via proxy will be to tomorrow 10 a.m. and you have to submit. I guess you need to submit it online by email. So later on, feel free to ask various questions. Yes, this slide here we show the various resolutions that will be in the AGM. There are 10 items. I will not go through in detail. Just need to note that the various information has actually been sent. Item 2, 3 and 4 are with regard to the reelection of 3 of our Directors. The annual report -- the back of our annual report already has additional information on the various Directors. I will run through it in detail. Item 9 is pertaining to potential grant of options to myself. If there's any question on that, I'll direct that to our Lead Independent Director, Matthias who's sitting next to me. So these are the 10 items that are actually there for the AGM. The actual AGM will actually be next Monday. Yes. I will now move on to the Q&A section. So the Q&A for this may cover the questions with regard to the business progress or the results of the various regions. Do you need to -- that I want to ask a question using Zoom?

Maybe would just highlight to our viewers who have joined us for this virtual information session that you can actually make use of the Q&A function in your Zoom application. If you open a Q&A window by clicking on the Q&A button which is located at the bottom of your screen, then type your question into the Q&A box and click send. And a message will appear below your question to indicate that it is currently being answered by us. So please give it a try. If you do want to ask questions now during this live webcast, I think what we can do is -- we have already, of course, received some questions from our shareholders and investors prior to this live webcast. And I think what we'll do is perhaps to take some of these questions first, then I'll invite Chung Chun to answer these questions.

Yes. So we have some of these questions that have shown on the screen. So first 3 questions relates to COVID-19 impact. Firstly, how has COVID-19 impacted the business in China? So with regard to China, I think it's worthwhile noting that in the various markets that we're in, China is actually the one that tends to be the most digitized in terms of the way uses [indiscernible]. So on the part of iFAST China, even before this COVID-19 situation, we do find that 99% of our transactions are actually done online. So with the COVID-19 situation, which you find that other than the impact of the overall condition or stock market in terms of the way the transactions are handled is not a major effect because account opening, transactions and so on can continue to happen smoothly. What has changed perhaps is that when it comes to having business meetings and so on then, these days most of them will actually be conducted online, video conferencing, et cetera, rather than physical face-to-face meeting. I think that would actually be the impact that we have seen. As for the other country, I think the effect on how we do business varies somewhat. But I would say that by and large for us, the overall ability to continue with our business has not been affected. And I think you can actually see in our results that we continue to build and run our businesses smoothly. Is iFAST Biz business affected by COVID? I suppose there are 2 angles to that particular issue. On the one hand, the COVID-19 situation have tremendously negatively impacted the economies all around the world. I think we're just leading to the worst recession that the world has seen in that game. So from that perspective, as a result of COVID-19, you will find that there's sharp upsell in the Group's market. But in our case, because of the fact that we are able to continue to take on the transactions and company, et cetera smoothly, then our ability to handle business have actually not been negatively affected. In fact, on the flip side, we do find that as a result of the decline in the soft market this time around, more so than most other declines in stock market previously where you find that investors have been coming in, in a much stronger way than before to open account and to purchase -- make additional investment on our platform. So as you note, during the -- in the results that we just reported this morning, in the first quarter, we actually have seen record net inflow for the Group. First quarter, we saw a net inflow of SGD 590 million of client assets onto our platform. So that has been a record, and I think this is just for one quarter. I think as -- in terms of our comparisons for the full of 2019, we saw net inflow of just under SGD 1 billion, so to have a SGD 590 million in first quarter, that's actually been a strong quarter. Yes. So overall, I think the overall net effect for us is that in terms of business, so far, we are actually coping relatively well. Question 3. How will the business be affected if the COVID-19 lockdown extend for another 3 months? So as I mentioned, we are able to do our company transactions online. So we are pretty much not too affected. Of course, we have the B2B and B2C part of the business. B2C actually we are doing the business online, and I think B2C Singapore particularly, we've seen a big surge in account opening for our B2C business in Singapore has been -- has seen a record high level as well. So that's actually not affected. The B2B business, historically, there's some portion of the transaction that actually has been done on paper as opposed to fully online. So even though we have the tools to actually allow all the businesses to be submitted online, I think the financial advisers, they are, as a matter of habit, a certain amount of business is actually done by a form and that's submitted to us. Due to lockdown, we have a circuit breaker that we actually see right now, which you find that we essentially were taking the transaction online or via online form or just the online transaction be submitted directly itself. So from that perspective, we actually find that the business will be able to carry on. So to answer the question, even if it extend for another 3 months, then our ability to conduct the business would not be negatively impacted. I'll move on to some of the other questions. The next 3 questions pertains to China. Firstly, what gives you the conviction to continue growing across China despite pressure from shareholders and the losses? I think I'll start off by saying that it's true that China business has progressed -- Sorry. I'll start off by saying that it's true that China business has progressed more slowly than what we originally anticipated or targeted. I think 2019 itself has not been a good year, has been a poor year for China, it has the ability to ramp up the assets for us. But I think if you look at the results that we have just posted for first quarter, actually, China is actually the only market where we actually have an increase in AUA during the quarter -- in the first quarter instead of decline. Most other market see a decline in terms of AUA because of the fact that the equity funds have been slowed down overall. In China, we -- our inflow actually such I was still able to grow the business. So I would say that 2019 has been a poor year. But in the last 3, 6 months, we certainly would see some encouraging trends that are suggesting that things are improving. I think a number of questions quite often comes about with regard to, yes, how long we expect to be able to breakeven in China and so on? I think we do have [indiscernible] in terms of when we will be breaking even and so on. But I think along the way, if you take last year, we have actually not progressed in a way that we have anticipated, so because of that year has been a bit slower. What is key for us really is ability to make progress as we move on. And I think the last 3 to 6 months is the periods where we're seeing the more encouraging sign. I also like to note that, yes, it's true that some shareholders actually are not too encouraged by our China business. And I think sometimes that feeling is compounded by the situation whereby the loss that we're incurring in China is quite sizable relative to the whole Group. So the size of our overall profits from general markets in a sense helps affect the level of patience that shareholders generally have. But I think if you find that other markets continue to grow, like Singapore, Hong Kong, Malaysia, if that continue to grow in the size of profit that we're generating from those markets, a high that quite clearly, I think most investors will start to realize that it certainly move forward to continue to push on the strategy. So in the first quarter, we saw that as a Group, we boosted net profit of SGD 3.6 million. So excluding China, we're actually looking at about SGD 4.7 million in terms of the overall profit that we made during the quarter. So as we move on, we expect that the businesses from the other markets in terms of the profit will continue to be able to grow and then the view in that context, China is certainly an important market that we should continue to persevere and push on. That's how we look at China's situation. I'll move on. The next 2 questions is with regard to digital banking, impact of digital banking license if approved and the progress of virtual banking license? Yes. So the digital banking license application in Singapore is something that has been in progress in terms of the application. During the last few months, we have actually been handling all the additional queries that comes from MAS and so on. And I think we have made some progress in that application, but it's a work routine that couple of weeks ago, the MAS actually announced that the timing for the announcement of the award of the license will be delayed. Originally, the intention for MAS was to be able to announce who are the successful digital banking division sometime in June. But few weeks ago, they updated to say that given the COVID-19 situation, they have to push that impact somewhat and they have mentioned that it'll be in the second half of this year. So that's what it takes on currently. The impact of the license approval, I would say that if we get additional banking license in the medium to long term, it certainly will be a major positive impact in terms of the -- allowing us to be able to expedite our growth rate overall going forward. Of course, even before that, we certainly expect that as a platform we're -- while we continue to -- work on to improve, we'll continue to be there. By having the additional license will allow us to tap on the banking license to enable our overall platform business to scale far more quickly, especially on a cross-border basis than before. That's the way you should see. The next question is with regard to ETF. When can we expect ETF on the platform? Prices or portfolio and maybe an update more frequently? I'll like to direct this question to Jean Paul. Jean Paul, in addition to be our Corporate Communications Director, is also the GM of our MSN Singapore business. So I'd like him to take that.

Yes. So actually for ETFs, investors who have FSMOne account in Singapore, for example, they can already trade in ETFs via our live trading page on fsmone.com. And these ETFs are -- those ETFs listed on the markets are exchanges that we offer or distribute. So those would be the Singapore exchange and for exchange as I said, U.S. exchanges. So you can already as an investor trade on these ETFs. In terms of the prices, you can using the live trading function trade into stocks and ETFs on our platform, right? So you'll be able to see the prices of these securities being updated as and when they're trading on any normal day. So you'll see the prices fluctuate and you'll add accordingly. Maybe perhaps I'll just also tackle the other question, which is also related to FSMOne because we have an investor asking about the commission rates for trading in FSM or in diamond. So actually, this question, I think it's interesting to perhaps know that we've been already offering a flat commission rate. So in that sense, there is already a flat commission rate of just SGD 10 for our gold and diamond investors trading in Singapore Exchange stocks and ETFs. And what we've done earlier this year at the start of January 2020 on fsmone.com, clients who are also silver clients, that means a lower tier of AUA, and that's an AUA level of [indiscernible] and above, they can also enjoy this flat trading commission rate of SGD 10 on SGX stocks and ETFs. So we've been trying to allow more of our investors to enjoy this flat commission rate for trading because obviously that will help them to trade in the markets easily and also, of course, at low costs. It helps you now with the portfolio's performance. So that's something that we have been doing already on fsmone.com. So we could be working on more initiatives and so on going forward. So that's something our investors should keep an eye on.

Okay. We have one question that came in with regard to technology risks. The question is what is in place if the whole network is hijacked by a hacker. Well, for this, let me invite our Executive Director, Dennis Goh, who's dialing in from home, I think you can see him. Dennis, you take on that question, please, you're our key IT guy, so you're more equipped to answer this question.

Yes. Thanks, Chung Chun. Hi. Can you guys hear me?

Yes.

Okay. Okay. So I would like to answer this question. So the question is what is in place if our whole network is under attack by a hacker? So I guess to start off, I'll probably give a quick outline of what's our IT risk management framework as a backdrop to this question. So I think firstly, iFAST, we are licensed and regulated by MAS. So iFAST Financial Singapore will need to comply with MAS TRM, which is the technology risk management guideline in Singapore. So with regards to this, we also implemented best practices, which is recommended by ISG-CERT, Singapore -- I mean, which stands for Singapore computer emergency response team as well as other international organization like ISO, IEC, which is like International Electrotechnical Commission or SENS. So various global bodies or standards on how well we adopt in our systems as best practices. So this on the policy front. So other than this, we also conduct annual service security resize of security teams to train our teams in terms of various security scenarios. So other than that, in terms of the practices, iFAST will also conduct BCP and our DR decided annually to activate our -- in the case we need to activate our BCP or DR incidence. So other than internal exercises, which we combat, because in Singapore we're also SGX broker, so we also do conduct external activities with SGX or in Hong SFC as well. So with regards to the whole network being compromised, I'll answer in 3 angles. We have detection, response and prevention capabilities to deal with such incident. So in terms of prevention, what we do have is like DLP, which stands for data loss protection. This will actually automatically tap or block attackers. Let's say, any of them have enter into our system and they try to export our files, which actually contains data like customers or corporate information. So other than that, the DLP solution, this will still have incorporated in terms of automated response or ML in terms of like machine learning that will have to actually actively monitor and stop malware. So that's in terms of the prevention. In terms of detection, what we have is that we have various security monitoring solution that's endpoint network and service level. So these solutions will actually provide alert to our teams and it may say there are certain indicators that's actually being triggered. So in terms of response, what we have is that we actually -- though we have all this in terms of prevention and detection, we're actually also mindful that incidents can still happen despite our best effort. So in terms of this, we actually -- have actually put together an IT incident handling and recovery protocol. That's actually in line with our [indiscernible] in place. So with all this, we actually do -- we are quite confident in terms of what we have put in place to be able to mitigate and address any incidents that occur. So I hope that answers the question in terms of the hacking.

Thank you, Dennis. I will now like to take on the questions that have been coming online, because we started this session just now. First question, yes. So the question is, were there any abnormalities that caused the Singapore segment to do well? Such as heavy buying and selling of the investment product and driving up commissions on this revenue expected for the next few quarters? I would say that the decline of the stock market this time around has caused the overall stock market volume to actually be higher in the last few months than the months before. And I think that it's something that is seen not just by ourselves but buy most stock brokers as well. What is different for us certainly is that in the past you'll find that stock broking was actually not that significant part of our overall revenue. But in the last few years, we have actually been growing the revenue from the still working business. And I think we have come to a point whereby the growth in someone who kicks up the revenue start to -- be able to more positively benefit the overall business that we actually have. The growth that we actually see is partly as a result of the current situation on the increased volatility, but it's also a reflection of the fact that the business model that were put in, it takes time for it to grow to a sizable level at each area we've been growing. And I think -- so that constant improvement in the overall volume has a big impact and now we're actually seeing it more. Well, I suppose the question is, do we expect that to continue? I would say that overall, we do expect that the stockbroking site of the business can continue to grow for us even after volatility start to be reduced a bit. But what is also worth noting is that the growth is not just from the stockbroking side of the business. We have seen quite strong inflow for the overall business we have as a platform. There's a strong inflow in interest of the business as well. The ETF business has actually been growing quite well also for us. And the overall customer access including cash is coming on to our platform that has actually been going to increase. So all this add up to the increases that we have actually seen. I'll move on. Could you share a bit more on the resiliency of the AUA, it was very strong? Yes. So firstly, I would say that this time around the growth in AUA, yes, has been helped essentially by -- not exactly COVID AUA, but rather the fact that AUA didn't decline much. I think that, to a large extent, was because of the fact that net inflows has been very strong. As I noted, it was SGD 590 million during the quarter. That was actually led by the Singapore business in terms of the absolute [indiscernible] especially. We have also seen quite strong flow in Malaysia. In Hong Kong, strong, general flat, even though March was very strong, but the Group as a whole has actually seen a very strong flow in the 3 months. I think the fact that flows have been improving other than the big dependent on some market conditions. I think it's also a reflection of the fact that the business model that we've been putting in, that we've been working over the last few years, that is actually giving rise to the benefits that we have been looking for and that we've been expecting. So it's actually a broader range of services as a wealth management platform. If we use -- we just have actually a trust network now. We're a well-managed platform, so we see flows coming in, in terms of not just unit trans, but ETF, stocks, cash bonds. So I think that strategy is something to show through in the numbers in a more positive way. And I think that is in part the reason why the AUA number has actually been holding up pretty well. I'll move on. [indiscernible] more brand, from Singapore government for COVID-19, since iFAST did not get impact from COVID-19, will iFAST still need all this grant to society? I suppose, yes, perhaps certain shareholders may feel that we do so, but at the same time, I believe there will probably be a lot of shareholders who would disagree with the need to meet all society. But what I will say is that certainly, we feel very fortunate that we have not been negatively impacted so far or too negatively impacted so far. And we would be looking at doing our part in terms of helping the overall situation in society as we move on less and lower. When can dividends be paid? David, do you want to answer that?

The final dividend we will pay on 19th of May and the first interim dividend will be paid on 5th of June.

Yes. So there are 2 dividends that are coming up, one is a final dividend that was declined previously, which will need the approval of shareholders next Monday at the AGM. The expected date is 19th May and then what we've just -- what the directors have just declared for first Q that will be 5th of June. What resulted in a quarterly net -- what resulted in a record profit is likely to be a one-off. I would say the short answer is no, we don't think this as a one-off. The -- if you look at the details of the number, it actually shows that our core business as a whole have grown quite well. We noted that end of last year, we hit SGD 10 billion in terms of AUA. During the month of March as a result of the sell-down in the global stock market, we saw the AUA declining below SGD 10 billion. But as we noted as well, it is mentioned that we just put up in the results this morning that we have as -- as of 22nd of April, I mean, yesterday, we had -- we hit the SGD 10 billion. So the AUA is an indication of -- a strong indication of the overall health of our business. So yes, we do think that a strong result in itself. Excluding Singapore banking license, are you still committed to bring your expense to single-digit growth in 2020? Yes. So when we mentioned about the single-digit growth, I think the previous quarter, we did talk about the other net expenses number. And I think we talked about a growth ranging of about 7% to 9.5%. In absolute amount, we are looking -- we guided for 59.9 million in terms of expenses -- a range of 59.9 million to 61.1 million. That was a range of expenses that we've guided. We are still looking at the same rate of expenses for this year. Even though if you look at the growth of first Q, I think it was 13% or thereabout. But that's for the quarter. For the year as a whole, I think we're still looking at the rates that we actually mentioned. Can we expect the loss from China to be trending down going forward? We are certainly looking part on achieving that. And we hope some of the reserve improvement in flows that we see will continue. And if that's the case, then we will be in a position of seeing that trend going forward. On synergy of the partners and financial and funding society in your bid for digital bank license, I think there's probably some misunderstanding here, and financial and funding society is not our partner. Our partner, as we have mentioned, essentially our 2 Chinese company, 1 of them is Yillion Group, which owns a digital bank in China itself, which also have -- they have strong shareholders. I think that will be a strong partner that certainly add a lot of synergy to what we do because bidding for the digital banking license, we are looking at that being able to help our overall wealth management business, especially on a cross-border basis. China will be a bottom of that. So we see that as a strong synergy with some of the partners there. Yes, that have gone in into the application together with us. Are share buybacks allowed by MAS? The answer is yes. We have done some of that. Next question. Looking further in the states, again, I mean using same 0 commission fees on the platform, but iFast management towards this in the future. Singapore stockbroking has also lower noncommission fees, cash upfront and iFast precaution not to lose their market share. How can iFast precaution not to lose market share in Singapore? I would say that we have been aware of this, one that commission rates for stockbroking are certainly on the downward trend, and it will continue to be so. And we -- and how can it go? I think U.S. brokers have given the answer. They can be 0. I think that may happen one day in Singapore, even though on an year-to-year basis for the next couple of years, we think that, that probably what happened that soon. What is important to note is that we feel that iFast is one the best position to be in a position to continue to make our commission rates for stockbroking more competitive if we want to. Actually, we are already the most competitive, because I think for a large segment of our client now, they're able to buy and sell Singapore stocks for $10 per transaction regardless of site. So certainly, we're in a very competitive position. We will certainly want to make sure that we continue to be one of the most competitive, if not the most competitive. And I think our ability to do that is because of the overall business model that we had in terms of combining some of it with the overall wealth management business. So I think we are well positioned for that. But we are not in a hurry to bring it down to 0 because I think sometimes charging a small amount is better than charging 0 because that allow us to continue the improvement in services. It's not too much of a pain for clients to be paying $10 certainly. But I think for us, when we aim to get the $10 across many different client base, different transactions, it does add up to a minimum stock that will allow us to improve the services. That's how we see it. For Malaysia market, we all know when can the investors give a trade, grow some shares by FSM Malaysia? It's something that we have been applying for. We're waiting ourselves. We are hopeful that we can be successful. We are hopeful that we can get some kind of answer sometime this year. That's what we are waiting currently. And I think if we're able to do that income services in Malaysia, scale up even faster. There's a sudden decline of markets in late February. There were clients who are unable to settle their debts or -- with the impact to the results. I think for us -- yes, JP, you like to take that question? In terms of when there's certain -- yes, certain decline in markets. Would there be any impact on our business?

For our business, because our clients open FSMOne conference, for instance, they have actually prefund the accounts. So actually, in terms of what they do, they prefund their cash accounts. And then they are able to use the money in the cash accounts to start trading in stocks and ETFs. So this point about unable to settle the trade is not an issue for our business. Yes. And of course, if it's entirely prefunded, then they need to basically transfer the money in a convenient way, which is the case, internal cash accounts before they start trading.

Okay. Next question, JP, as well. How was the trading velocity in various market, the growth rates of newer companies?

Yes. I think in first Q this year, what we've noticed generally is those markets that have been impacted negatively in a very strong manner. So we're talking about, let's say, U.S. markets, Singapore market, so the kind of trading volumes in those markets was especially strong. I guess what it meant was that investors saw opportunities to trade actively the prices. So these stocks and ETFs were being volatile, were coming down in iFast. In terms of the new account openings for us in Singapore, yes, account opening profile was especially strong in first Q. And I think one key reason for that was for investors, I think, wanted to participate in other markets have been coming down and were looking for bargains quickly. What these investors probably noticed was that for us in Singapore, FSMOne is one of the very few traders where you can open an account seamlessly, very conveniently and very quickly. So basically, the ability to start trading very fast is something that we wanted to make it as easy as possible for investors and, therefore, the growth rate has been especially strong for us in Singapore. But this is also the case for new accounts by opening numbers. It's also the case that the numbers are quite high in some of our other markets, including Malaysia as well. And how do we see these 2 variables going forward? I think for investors who find that they want to participate in the both of the markets, they want to join in the equity markets and take part in U.S. markets, Singapore markets and have that in their portfolio. They only find that in terms of the services we have online is very seamless. Probably one of the most active players are out there. In terms of constantly working on our fintech developments, we can get better for our consumers and our investors. So I think if you look at that factor, the convenience side of things and the cost side of things as well, we do hope to see continued strong growth rates in terms of the kind of account growth that we have seen in first Q as well as, of course, the volume in terms of interest in terms of investors wanting to trade.

Next question. Are there more plans on the trading platform for FSMOne products? Whoever you want to access to London Stock Exchange markets will, JP?

Yes. I think for the addition of the new foreign exchanges is not something that's immediate. But we are working on some other services that we hope will help investors to trade and move things more conveniently. So that's something we're working on constantly, so that's happening and in the pipeline. So for the LSE specifically is not something that we're working on at this point in time. But for the overall iFast platform, there could be some of these additional exchanges being added in the remaining months of this year.

In digital banking business model, how do you differentiate from other peers? And what's the revenue model, lending or money transfer or both? Yes. So as far as our digital banking is concerned, I think as far as I do think that actually, if you look around the world's digital banks or challenger banks actually loss-making. And I would say that the reason that is the case for most of them is because they actually find that they actually have to spend a lot of money trying to acquire the deposit base, account base and deposit base. There are a lot of banks that we acquire a huge account base, but trying to acquire a deposit base actually is difficult and is expensive, meaning they actually have to pay a big premium in terms of deposit rates to attract the depositors. Our belief has always been that in order for a bank to be successful, you need to have a natural fit to attract a deposit base and deposits without paying unnecessarily high deposit rates. I think that is actually important. That's key because it is essentially something that determine your competitiveness as a bank and ready to acquire deposits seamlessly without having to pay a high deposit rate will also affect the lending side of the business. Because if you have to pay up a lot to bring in a deposit, then certainly you need to be lending at higher rates than the traditional banks. And you have to lend a much higher rate than a traditional bank then it means that you probably are forced to lend to companies that do not have as good standing in terms of credit condition that will in turn then introduce additional risks to the overall lending business. So in the case of iFast, we feel that we actually have some natural strength because we are a strong player in the wealth management business. And as a wealth management platform, we already have deposit base naturally coming in every day, right? We actually have deposits coming in. And that actually complements the overall banking business very well. So we feel that, that actually will position us very well in the digital banking business, and that is -- we believe our strongest differentiator versus other leaders because I think most other leader will actually find that you actually take a while before consumers will actually be comfortable putting more deposits there. So our differentiator comes from the wealth management business, which naturally you have a lot on. And that will allow us to then build a far more robust and healthier net mix other businesses. I'll move on. Is iFast still looking for partner for the Hong Kong and China business? I would say that there's 2 size of the partner. One is, of course, a business partner does -- those who are using our platform, and we're working with or and really our products and so on. That range of partner continues to be expanded all the time. I think the -- this question could be asking more about whether we're looking for a digital partner. I think that is something that we are basically open to and that we will be exploring from time to time, but it's not something that is urgent for us at this point. Do you think trailer fees business model is sustainable? The face of pressure of lower management fees in the industry. The short answer is yes, trailer fees are sustainable unless there is a change in regulation, meaning if the regulator in Singapore or the markets that we're in decide to take the signs of some markets like U.K. meaning the bad trailer fee, the bad commissions, which include a trailer fee, if that happens, then, of course, there will be no more trailer fee. But if they don't do that necessarily trailer fees are suitable. And in fact, the trend in the markets that we're in has been that they just have had to perhaps be shown sufficiently with the various distributors who have the volume. But with regards to the earlier comment that I made, what if the regulator decided to ban commission, which mean they ban trailer fee as well. I'll say that if that scenario actually plays out, I think iFast is actually, in fact, more -- better positioned than other key players in the financial industry to cope with that major change in business model, mainly because the business model that we have built is one that actually encourages and trends on transparency. So if trailer fees are in fact banned, you actually find the platforms like iFast can actually grow at a faster pace. And we have actually seen that in U.K. as well if you look at what should happen with the bank commission. So yes. So from that perspective, we are not too worried. Having said that, I also note that there is a trend towards ETF, instead of just actively managed fund. So we expect the future to be one whereby ETF will become a bigger proportion of our overall business. So trade ETF generally speaking doesn't give us trailer fee. And that certainly will be a factor that for in the future reduce some of the trailer fee that will come from the product. But then we see things evolving is that I think the ETF will be coexisting together with actively managed fund. And really as a platform, we are embracing both sides of the business. We certainly agree more than other players in terms of seeing that encouraging ETF as a product. And the key is that the -- as a platform, we have the revenue contribution from different components and will add up, and it gives us a sufficient revenue as a whole, both recurring as well as nonrecurring. That's how we see the business. Next, in light of the current wave of uncertainty in the world, well, I think it give relatively positive results. The prolonged lack of clarity at the end of pandemic and economic situation is the growth -- reassessing the growth strategy for the short to medium term? Are you being reduced OpEx? OpEx, will the situation improve? Our business growth plans, are they still on track? I would say that the negative impact will be if the -- when there's a negative impact on the overall stock market and stock market declined and that coming with some of the AUA to some extent. So that is a factor that warrants that we have to be mindful of the risks. But the flip side of it -- the positive side of it in fact is that the current situation is actually causing more businesses and in fact causing more businesses to actually going online. And I think if you take banks to do generally the key players in the wealth management industry in Asia, I think banks will probably see a -- because negatively impact because a lot of the businesses are still done by RI or through the branches and so on. So I think there's probably more impact on that part of it. I think for us, it doesn't -- the impact of how the -- from the way the business is done, I think we are a net positive. We will see a net positive impact from that. But of course, we have to be mindful of the potential downside on the stock market. All in, I would say that the current pandemic situation doesn't affect how we look at our medium-term plan for the platform business. In the BD interview, COO was targeting ambitious $0.20 return on equity from digital banking. Are you still confident on this target? Yes. At this point in time, I wouldn't go through too much detail on how we derive this number other than to actually say that when we look at additional banking business, what we have in mind is a business model that allows us to be capital efficient as well in addition to just taking deposits the way all the other banks are doing currently. We actually expect that we'll be taking on deposits in a manner similar to what we're doing today as a platform or the trust account, on the trust account might be -- meaning, we think the deposits or the cash that comes in from the client and then we pass it on to some other well-established bank, and we are actually we essentially add a fee income on that. So the ability to actually -- the fee income on a deposit base, not just on the investment product, but also on the deposit base, I think that is a factor that will allow us to be able to generate higher ROE than most other banks. That's the way we see it, which is why the number that we mentioned seemed high, if you take a perspective of a traditional business of most traditional bank. But from our perspective, if you look at the business model that we then look at as well as the fact that we have a natural ecosystem that will attract the deposit at relatively low cost, then we think there is a realistic target to be -- that we are looking at. What will expenditure allocated for digital bank? Probably expenditure has been for digital bank, if we get it, how will we fund it? I think as far as the expenditure is concerned, we haven't given guidance on exact amount. But I think if you take the current year, especially given some delay, we expect that even we are -- even assuming that we are successful in getting a license, the expenditure for the current year will not change too much. Of course, going forward into next year, they will have some increase. I think that is a guidance that we'll give when we, yes, get closer to next year. But I would like to say that generally speaking, we actually find that when it comes to the capital expenditure on building up the IT, et cetera, we tend to do it at a relatively lower amount compared to most of the financial institution because we are -- that's our background. We have been building systems internally all the time, and we have our big team of IT people who can actually handle this quite effectively. How will we fund it? There will certainly be a need to actually have more capital because the requirement for the DWB, the digital wholesale bank, is 100 million, so suppose we take a 65% stake, and we do need to have additional capital. I think there are the effective way of being able to do that. Yes. So I think there will be more at least for the capital, but I think the need for the expenditure will be a lot more managing. Other plans to include more exchanges? I think JP touched on some of that earlier on, but essentially, we see the key market as we pursue the respective markets that -- so it's like in Singapore, we're in Singapore. And then we have U.S. and Hong Kong. We expect to be, I think the China side of the market through the stop next. I think as we move forward, there will be some other area that we actually look at, but I think that the core market that we expect to be the most important will be Singapore, Hong Kong, Malaysia. Singapore, Hong Kong, U.S. and then eventually China. As far as other markets are concerned, it's something that we will evaluate. Okay. This question, I think that we have answered. Okay. I'll take that. Our FSMOne plan for its competitors or overseas. We have established operations in Singapore, like buying out brokers. I think the stockbroking business, generally speaking, in many countries, it's actually an industry where actually particularly -- by comparison, we actually know that in Singapore, they're actually not that many players in the stockbroking industry. And because of the overall strength that we've built in the wealth management platform and the overall business model that we have, including the AUA and the client base and revenue stream from the wealth management side of the business, we feel that we are generally quite well positioned to take on the competition from new overseas brokers that may see. This one is more a message to convey that we give respect your questions. Thank you for that. We'll move on next question, digital banking part of Singapore hubs, iFast recurring for competition from Hong Kong's virtual banks are launching. Yes, so as of today, we don't have a virtual banking license in Hong Kong. I said so the new virtual banks won't directly be a competition for us, but we look forward to be able to broaden our range of services going forward. Repeating my question has finally restriction on stock buybacks regarding Singapore-listed company. iFast planning to buy back if prices go down significantly. I suppose this question arises because in some jurisdiction in U.K., I think the regulator have asked a bank not to do any buyback. I believe there is some sort of such consideration that they are there for some of the Singapore bank. I think for the nonbank generally speaking, at this point in time, there's no restriction. So as far as iFast is concerned, today, we're not a bank. I think we compete well in the overall situation. So for us, there's no restriction. I think this one, it's related to an earlier question. Okay. Can you provide some updates on retail bonds offering in Malaysia? How is the growth in volume? The real bonds operating in Malaysia is a segment of business that we have been seeing steady growth. So the volume has actually been growing. But I think in terms of the absolute amount because of the revenue base contributing to the Malaysian business in total is not a big contributor as well at SGX, but it's a business that we certainly expect to become increasingly interesting as we move forward going forward. Are you able to extend this offering in other country? I think this is referring to the bonds business. We -- in few markets that we're in, including Singapore and Hong Kong, we do have the service that we call the Bond Express. You would like to elaborate a bit more on the Bond Express?

Okay. Yes. So for bond offerings, we did indeed launch it in Malaysia last year, but we've been having just bond offering our service in Singapore, more quite strong for a while. So if I can just use maybe Singapore as an example specifically to Bond Express. So with Bond Express, as long as investors and the credit investor, he's able to actually trade into some of these corporate bonds that we offer, let's say, on FSMOne.com, even that we believe are bonds at a much smaller amount of the usual wholesale bond amount of let's say, 250,000. So with Bond Express, you can do so at just 5,000 and above. So what it means is that for an investor who is able to trade in Bond Express corporate bonds, they're able to actually diversify our bond portfolio so much more easily because the entry level in terms of the investment amount is so much lower. So that's an offering that we have in the various markets that we're in. It's an offering that we call Bond Express. It's very popular with the various investors because of the reasons I just shared. So yes, we've seen quite good traction generally from the bond business in those markets that we're in.

Is there a plan to enable trading in the stock exchange of Thailand? Not in the next 1, 2 years. Next question. Will iFast consider to expand to more Asian countries like Thailand, Indonesia, Vietnam or Philippines? We will certainly consider even though in the next 1 to 2 years, our immediate focus is to scale up further in the existing markets that we're already in. How would you compare yourself against Philips Securities and POEMS? A bit difficult for me to directly, without going to too much detail against a specific competitor. I'll just say that Philips Securities is a competitor that I respect. But yes, I think we certainly have always been ensuring that in terms of services, we can be very strong, and we are confident of ourselves. But it is a competitor that I personally respect. What do you see as the biggest threats for retail investing industry? In fact, iFast or is iFast positioning itself to overcome them and emerge as a leader? What's the biggest threat? Okay. Perhaps on this part, let me get into something a bit more philosophical as well. If you look at the mission statement that iFast have put out, we basically said we're here to help investors invest globally and profitably. And that's something that is very close to my heart because as a former analyst and I actually somewhat a shareholder at heart, when I look at the overall retail investing industry, I look at the overall wealth management player, I find that there are many wealth management player out there. They are not really prioritizing how -- what it takes to actually be having a business model that would help investors to invest profitably in the long run. My view is that, that is an important consideration for the long run. That is a important consideration in terms of ensuring that as a wealth management player, as a player in the retail investing industry, we can be successful. There are many products that are sold out there in the wealth management industry today. There are really not products that are meant to benefit the retail investor. There are management that are sold because they benefit the distributor more or benefit the investment bank help to create those such products, et cetera. I think that is actually the way we see what's happening in the overall retail investing industry or even private banking industry and so on. So if you ask me what's the biggest threat for the industry, I would say that it will be for players who are actually not taking a long-term view in terms of what is the right advice for retail investors or for that matter even a creditor, still a long run. Players who don't put in place a good business model to emphasize advising their investors on the right product, I think they will be the ones that actually see a bigger threat over time because as the world becomes more transparent and financial products will become more and more transparent when business model moves more and more online. Then you actually find that the repeat for different wealth management player to sell products that are not transparent and they're not in the best interest of the investor. That really will certainly go down. And I think you'll see that as something that will be looking against them. iFast is positioning ourselves as an entity that will be there to benefit from the longer-term trend, whereby you see greater transparency and greater efficiency in the overall cost. So from that perspective, we believe that in the longer term, certainly, iFast will be model. Next question. Any plan to leap iFast in Hong Kong? As far as iFast hub is concerned, the short answer is no at this point. But in terms of the subsidiaries that we have, whether it's our Hong Kong business, I think we feel that it's possible that one day that is a direction that we actually want to take to separately release our Hong Kong and China business, and we do so that Hong Kong will become a natural Asian hub. What challenges did we face in Hong Kong since we saw a drop in proportional contribution to overall iFast revenue? Will we continue to face the same challenges going forward? If so, how will we overcome this? I would say that there's no specific additional challenge in Hong Kong that happened, other -- I think you're talking about the first quarter results. I think the observation that we saw was that in Hong Kong, the -- for the month of March when the market declined substantially, then we saw some outflow for the month of March in Hong Kong. But for the quarter as a whole, we still saw a net inflow for us. So even from that perspective, you actually find that Hong Kong didn't grow -- didn't do as well as, say, Singapore during the quarter. But on an overall basis, I can see that there's additional challenges for us. Okay. I think that is pretty much the -- I think there's one more question. Any other growth opportunities you are looking at given the COVID-19 situation and leveraging -- any other growth opportunities you're looking at given COVID-19 situation on leveraging all of your strong financial position or whether to be conservative in the coming months due to the uncertainty? Yes. So I would say that the first thing to note is that we are coping relatively well during the situation. And given the online nature of our business where most transactions are being done online, we are actually in a position to hopefully increase market share in the industry as a whole. I think that will be the most obvious benefit. And financially, we're also strong for cash flow, strong balance sheet. And we also hope that actually demonstrate that, yes, in terms of potentially looking at digital banking business that we should be seen favorably as well. Is iFast entity in India planning to get into retail brokerage? The answer is iFast in India is already doing some kind of -- yes, stockbroking business. But in India, our main business is more on the B2B side of it. So we are seeing the contribution from the stockbroking side, but it's not big at this point. Okay. With that, I think we have taken on most or all the questions that have come through. Is there anything else that we need to address? Just a reminder about -- yes, we just want to issue a reminder about how to vote, JP.

Yes. So to all our shareholders on this call, you are able to actually submit your proxy forms, e-mail to us at [email protected]. So we're sharing the slide once again with you. The cut off time for the submission of the proxy forms is tomorrow 24th April by 10 a.m. And of course, we will take in your proxy forms, votes and of course we'll be tabulating that. And the results will be shared at iFast Corp. AGM on Monday, 27th of April at 10 a.m. I guess essentially today's virtual information session, the management team and the Board directors wanted to engage with shareholders and investors in a open, transparent manner, taking in the questions that you have. And I hope that this session has been able to achieve this goal. If you have more questions, we're happy to take them on. So please email us at [email protected]. Please keep a lookout for more information on our corporate website at ifastcorp.com as well. And I think with that, we can perhaps officially wrap up today's virtual information session. Thank you, everyone.

Okay. Thanks, everyone for participating. Thank you.