In the previous post, I shared my first article I wrote for The Smart Investor.
Embedded in that article are answers to some of the questions asked during the AGM.
- How are they going to grow at a CAGR of 27% to hit S$100 billion by 2030?
- Whether eMPF numbers will increase in the coming quarters?
- Who are their iBG customers?
- What are the value proposition of iBG?
Here are some additional snippets from the AGM. Again, it is not a verbatim. They are meshed up with my personal views, and by what I heard from 2023 AGM webcast which I watched on the same night.
Growth rate, net margin and cash flow
CEO Lim Chang Chun reiterated that growth will not be linear and there will be years that goes below that but other years they might achieve much higher growth. But on average, it is a possibility. S$100 billion is a stretched target but CEO thinks it is achievable and they are working towards it.
The increase in net margin is due to eMPF project. The margin will be similar for the next few quarters. They are looking towards to improve it in the future.
This quarter’s cash flow is not as strong as profit due to payment of eMPF received. However, the payment has come in since April, so that will pick up going forward.
iFAST Global Bank (iBG)
Among the three components in iBG, CEO thinks personal banking is the most attractive.
CEO described banking like an Old Boys Club – one can only be a bank if you are already a bank. Hence, it is less competitive as compare to stock broking.
Competition is always on CEO’s mind since they started. So while the overall landscape might be competitive, they will be looking for areas that are less competitive and tap into that opportunity. For example, when they went into online unit trust platforms in the beginning, there were only a few competitors such as Dollardex (I remembered had an account with Dollardex, rather than Fundsupermart then).
It’s similar for iBG. Their target is the mass affluent – those with 20k, 100k. Very few banks provide for them to open an account beyond their home countries.
UK banks are also not passing the interest to CASA. So the iGB’s interest of 4.25% is attractive and they just cumulate these deposits and place in Bank of England at 5.25% to earn a 1% spread.
800% LCR is not a target but it happens to be. As the group goes into banking, they still want to be relative safe and not take too much risk on their balance sheet.
There are some limits with iBG debit card, such as $30,000 payment limit and can’t be used to withdraw money overseas. The group is working with external vendor for its debit card, so there are things that are beyond their control.
The longer term plan is to have own payment license. And with YouTrip CEO Caecillia Chu on their board, they can learn from YouTrip.
China
Admit that they are not doing well in China. Normally gestation period for a region is about 5 to 7 years. Probably affected by recent geopolitical tension and China’s policy. Assume China continues to be a relative tough market for the next few years, so they are reducing cost but not pulling out yet.
In-house funds for SG Auto-Sweep?
The group is working toward T+0 for SG Auto-Sweep, so that can only be done if they use in-house funds. However, the in-house funds are still tapping into Fullerton funds etc. He opined that there are lots of good fund management in Singapore but they do not improve on administration efficiency.
Possibility on scrapping of Trailer Fees
There are different reasons that affect trailer fees. For UK, it is due to regulatory change. There was a conversation with MAS about this in the past. CEO opined that even if it happened, iFAST will benefit from it as there will be a boom for platform business if trailer fees is banned.
As for US, ETF is the main cause on the trailer fees compression. Hence, iFAST has both unit trust and ETFs on its platform. Trailer fees might drop but it will be compensated by other fees. The mix in revenue will then change accordingly.
That’s what I have.
Do wait for the webcast and AGM minutes from iFAST to hear directly from the man.
Trivia
The sound system wasn’t working at the beginning. The echo setting was probably not adjusted, resulting in echo after every sentence spoke. That resulted in a slight delay. I would have thought at MBS, such things would be checked before hand. On the other hand, it means I did not miss anything even though I was slightly late.
Good to have some refreshment at the end of the AGM. However, given the number of shareholders who turned out, I am wondering if they can go to other venues to save some cost and maybe give out some vouchers instead?