iFAST Corporation Hikes its 2Q 2024 Dividend by 36%: Can the Fintech Continue Raising its Dividends?
The news keeps getting better for iFAST Corporation Limited (SGX: AIY).
For its second quarter of 2024 (2Q 2024) earnings, iFAST hiked its interim dividend by 36% year on year to S$0.015.
This result comes on the heels of its previous quarter results which saw the fintech report a stunning 387% year-on-year rise in net profit while increasing its interim dividend by 30% year-on-year to S$0.013.
Income investors may be curious to know if the fintech can continue to increase its dividends for the remainder of this year.
Let’s dig deeper into the group’s latest results to find out.
An impressive set of results
A company can pay more dividends if it has the cash to do so.
In other words, if iFAST grows its revenue and makes more profits, it stands a better chance of increasing its dividend payouts in the future.
With that in mind, how did it do in the latest quarter?
Total revenue for 2Q 2024 surged 72.9% year on year to S$93.7 million, helped by a more than tripling of interest revenue to S$9.7 million for the quarter.
Operating expenses rose by 50.2% year on year to S$41.4 million, leading to operating profit soaring close to fourfold year on year from S$5.1 million a year ago to S$20.2 million in 2Q 2024.
As a result, net profit leapt more than fourfold year on year to S$16 million.
The strong performance was attributed to contributions from the Hong Kong ePension business along with improvements in the group’s wealth management business.
As of the end of June 2024, iFAST boasts a strong balance sheet with S$560.5 million of cash and cash equivalents with S$111.9 million of debt.
In tandem with the good results, management has declared an interim dividend of S$0.015, 36% higher than the S$0.011 paid out a year ago.
Record AUA amid healthy inflows
The improvement in iFAST’s top and bottom lines was accompanied by a rise in the group’s assets under administration (AUA).
AUA hit a new record of S$22.37 billion as of 30 June 2024, up nearly 19% year on year.
The increase in AUA was driven by net inflows of S$790 million for 2Q 2024, up 45.5% year on year compared with the net inflows of S$543 million in 2Q 2023.
For 1H 2024, net inflows came in at S$1.5 billion, up nearly 70% year on year.
Elsewhere, bonds turnover hit a new high of around S$950 million in 2Q 2024, more than double the turnover of S$400 million achieved in 2Q 2023.
The increase in assets on its platform is a sign of the customer’s trust in iFAST.
Hong Kong ePension contribution
The Hong Kong ePension division has officially commenced operations during 2Q 2024 and is onboarding more trustees onto the platform.
As a result, net revenue for the Hong Kong division shot up by over fivefold from S$5.7 million a year ago to S$28.5 million in its latest quarter.
Management has not updated its Hong Kong division guidance since February this year.
Hence, the group still expects Hong Kong’s net revenue for 2024 to be higher than HK$650 million while its profit before tax to be higher than HK$250 million.
The ePension division will continue to be an important growth catalyst for the fintech for the remainder of 2024 and into 2025.
In 2025, the Hong Kong division should see even higher contributions next year with net revenue projected to exceed HK$1 billion and profit before tax coming in at more than HK$500 million.
iFAST Global Bank seeing more traction
Over at iFAST Global Bank (iGB), customer deposits continued to grow.
As of 30 June 2024, deposits stood at S$646.62 million, an increase of 80.3% year on year.
The increase in deposits led to a more than tripling of net interest income to S$1.85 million for 2Q 2024.
The bank generated revenue of S$4.6 million for 2Q 2024, up 62.8% year on year.
To be sure, iGB still incurred a net loss of S$1.6 million for the quarter.
However, this loss was 30% lower than the S$2.2 million net loss incurred in the prior year.
Meanwhile, the bank successfully launched margin finance lending to iFAST platform customers in Singapore during the quarter and is iGB’s first step into secured lending.
Over at EZRemit, the bank has onboarded counterparties in Saudi Arabia.
The Digital Personal Banking sub-division added Japanese Yen to its multi-currency account to enable faster and more efficient payments.
Overall, the group expects iGB to become an important growth driver in 2025 and beyond.
Get Smart: Well-positioned to deliver higher dividends
iFAST is seeing healthy momentum in its revenue and earnings as the ePension division commences operations.
Its core wealth management business is also seeing healthy inflows, boosting AUA to new highs.
Barring execution risks, iFAST looks well-positioned to continue growing its revenue and profits from its ePension contract while iGB is also seeing healthy traction in garnering customer deposits.
The group has performed well and looks ready to dish out higher dividends in the quarters to come.
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Disclosure: Royston Yang owns shares of iFAST Corporation.
The post iFAST Corporation Hikes its 2Q 2024 Dividend by 36%: Can the Fintech Continue Raising its Dividends? appeared first on The Smart Investor.