Chairman's Statement

Dear Shareholders,

Progress in 2017

In 2017, the Group saw significant progress on several fronts. Firstly, our Group's net profit for 2017 increased 65.9% to $9.04 million, on the back of net revenue of $49.45 million (+21.5%) and gross revenue of $101.17 million. Group net profit excluding China was higher at $13.21 million, as China is still in its initial phases of development, and is therefore contributing losses to the Group as a whole.

Chart 1 shows the net revenue and net profit of the Group (excluding China) from 2011 to 2017. Group net profit excluding China reached a record high level on the back of record high AUA in Singapore, Hong Kong and Malaysia.

Some shareholders have been concerned about the operating losses that we are currently incurring for China. The reality is that the nature of the investment platform business is such that losses are expected in the first few years of the set up before a critical mass is achieved. We see this initial phase as an important investment for the long run. China is expected to be the biggest wealth management market in Asia, and it is a market that we should not ignore.

In 2017, we also saw substantial progress in our continuous push for a better range of products and services on our platform. We have rolled out our stockbroking services in Singapore, and with that the core components of our platform services are already in place. With unit trusts, ETFs, bonds and stocks already available on our platform, and with robo-advisory capabilities in place for B2C and B2B channels, we believe that we are well-positioned for a much bigger share of the wealth management industry AUA in the years ahead.

The Fintech Opportunities

While much has been discussed about the opportunities of the Fintech world in the last few years, we believe that Singapore and Asia are still in the initial phases of the development and progress that will eventually be seen. Other than the increasing adoption of Fintech solutions within most countries, we see two important drivers for Fintech in the wealth management space in the next few years.

The first is the convergence of the different segments of the wealth management industry. Historically, the life insurance industry, the unit trust industry and the stockbroking industry have been seen as different industries. However, the reality is that all three industries are aiming to serve the investment and long term savings needs of the industry. The characteristics of the products can be very different due to the history and regulations behind the historical developments of these products. However, from the perspective of the consumers/investors, what matters is whether the products and services give the best value for money.

For instance, charges for many investment products with an insurance wrapper can be much higher than pure investment products (unit trusts). The charges also tend to be harder to understand, and are less transparent. Some of the charges within insurance products are considered normal and reasonable for the insurance industry, but would be considered outrageous for investment products such as unit trusts and ETFs. Many consumers in Singapore are still not very well educated about the differences. However, with the continuous progress of the Fintech world, we expect to see increasing convergence as consumer awareness increases.

Companies that can properly harness the power of the Fintech will be able to potentially serve the consumers much better, and have far more competitive business models. For instance, by leveraging on our strengths in the unit trust industry (with good scale and strong base of recurring revenues), iFAST is able to offer the most competitive stockbroking dealing commission charges in Singapore.

The second driver for Fintech going forward is the cross-border opportunities. Historically, financial services for retail/individuals tend to be very much demarcated based on countries, except for the private banking segment which serves the very high net worth individuals. This is because every country has different rules and regulations, and the financial services industry has to worry a lot more about compliance and risk management issues than other industries.

Increasingly, however, the power of the Internet is breaking down the geographical barriers. Regulators of various countries, recognising the potential of cross-border Fintech implications, have increasingly been introducing various regulatory changes and initiatives to ensure that Fintech in the respective countries can progress well.

As a Group that is currently present in five markets in Asia, we strive to stay at the forefront of the cross-border opportunities that will become increasingly important.


Going forward, we believe that the Group's efforts of the last two to three years in broadening the range of products and services have positioned us well for further growth. The Group now runs a comprehensive wealth management platform that will help bring the Group's AUA and overall business volume to the next level in the years ahead.

The Group's AUA has been growing, increasing 24.3% YoY to a record $7.58 billion at the end of 2017. We believe that in the medium to long term, the Group still has a lot of room for growth as the current AUA is still a small amount relative to the size of the wealth management industry in Singapore and Asia.

Barring a major deterioration of the financial markets, we expect the Group's businesses in the key markets of Singapore, Hong Kong and Malaysia to show further improvement in 2018 compared to 2017.

Our China business is still in its initial stages of building up, and losses are still expected in 2018. We expect China's losses in 2018 to be comparable to our losses in China in 2017. In the years ahead, we expect China to be an important contributor to the Group.

We expect the Group's dividend per share in 2018 to be higher than in 2017.

Lim Chung Chun
Chairman and CEO