IFAST Corporation Ltd
SGX:AIY
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IFAST Corporation Ltd
Earnings Call Analysis
Q2-2024 Analysis
IFAST Corporation Ltd
In the second quarter of 2024, iFAST saw remarkable growth in its financial metrics, with net profit soaring 346.1% year-on-year to $16.3 million. This growth was underpinned by a 72.9% increase in gross revenue to $93.75 million and a 93% rise in net revenue to $61.38 million. For the first half of 2024, total revenue reached $179.71 million, reflecting a year-on-year growth of 66.2%. Net revenue and profit similarly exhibited strong growth, standing at $119.9 million and $30.54 million, respectively, resulting in a staggering profit increase of 364.8%. This robust performance indicates the company is effectively capitalizing on its core businesses.
The ePension division, particularly in Hong Kong, has emerged as a crucial growth driver. Expectations suggest that it will continue to fuel profitability in 2024 and 2025. iFAST Global Bank is positioned as an essential component of the overall growth strategy, anticipated to become a major revenue contributor by 2025. The total assets under administration (AUA) soared to a record $22.37 billion, marking an 18.9% increase year-on-year, and highlighting the successful inflow of assets fueled by effective management strategies.
iFAST plans to enhance its service offering by launching a debit card for customers by the end of 2024. This service aims to further penetrate the growing UK market. Additionally, the company has obtained a broker-dealer license in the U.S. and is working towards meeting the requirements to become a self-custodian, expanding its international footprint. The bond marketplace is also set to launch later this year, expanding further into fintech services that complement the current banking offerings.
As part of its commitment to shareholder value, iFAST has announced a second interim dividend of $0.015 per ordinary share for the full year of 2024, an increase from $0.011 in 2023. This signals confidence in continued profitability and a commitment to returning capital to shareholders, reinforcing the company's positive financial trajectory.
Despite the positive results, iFAST acknowledges the operational challenges within its banking segment. The approach includes a focus on conservative asset management, reflecting a commitment to maintaining a safe balance sheet strategy even as the company scales its banking operations. iFAST expects the iFAST Global Bank to reach a breakeven point by the fourth quarter of 2024, although it will operate at a loss for the entire year. This cautious approach aims to ensure long-term sustainability amidst growth.
Looking ahead, barring unforeseen circumstances, iFAST anticipates robust revenue and profit growth compared to 2023. The guidance remains conservative, with the expectation to exceed previous profit guidance thanks to strong inflows and considerable expansion plans. This forward-looking statement suggests optimism about the bank's growth trajectory while being mindful of market conditions.
The company's return on equity for the first half of 2024 was reported at 22%. iFAST emphasizes that despite the transition to a banking model, the proportion of revenue generated from fee-based income remains substantial. This balance allows iFAST to maintain competitive returns compared to traditional banks, which typically offer lower ROE. As the bank's lending products roll out, a continued focus on conservative lending practices will help manage risk while aiming for sustainable growth.
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Hi, everybody. Welcome to iFAST's Corporation's results presentation for second quarter 2024 and first half 2024. My name is JP. I'm from the Corporate Communications team at iFAST Corp. Together with me, we have Mr. Chung Chun Lim, CEO of iFAST Corporation. I'll be running through the key summary and Section 1 before inviting Chung Chun to carry on with Session 2. And after that, we will have the Q&A as well.
So in our key summary. In second quarter 2024, the group's net profit increased by 346.1% year-on-year to $16.3 million. That's on the back of a 72.9% increase year-on-year in our gross revenue to $93.75 million and a 93% year-on-year increase in net revenue to $61.38 million.
The increase in profitability was driven by contributions from the ePension division as well as improvements in our core wealth management business. At the end of second quarter 2024, our assets under administration, or AUA, increased to a record high level of $22.37 billion, driven by net inflows of $0.79 billion during the quarter.
iFAST Global Bank's customer deposit amounts grew to $646.62 million as at 30th of June 2024. This is an increase of 80.3% year-to-date. This contributed to a 265.3% year-on-year growth in our net interest income at the bank to $1.85 million in second quarter 2024.
We mentioned this in our previous quarter as well, and we reiterate this point that iFAST Global Bank adopts a conservative stance in terms of our balance sheet strategy, with the vast majority of the client deposits being held as cash with the Bank of England and with other banks as well as the short-duration sovereign bonds and investment-grade bonds. We have a little bit more details on this point later on.
iFAST group is steadily increasing its capability and presence as a global digital banking and wealth management group, with iFAST Global Bank as part of this global Fintech ecosystem. The group expects iFAST Global Bank to become an important growth driver in 2025 and beyond.
The ePension division in Hong Kong will be an important growth driver in 2024 and 2025, while the overall wealth management platform business is expected to continue to show healthy progress. On an overall basis and barring unforeseen circumstances, the group expects 2024 to see robust growth rates in revenues and profitability compared to 2023.
For the second interim dividend for 2024 full year, the Directors proposed a dividend of $0.015 per ordinary share, which is higher than the second interim dividend for 2023, which was at $0.011 per ordinary share.
Moving on to our quarterly update slide, which is on the group's AUA. So as you can see, the group AUA increased 18.9% year-on-year. So it's to a new record high level of $22.37 billion as of 30th of June 2024. In terms of the split between the B2B and B2C divisions, it's roughly in the region of 68% contribution from B2B and 32% from B2C.
Moving on to the next slide, which shows the net inflows and gross unit trust subscription numbers. So as mentioned just now, in terms of our net inflows in the second quarter of this year, net inflows stood at $0.79 billion and for the full first half of 2024, net inflows stood at $1.47 billion, which compares favorably compared to the first half of last year. Very similarly for gross unit trust subscriptions as well, the first half 2024 numbers are higher than first half of last year.
I'll move on to Section 1, which touches on the financial results before inviting Chung Chun. So for financial results for the group in second quarter of 2024. So looking at total revenue for second quarter 2024, it was at $93.75 million, which is a year-on-year change of 72.9%. Net revenue grew by 93% year-on-year to 61.38 million. OpEx grew by 50.2% year-on-year to $41.37 million in second quarter. And for net profit, there's a year-on-year growth of 346.1% year-on-year to $16.3 million.
Similarly, for the financial results for the group, but over the first half period comparisons. So for first half 2024, total revenue stood at $179.71 million. This is a year-on-year change of 66.2%. Net revenue grew by 90.2% year-on-year to $119.9 million in first half 2024. OpEx grew by 48.5% year-on-year to $81.54 million in first half 2024. And for net profit, it stood at $30.54 million in first half 2024, which is a year-on-year growth rate of 364.8%.
The next slide shows our results overview for the group for the last 4 years and first half of this year. I will not run through the details. So moving on to the information that we provided as well for our nonbanking operations so that investors can also have a better understanding of the progress of the core wealth management business.
So for second quarter 2024. Total revenue was at $82.37 million. That's a year-on-year change of 64.8%. Net revenue grew by 95.9% year-on-year to $56.79 million. And net profit was up 195.6% year-on-year to $17.6 million.
So for the nonbanking operations as well, but over the first half period comparison. So for first half 2024, total revenue grew by 59% year-on-year to $158.79 million. Net revenue grew by 94% year-on-year to $110.67 million. Net profit grew by 227.3% year-on-year to $34.39 million.
For the last part of this section, touching on the dividend. So for the second interim dividend for full year 2024. So the dividend per share at $0.015 per ordinary share. The payment date will be on 21st of August this year. I will now invite Chung Chun to carry on with the business update as well as our last sections.
Hi everyone. Yes. So on the business update, yes, we have some slides that are somewhat similar to what we spoke about in the previous quarter, but just to repeat the point again. I think for the next 3 years, the priority for the group relies firstly, make solid progress as a global digital banking and wealth management platform with a truly global business model.
So we're again emphasizing the word 'truly global' because we want to have a business model where we can basically operate from a few countries, particularly the financial centers, particularly U.K., Singapore, Hong Kong and be able to tap into customers from around the world. So that is the core thinking, and we want to be able to make good progress during the next couple of years.
Second point is, as we have stated before, accelerate Hong Kong's growth. I think you have seen it in the numbers that we've reported that, that has indeed started to materialize, and I think we're going to see further progress as we move on. Thirdly, effectively develop innovative Fintech services that are complementary to digital banking and wealth management platforms. I think in this regard, the areas that we spoke about include payment related services such as debit card and the bond marketplace.
So the bond marketplace, we have received approval for RMO license in Malaysia, recognized market operator license. So we will be operating in bond marketplace. We basically aspired to have something that's as close to a bond exchange as possible. So that's part of it, and that part will be officially launched in the later part of this year.
The debit card, it is something that is in progress. I know they already have a question over here regarding the status of debit card for IGB customer. We are basically working on it currently. The latest expectation is that we will be able to launch the debit card for IGB customer at the end of this year.
Moving on. Yes. This is a chart that we have shown about Fintech ecosystem is an ecosystem that continue to progress as we move on.
Next. This particular slide is on the iFAST Global Bank. We basically showed some numbers to actually demonstrate that yes, we have adopted a conservative balance sheet strategy. The reason why we are showing some of this information is related to tell investors that even as we have a bank within our group, some of the basic thinking that we have historically when we run our business continues to prevail. And some of this basic thinking is essentially to have a business model where we continue to be a company that has a very safe balance sheet strategy.
In the past, of course, we were essentially generating fee-based income, but now we are a bank that requires a bigger balance sheet. But even as we do so, we believe that we're able to do so in a way that is actually quite safe from a balance sheet perspective.
So we will not have some of the risks in a big way the with some banks in some parts of the world we have seen in the past. So as we grow, then we endorse out numbers here to show that, yes, the assets that we have are actually very safe. So that is really the key thinking for highlighting some of these numbers.
Moving on. This page also related to the ratio for the bank. Again, it sort of illustrates some of the points that we have summed up. We want to be in a position where we can actually have conservative balance sheet strategy, not just in terms of the type of assets that we hold, but also in terms of liquidity ratio, capital ratio and so on.
I think quite often, for many start-up digital banks, when they get into digital banking, one of the key business model really that they like to go into is to actually provide lending to what is typically called the underbanked segment, but we typically feel that the lending to underbanked segment can be relatively risky.
So on our part, actually, we have somewhat different thinking. It still revolves around accumulating AUA, but AUA now pretty much also includes deposit, and that will allow us to be able to accelerate our growth in a better way. And we believe that we can actually have a strategy that allows us to have capital ratios and the liquidity ratios actually well above the capital requirement.
Yes. Next section is our performance trends. I'll just touch on a few pages. This table here shows some of the financial indicators. The first line there, it talks about EBITDA. We historically don't really emphasize on this because we always report the net profit, and we look at net profit as a key number, but just for illustration, to show where we are as far as the EBITDA numbers are concerned, I think in the first half, we're at $56 million, right?
Operating cash flow number, that includes the banking business. So you'll see that the number has jumped to quite a sizable level because cash deposits started to come in and that we deploy them in a very conservative manner.
CapEx, yes, that actually relates to quite a bit to the IT expenses that we have to incur in terms of IT infrastructure, IT development. I suppose by now if you look at the number relative to our overall operation of the group, CapEx is no longer a big number.
Yes. The shareholders' equity, we have actually been growing, and the latest number is $278 million. We hope to get to the $300 million region by the end of this year.
Next, this is another slide that we've put in, in a sense, to also again demonstrate a similar point, right, which is that we have a balance sheet that is actually quite safe, quite conservative, and we keep it quite liquid. This is despite the fact that we actually do have some borrowing right now in the form of iFAST bond particularly. I think you have known that in June, we actually did a bond issue of iFAST bond.
The key reason why we want [indiscernible] bond issue really is because we want to increase the capital for the bank. But even as we do so, if you look at us on a group basis, we're essentially still in a net cash position.
So okay, if you look at this particular table, we're not exactly using the word net cash, but I think we're basically saying, if you take the cash plus the liquid assets that we have, the net of borrowing, then we are in a positive position on that. And so we are in a very comfortable position. So that's the key point that we actually wanted to make.
Next. The PBT margin for the group. So the PBT margin here is expressed as a percentage of net revenue. So if you look at the chart, you have noted that back in 2022, we had some decline in PBT. By the last 2 years, we have started to improve to quite decent numbers again.
In 2022, the decline was, firstly, there was a standard market downturn that led to some slowdown in our core wealth management platform business. And that happens at a time when [indiscernible] increasing. We did acquisition for the bank, so that have some initial losses so that led to the decline in the margin.
But as we progress, we start to have a higher profit as a group, particularly with the ePension division contributing well in Hong Kong. And then the wealth management platform business that we have also had been growing again. Now we're in a record high territory in terms of AUA, so margins have improved. So going forward, we expect to continue to have quite a good PBT margin.
Next. Return on equity. Return on equity first half was 22%. Again, one of the point I'd like to touch on really is that the investors, who have been our shareholders all these years, know that we have a business model that's quite cash generative and we can essentially have a good return on equity when the businesses are operating at a good optimum level.
Now that we have gone into banking, we actually need a bigger balance sheet. But our belief is that given that all of our revenue as a group are still based on fee-based income. So even with the bank in the group, on an overall basis, we expect that we will be able to have quite a decent return on equity. So that's one of the point I wanted to mention.
This group operating cash flow, as I mentioned, include the bank numbers, that's why the numbers have grown to quite substantial level in the last 2 years. Next is a chart on the capital expenditure. I noted earlier that CapEx for us right now is not so big relative to the overall size of our business. Now the current year, forecast for the CapEx for the full year will be about $20.5 million.
So I'll stop here. The rest are additional statistics and so on. I will not run through them. And we'll move on to the Q&A section.
Yes, we'll move on to the Q&A. So we already actually have a few questions from our participants. Thank you very much. So we run for that. [Operator Instructions].
But let's start with some of the questions we already have in the Q&A. So we'll start with [ Reji's ] questions. So he asked for an update on the efforts to have direct links to U.S. markets. And second, on the status of launching debit cards for IGB customers, iFAST Global Bank, in the U.K.
Yes. On the direct link to the U.S. market, we have made some progress. We have actually officially received the approval for a broker-dealer license in the U.S. But the additional approval that we actually require because we intend to be our own custodian, so that's an additional regulatory requirement that we need to go through. Yes, we are still in the midst of that process. But certainly, there's been the progresses that we have our U.S. broker-dealer license [indiscernible].
Second part, as I mentioned earlier, on the debit card for IGB, we expect to be able to make that available at the end of this year.
So move on to the next couple of questions from Andrea. So she noticed that second quarter 2024 taxes were lower than usual. Could we get some color on this, please? And how should we think about taxes for second half 2024.
Is Jimmy on the line? Can you take this question about the ...
I think [indiscernible] is referring to our effective tax for the quarter-to-quarter. So of course, last quarter, you saw that it's quite high because we do on a [indiscernible] because it's a [indiscernible] basis. And as compared to this quarter, right, it's lower. And then because we made profit in this quarter itself. That's why you see a lower tax [indiscernible] by itself. And then, of course, in the second half, as we progress to make more profit, right, then we will see increase in our tax payable in the coming second half or so.
Yes. So yes, just to add on, I think currently, if you look at the overall group number, our tax rate is high relative to the normal corporate tax rate. And the reason for that is because we're still making losses in some part of the businesses. So that actually increased the overall effective tax rate on a group basis. But if you look at individual countries, then I think Hong Kong, Malaysia, we are paying the normal corporate tax rates for those countries.
In Singapore, we have slight tax breaks, so we're paying slightly lower tax rate than the normal corporate tax rate. On a group basis because of the fact that certain countries are making losses, that's why the numbers tend to be high. But as we move forward, as the overall base of profit grows, then the effective tax rate as a group can improve.
So Andrea has another question, which is on the ePension part. So the question is this, MPFA announced that the trustee onboarding has commenced? How can we gauge the pace of IFRS revenue recognition as the trustees get onboarded?
Our revenue recognition will increase as the overall onboarding level goes up, but it's not a number that changes every month or every quarter. So I think probably the way to look at it would be, yes, first 3 quarters of this year is probably kind of a similar kind of revenue and then that starts to increase to a higher level maybe end of this year and going into next year. And then as we go into 2026, then there will be some additional increase. So that should be the way to look at it. So it's not a number that increases every month or every quarter, but more on step basis as we move on.
Lee Keng has a question as well on the ePension. So we'll probably take that now. So can we get an update on the progress of the ePension project? How is it progressing versus last quarter? Should we be expecting tapering of operating expenses going forward?
The progress of the project has been quite positive. I think as that has been announced by MPFA, the project is officially operating right now. So in terms of onboarding, the first trustee has officially been onboarded. I think end of this month, we expect the second one to officially be onboarded. So that's something that is progressing.
As far as expenses are concerned, we do expect that there will be some increase in operating expenses in the quarters ahead as we ramp up the overall head count further for the project and so on. But as I noted, yes, so expenses will go up. But along the way, during [indiscernible] period, there will be some increases in the revenue as well. Yes. So that's why the -- as far as the overall ePension and Hong Kong business is concerned, I think the kind of guidance that we gave previously that remains.
So we have another question related to ePension, [indiscernible] but it's specifically on the ORSO ePension. So his question is, can you please provide an update on the ORSO ePension launch. What is the status of this? Is the time line for the beginning of contributions still slated for first quarter 2025?
Yes. We're expecting the beginning of contribution should happen in the first quarter of 2025. That remains the same.
Okay. We'll move to Glenn's questions, which are a mixture of ePension and core wealth management. So his first question, could you give a breakdown on how much the ePension and core wealth management platform business contributed to the growth in profitability? That is, what percentage that each stream contribute? And will this proportion continue for the rest of the year?
I think if I look at the numbers for the second quarter or the first half, then the bigger increase in contribution was from the ePension certainly, but of course, the core platform business also improved. So yes, we don't give the exact breakdown in percentage yes, because of some confidentiality requirement.
But if you look at the numbers in terms of the increase in Hong Kong versus increase for the group for Singapore, I think that gives you some idea that the ePension has been a bigger driver during the last 6 months. For the year as a whole, then certainly, ePension will continue to be the biggest driver. Yes. So that should be the way to look at it.
Glenn's other question is, what are the main products seeing growth and interest in the wealth management business? Any particular reasons why this sudden uptick? And is it sustainable?
[indiscernible] can you show our group AUA chart? Yes. So if you look at our group AUA chart, right, and you analyze the trend, then you actually find that in the long run, generally is on an uptrend. But from time to time, there's a dip, right? And if you look carefully, you find that, that dip typically coincides with a period where financial markets or stock markets go through a very bad patch, right?
So if you look further back to 2008 for instance, the global financial crisis actually led to a big sell-down in stock market. So that [indiscernible] quite a significant decline in AUA, but subsequently things start to recover as things stabilize and then momentum resume. And along the way from time to time, you see some of that.
So 2022 was a period where we actually saw the financial markets going through quite a bad patch. I think we saw the sell-down in the overall tech sector after a booming in year 2000, 2001. I think by 2022, we saw quite a big sell-down and the overall markets, I think, globally were actually somewhat affected.
I think if you look at the China, financial market in the last 2 years has been very tough as well. And of course, even bonds, we're actually seeing quite a bad patch in 2022. So as financial markets were going through the tough market condition, then AUA took a hit. That's what it did, and that affected our group profitability. But subsequently, when things stabilize, you find that overall AUA starts to improve because the net inflow continue to come in -- the net inflow that recovered from the depressed level that starts to drive the overall growth of the AUA again.
And the other part would be as equity markets start to recover, then that will also bring additional upside to the to the AUA number.
So I think in the last couple of quarters, you'll start to see that those kind of recovery trends start to actually happen. That's why the group AUA numbers are hitting record highs again in the last couple of quarters. So that is essentially the effect that you're seeing.
So as far as which asset class is concerned, I think we're seeing growth in all the various asset classes. The equity portion, including equity funds, as I mentioned in 2022, they went through quite a tough patch and first half '23 also wasn't easy. But they have started to grow and then things like bonds, ETF, et cetera, they're also growing. Yes. So that should be the way to look at why the AUA start to resume the group again.
So we have a participants, [ Reji ], who has raised his hand. So [ Reji ], can we get you to unmute and ask your question. [ Reji ], would you like to ask your question? I'm not sure whether you [indiscernible], but I just mentioned, let me just check again. Yes. I think [ Reji ] no longer raised his hand. So yes, we don't have any more questions in the Q&A box at this point. Maybe just one more round of questions from any other participants.
Okay. We have a couple of participants raising their hands. We'll start with Benjamin.
I just wanted to check on the margin financing product that you introduced at IGB in Q2. Just wanted to check whether you would be able to share the margins that you're getting from this product? And how big is the portfolio currently? And how big do you expect this to be next time?
[indiscernible] the margin is around about 1.5%, I would say. That should be a way to look at it. The number is not a big number yet. It's growing steadily, but it's not a huge number. I think we intend to sort of let that grow slowly. You're probably looking at the numbers being in the region of SGD 20 million, SGD 30 million currently.
We rolled out this service, but we don't see this as something that will become a key driver for our business, neither do we intend for it to be a key driver. But we feel that, that's a service that some of the clients would like to have, particularly the higher net worth clients and so on. So we basically want to have this service to have a more complete service for our overall platform, but we typically don't want to encourage too higher leverage. So we do not see that as a major driver of growth going forward.
Got it. Are there plans to introduce other lending products in the future as well? Any plans in the pipeline?
Yes, we have a full licensed bank. And as we move forward as our deposit base continues to grow, we expect that there will be other lending products that we will be introducing. But we will continue to adopt the thinking of having lending strategies that are sufficiently safe. We won't take too much risk. And we are not rushing in a big way because we want to let the deposit base build up well. And yes, we want to also be able to have a deposit base whereby our cost of deposits sufficiently low enough so that when we do start lending out more that we also can be competitive for the very safe client.
So that is the broad thinking that we have. So we are not rushing to roll out products that have very high interest rate because typically to actually do so, then you need to have customer base that may not be the prime customers that you actually want. Yes. So the short answer to your question is, yes, we expect to have other lending products, but it's not something that we are going to rush to introduce at a very rapid rate.
I have just two more questions, very quick ones. The next one is on, was there a recent capital injection into the global bank and at what valuation was that at? If you can share.
There is a recent capital injection into the global bank. We did that at the end of June. And when we inject, we typically inject at the book value of the bank. Yes. So if you look at it at the bank level, at the subsidiary level, that is at book value. So our effective stake in the bank has steadily gone up, we expect that eventually we'll own 100% of the bank.
Okay. The last one is on the Hong Kong guidance. I think so far in the first half, your PBT for your Hong Kong business has already met 62% to 63% of your guidance. So the question is, what is holding you back from revising this guidance upwards? I think last quarter, you were pointing out that you were a bit more cautious on the Hong Kong and China business. But then I think over the last quarters, we have seen very strong growth in the AUA even on the wealth management side.
So I just want to get your thoughts on what's holding you back from revising these guidance upwards. And there's any possibility of doing that in the next few quarters.
So based on the results of the first half, our current expectation is that for 2024, we should exceed the guidance that we have given on the PBT level for Hong Kong. I think we should comfortably be able to exceed that guidance. But we actually intend to just leave the guidance which we last updated in February 2024 as it is. We don't intend to officially change that guidance even as we currently expect that we should be comfortably exceeding that number.
Just one very quick follow-up. I think these were positive, because now that you're mentioning that you feel that you can exceed the guidance. But on this change of your slightly more positive stance, do you think it's coming more because the ePension contribution is coming in better? Or is it because the Hong Kong core wealth management business is exceeding your expectations just because the past few quarters, the growth has been quite strong on the AUA side, which one is the main contributor there?
I think when we did the guidance, we also provided some buffer on the 2024 number. So I suppose that's one of the important reasons why we're able to exceed the guidance. And yes, so when we did the guidance, we felt that it's prudent to be able to allow ourselves some buffer. That's the thinking that we actually had.
So we'll move on to another participant who raised hand. So that's [indiscernible].
My question is regarding the bank. Could you just give us a bit of understanding as to who are the main depositors, which country are it from? And what are the main currencies that they are depositing their money in?
Yes. Yes. So for the bank, we have a digital personal banking division that is currently having the biggest source of the deposit inflow. So I take the digital personal banking division and talk about the source of deposits. So for this division, about 2/3 of the deposits actually come from non-U.K. resident. So U.K. residents contribute about 1/3 of the deposit base, 2/3 actually comes from nonresident.
The nonresidents that are contributing, the bulk of it comes from Asia currently. The single biggest market that contributed to deposits is actually Hong Kong for us. I suppose that's happening partly because of the historical linkage between Hong Kong and U.K. So Hongkongers do have a lot of confidence about U.K. and I think there is also an increasing level of demand, right, from Hongkongers to actually have some of their wealth or assets or bank deposits outside Hong Kong itself.
So that is actually contributing quite significantly to that demand. Yes, so Hong Kong is the single biggest -- we also have depositors from other countries like China, Malaysia, some from Singapore, not a big percentage, but there's some from Singapore. And then the rest are spread out among quite a lot of different countries, each of them contributing 1% to the overall number. The official number of countries where we have customers coming from currently stands at around 90 countries.
But of course, the top few will contribute to the bulk of it right now, but it's a list of countries that's expanding. And over time, we do want to continue to have the broader base coming from different countries. On U.K., currently, it's 1/3 of the numbers, but we actually feel that where we are now, we are actually still making a very, very small impact in the local market.
But I think the potential from the local market is definitely huge and tremendous, but to be able to be more successful on the local market, we need to roll out a more complete service. So one of -- the important one will actually be the debit card. So that's a work in progress. We hope to be able to make that available end of this year. So when that is available, then we basically will have a situation where we're able to provide a current account that pays one of the highest interest rates to the customer because most banks, I think that tends to be the case in Singapore as well and certainly in U.K. and in I think most countries, the portion of deposits in current account savings account, I think typically here they call it CASA, very little interest rate tend to be passed on to the client I think for historical reasons. Because historically, the current account money has higher administration costs and so on, so banks are used to passing on very little, and that practice continues until today. But in a digital world, where we can do the business efficiently, use of technology, there's no real need to penalize the customer so much just because they are putting their money in the current account instead of a fixed deposit.
Yes. So when we have rolled out our debit card services, then that benefit will become a lot more obvious. And then we expect that we can make a bigger impact in the residence market as well.
Yes. So in short, I think we want to be able to grow from customers from both onshore, within the country, the U.K. residents, as well as people from all over the world who see iFAST Global Bank as a good place to actually maintain a bank account with a deposit in different currency.
In terms of currency, the biggest deposit is still in sterling, but I think we are talking about that contributing for probably about 60% of the deposit. The second biggest would be U.S. dollar. So that's contributing probably [indiscernible] of the deposit base for DPP, for digital percent banking. And then we have other currencies, yes, Hong Kong dollar, the Singapore dollar and so on that also contribute.
We have just introduced yen account as well by giving 0, but the positive thing is not negative. Yes. So in terms of breakdown of currency, it'll be sterling, followed by U.S. dollar, followed by Hong Kong dollar currently.
Very helpful. Could you just share a bit about how do you fund the deposit slide to you? Do you really pass it on to another money market fund so that iFAST doesn't need to pay from incurred negative margin from this? And then the follow-up question to that would be, how should we think about your group ROE, because as the bank grows bigger, bank ROEs are typically, I don't know, 10-plus percent. So how should we think about your profile ROE as the business starts to scale?
[indiscernible] can you go to the page on the -- yes, correct. So this particular slide actually shows the assets of the bank, right? So we're bringing the deposit. So then as you mentioned, we need to place the deposit somewhere, right? So that will earn a spread. So if you look at these numbers, you'll find that the biggest chunk is, in fact, with Central Bank [indiscernible] that's where it is currently. So we have cash with Central Bank, then we have sovereign bonds, other government bond, then we have quite a sizable portion of investment-grade corporate bonds, short duration essentially. Short, I think averaging just below 1 year currently. And then we have some that we place in money market fund. That's where we are currently. So as you can see from this table, that is actually being handled in a conservative manner. And yes, of course, to be able to take on the deposit and then to use it in a conservative manner and yet make a decent spread, right?
I think it requires that we are able to have an average cost of deposits that are not too high. And in our case, that we're able to do so because we are aggregating deposits from various individuals. We don't just focus on high net worth individual corporates and so on.
So we take deposits from many different individuals in different currencies, and especially if you take the current account equivalent type of deposit, we are in fact paying good deposit rates relative to most of the banks, right, even as we are able to have a cost of deposit that is on average not too high.
Yes. So that's where we are right now. The second part of the question on the ROE. Yes. So if you look at most banks, what you would notice is that most banks have a majority of their revenue or net revenue coming from net interest income.
So that's basically from the deposit and then landing it out. I think banks typically have net interest income contributing to 60% or 70% of their overall net revenue, right? So they mostly start with high net interest income and then they want to build the noninterest income, the fee income part of the revenue, so that they are able to have a better ROE. So that's a typical stance.
When you look at iFAST, iFAST actually starts the other way, right? So we actually started with 100% fee income, right, before we have our bank. Then we basically have 100% fee income that doesn't require [indiscernible]. So today, as well, you find that the vast majority of our net revenue is also still fee income. And in fact, given in the years ahead, we expect that fee income will continue to be the majority of our revenue. It's not just the ePension business, but the core wealth management platform business is essentially fee income.
And even as the bank deposit base grows, we actually expect that there will be some spillover benefit that we'll see coming from iFAST Global Bank to the other part of the platform. So for instance, some customers that have opened a bank account with us in iFAST Global Bank, they subsequently open account with us in Singapore as well as Hong Kong and then there are some assets that also get passed onto our platform in Singapore or Hong Kong, reason being, because that's where we have a complete wealth management platform.
Yes. So as we move on then, we'll get this effect whereby -- yes, we see the different parts of the platform, the different country is increasingly having synergistic benefit. Yes. So the thinking, therefore, would be that it's not just the net interest income that will grow a lot more, I think that noninterest income will continue to grow. So we expect that majority of our net revenue will continue to be fee based. Yes, since it's going to be fee-based, I think, on a majority basis, then we should still be able to enjoy quite a good ROE compared to most banks. So that's the thinking, and that's the planning.
So we'll move on to some of the questions we have received in the Q&A box. So we'll start with [ Kelvin's ] question, which is, is IGB still aiming to break even in 2024?
IGB is aiming to break even in the fourth quarter 2024. So that continues to be our current target to be able to breakeven in fourth quarter 2024, but not the year as a whole. The year as a whole, certainly, we'll still be making a loss, but we're talking about on a quarterly basis.
We'll move on to [ Lynn's ] question. Can you help us get a sense of the current challenges of the banking business, just to gauge progress going forward?
I think the challenges of banking business, I would say that -- yes. So if you look at the bank that we have, the core business for the bank, when we acquired, has been the remittance business. So we have the brand easy remit. So that's a business that actually brings fee income for us. That part of the business continues to be there.
But I think from quarter-to-quarter, then you sometimes find that there's some fluctuation in that number. It's not as steady as if is a net interest income. But that continues to be there. You'll see some volatility overall, but we continue again to be able to grow this part of the business. Won't be the biggest driver, but it is an important part of the service of the bank.
Then the other division that, as of today, contributes because a portion of the deposit will be digital personal banking. The current challenge, I would say, the starting point really is that this is a relatively unique business model. Most banks around the world don't adopt this business model despite the fact that -- for us, it's very clear that this is a huge opportunity, it's a blue ocean opportunity.
I think most banks, including start-up banks, tend to try to enter the business by having Red Ocean strategy, then they burn lots of money, subsidize the clients quite substantially so that they become the client at the start and so on and hoping that eventually you make money.
And then you see banks making losses of a few hundred million a year. Those are quite common. For us, we don't throw money the way other banks do or the way other startup banks do. And our cost of setting our technology tend to be a lot more efficient, a lot lower than the other start-up digital banks. But in a business model that we adopt relatively new, so if it's new, then there are just some of the different issues, [indiscernible] issues and so on that we actually need to sort out, that's part and parcel of building a new business, especially one, we have a new business model. But we see that as part of building business all these years. I think most of the business that we've built in the last 24 years, they tend to be a new business model as well.
And that's why we also have fewer competitors. And then we can steadily go on the path that we want to build. So that's how we actually look at the banking business. So the challenges, yes, there will be some issues here and there, but I think that's part of the journey that we'll go through.
We have one last question from our participants. So it's from [ Reji. ] Any update on the payment institution license iFAST hopes to secure?
Yes. Currently, yes, in the process of applying. There is a bit more progress, but I think it's still a process that we have to go through, and we hope that we can secure that by first half next year, hopefully.
Okay. We don't have any more questions from our participants at this point.
Okay. So with that...
With that we can maybe bring the briefing to a close. Thank you so much to all the participants for joining us today.
Thanks, everyone. Thank you.