Charles Zhou

Charles Zhao inquired about Futu's investments in Airstar Bank since acquiring a 44% equity stake in June, and the bank's strategic role within Futu's business in the short, medium, and long term. He also requested more detail on the regional mix of client AUM net inflow, specifically if Hong Kong still accounts for over 70%, and if there's a rising share from high net worth clients in Q3.

Answer

CFO Arthur Chen noted a slight decrease in Hong Kong's percentage contribution to net asset inflow due to strong inflows from overseas markets like Singapore and Malaysia. He confirmed a rising contribution from high net worth clients in Hong Kong, a trend expected to continue. Chief of Staff to CEO, Head of Strategy and IR Daniel Yuan updated that Futu increased its stake in Airstar Bank to 68.4% in Q3, becoming the controlling shareholder. He outlined Airstar Bank's short-term focus on customer experience and product enrichment, and long-term role in increasing client stickiness, wallet share, and enhancing Futu's one-stop financial services platform perception, leveraging its unique digital banking license in Hong Kong.

Charles Zhao asked about Futu's investments in Airstar Bank since acquiring a 44% stake in June, and the bank's strategic role in the short, medium, and long term. He also requested a regional breakdown of client AUM net inflow, specifically if Hong Kong still accounted for over 70%, and if there was a rising share from high net worth clients in Q3.

Answer

Chief of Staff Daniel Yuan updated that Futu increased its stake in Airstar Bank to 68.4%, becoming the controlling shareholder. He stated that in the short term, the focus is on improving customer experience and enriching products, while long-term, Airstar Bank aims to increase client stickiness and wallet share, positioning Futu as a one-stop financial services platform. CFO Arthur Chen noted that Hong Kong's percentage contribution to net asset inflow slightly decreased quarter-over-quarter due to strong inflows from Singapore and Malaysia, and confirmed a rising contribution from high net worth clients in Hong Kong, a trend expected to continue.

Charles Zhou of UBS Group asked for a breakdown of the regional mix for client acquisition in the second quarter and questioned the reason for a sequential slowdown. He also inquired about the potential impact of more stringent onboarding rules for Mainland Chinese clients in Hong Kong and whether the full-year guidance of 800,000 new accounts would be revised.

Answer

CFO Arthur Yu Chen stated that Hong Kong and Malaysia collectively accounted for over 50% of new clients in Q2, with the remainder from Singapore, the U.S., and Japan. He affirmed confidence in meeting the full-year target of 800,000 new accounts, having already achieved 460,000 in the first half. Chen asserted that the company sees no meaningful impact from new onboarding regulations in Hong Kong and that client acquisition remains robust.

Charles Zhou asked for an update on the timeline for Futu's crypto trading business, the implications of Hong Kong's stablecoin bill, and the impact of recent tax concerns on customer retention and assets for Mainland China clients.

Answer

Daniel Yuan, Head of Strategy & IR, detailed the recent launch of crypto deposits in Hong Kong and trading in the U.S., expressing a bullish long-term view. He affirmed that Futu adheres strictly to Hong Kong's data privacy laws and has not observed meaningful client attrition or asset outflow due to tax-related rumors.

Charles Zhou followed up on the special dividend, asking about the rationale for choosing a dividend over a buyback and the company's future preference. He also sought clarification on the HKD 131.4 million 'other costs and loss' item, which impacted net profit relative to consensus estimates.

Answer

CFO Arthur Chen addressed both questions. He explained that the company will use a combination of dividends and buybacks to cater to different shareholder preferences, noting some investors value the visibility of cash dividends. Regarding the 'other costs,' he clarified it was a non-cash, unrealized foreign exchange loss from RMB and Singapore dollar appreciation, which he expects will largely reverse in Q4 based on current exchange rates.