Leon Qi

Leon Qi inquired about the client profile of new customers acquired in Hong Kong over the past four quarters, specifically asking about differences in average AUM, ages, trading velocity, and products compared to existing Hong Kong customers. He also asked about the gross margin trend in markets outside Hong Kong, such as Singapore and Malaysia, and if their rapid AUM and client growth are driving overall margin increases, requesting current margin levels for these markets.

Answer

Chief of Staff to CEO, Head of Strategy and IR Daniel Yuan noted a continued upward trajectory in average client assets for new Hong Kong clients in Q3, coupled with robust net asset inflow from existing clients, leading to double-digit sequential growth in average client assets. He attributed trading behavior to market performance, with clients flocking to Hong Kong equities in Q3 due to outperformance. He confirmed that online brokerage inherently has high operating leverage, with healthy gross margins across all markets due to high-margin trading and margin products. He specifically mentioned that Singapore's operating margin consistently topped 60% for several consecutive months and is still expanding, demonstrating strong operating leverage.

Asked about the product mix driving future NBP growth, the gap between free surplus and dividend growth targets, and the conditions for considering buybacks or a higher payout.

Answer

Management stated the goal is a balanced product mix, using the current high demand for savings products as an opportunity to acquire new customers for future cross-selling of health and protection products. The CFO explained the 7-9% dividend growth is a near-term ('23-'24) policy that accounts for the $1B strategic investment, which will be reported as a variance to operating free surplus. Buybacks are not a priority as they see ample opportunity to deploy capital for high-return organic growth in Asia and Africa.