Futu Holdings Limited (NASDAQ:FUTU) Q4 2024 Earnings Call Transcript

Futu Holdings Limited (NASDAQ:FUTU) Q4 2024 Earnings Call Transcript March 13, 2025

Futu Holdings Limited beats earnings expectations. Reported EPS is $13.93, expectations were $12.06.

Emma Xu – Bank of America Securities:

Cindy Wang – China Renaissance:

Chiyao Huang – Morgan Stanley:

Charles Zhou – UBS:

You Fan – CICC:

Peter Zhang – JP Morgan:

Zoey Zong – Jefferies:

Hanyang Wang – 86Research:

Alan Chan – Citi:

Jian Wang – Goldman Sachs:

Operator: Hello, ladies and gentleman. Welcome to Futu Holdings Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After management prepared remarks, there will be a Q&A session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today’s conference call, Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR at Futu. Please go ahead, sir.

Daniel Yuan: Thanks, Operator, and thank you for joining us today to discuss our fourth quarter and full year 2024 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today’s call may include forward-looking statements, which represent the company’s belief regarding future events, which by their nature are not certain and are outside the company’s control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company’s filings with the SEC, including its annual report. With that, I will now turn the call over to Leaf. Leaf will make his comments in Chinese, and I will translate.

Leaf Li: Thank you all for joining our earnings call today. Client acquisitions accelerated across all markets amid an eventful quarter. We exceeded our full year guidance by a wide margin, adding 215,000 paying clients in the fourth quarter alone. As of year-end, total paying clients was over 2.4 million, a 41% year-over-year. Year to date, we have observed robust paying client growth across markets and are guiding for 800,000 new paying clients in 2025. In the fourth quarter, Hong Kong market was the top growth driver for new paying clients as we implemented targeted marketing initiatives to capitalize on the momentum at different asset classes. In Singapore, we maintain quality growth. With more paying clients added, there are also higher average assets.

We further solidified our position as a leading one-stop investment platform in Malaysia and recorded another quarter of strong paying client growth with our increasingly localized product experience and strengthening brand equity. In Japan, new paying clients grew double-digit quarter over quarter as our superior U.S. stock trading experience gained traction amid a bullish U.S. market backdrop. In 2024, we delivered 209 iterations of our mobile app and desktop clients and added 7,762 new features, up 37% and 32% year-over-year respectively. Product velocity remained high in the fourth quarter. In Japan, we launched U.S. margin trading with an increasing adoption rate and improving throughout the quarter. In the U.S., we unveiled Options Strategy Builder on our desktop version to better help traders navigate various options trading strategies.

As we continue to refine our options trading products, in the fourth quarter, the number of options traders in the U.S. more than doubled year-over-year, while the number of options contracts traded more than tripled compared to the year ago quarter. In Hong Kong and Singapore, we established a bond trading desk to help our clients execute large and complex bond orders. For our clients in Australia and Canada, we launched recurring investment plans for local stocks. We build a pullback in China equity in the second half of the quarter weighed on the valuation of our client’s assets. It was more than offset seller net asset inflow across markets. Further client assets, were at HK$743, up 43% year-over-year and 7% quarter-over-quarter. Overseas markets recorded the highest quarterly net asset inflow, almost equivalent to the full year 2023 inflow.

Total client assets in Singapore grew by 19% quarter-over-quarter, marking the 10th consecutive quarter of sequential growth, thanks to robust net asset inflow into U.S. equities and money market funds. U.S., Canada, and Australia markets also witnessed sequential growth in average client assets for four consecutive quarters. As our clients took on more leveraged positions, margin financing and security planning balance increased by 25% sequentially to a record HK$51 billion. Total trading volume jumped by 202% year-over-year and 52% quarter-over-quarter to HK$2.89 trillion. In fourth quarter our clients diversified their investing to include more crypto and AI names. As a result, U.S. stock trading volume grew by 36% sequentially to a historic high of HK$2.08 trillion.

Notably, several AI-focused companies, previously less familiar to our clients, emerged as top trading U.S. stocks in 2024, driven by their remarkable outperforming and the rising narrative around AI’s transformative potential. Hong Kong’s stock trading volume grew exponentially by 117% sequentially to HK$755 billion Hong Kong dollars. The renewed enthusiasm in Hong Kong equity starting from September led to a substantial rebound in trading velocity. Clients showed a meaningful pickup of interest in many technology names, as well as leveraged an inverse ETF. And one other thing. Total client assets in wealth management increased 93% year-over-year and 14% quarter-over-quarter, to HK$111. Money market funds continue to hold strong heels for our clients, even with moderately lower yields in the fourth quarter, and drove the bulk of the sequential growth in wealth management AUM.

In Hong Kong and Singapore, we expanded our structured product offerings to better address the investment needs of our high-net-worth clients. Total client assets in wealth management accounted for 15% of total client assets, up from 12% in the same quarter last year. We have 482 IPO distribution in IR clients, up 16% year-over-year. In 2024, we underwrote 40 Hong Kong IPOs, ranking first among all brokers for the third consecutive year, according to Wind. The new digital IPO settlement platform, FINI, introduced by the Hong Kong Stock Exchange, eliminates multi-account subscriptions, shortens the settlement period, reduces the amount of lock-up capital needed, and lowers funding costs through the new pre-funding model. We believe that this new system improves the retail IPO subscription experience, prompts more retail participation, and favors market consolidation.

We swiftly adapted our subscription process based on the new framework and achieved notable gains in market share. Next, I’d like to invite our CFO Arthur to discuss our financial performance.

Arthur Chen: Thanks, Leaf and Daniel. Please allow me to walk you through our financial performance in the fourth quarter. All the numbers are in Hong Kong dollars, unless otherwise noted. Total revenue was HK$4.4 billion, up 87% from HK$2.4 billion in the fourth quarter of 2023. We conclude a strong year with full-year revenue growing to HK$13.6 billion, up 36% year-over-year. Brokerage commission and handling charge income was HK$2.1 billion, an increase of 128% year-over-year and 35% Q-over-Q. The year-over-year Q-over-Q increase was both driven by higher trading volume, partially offset by the decline in blended commission rate. We adopted a per contract and a per share pricing model for U.S. options and the U.S. stock trading, respectively.

As a result, brokerage income will grow at a slower rate than trading volume, where our clients trade high-priced stocks and options. Interest income was HK$2 billion, up 52% year-over-year and 19% Q-over-Q. Both were driven by higher interest income from our security borrowing and the lending business and the higher interest from banking deposits. Other income was HK$353 million, up 157% year-over-year and a 69% Q-over-Q. The year-over-year and the Q-over-Q increase was both primary attributes to higher fund distribution income and the currency exchange income. Our total cost was HK$776 million, an increase of 79% from HK$434 million in the fourth quarter of 2023. Brokerage commission and the handling charge expenses was HK$112 million, up 90% year-over-year and a 38% Q-over-Q.

The Q-over-Q increase was roughly in line with the movement of our brokerage commission and the handling charge income. Interest expenses were HK$513 million, up 90% year-over-year and a 24% Q-over-Q. The year-over-year increase was driven by high interest expenses associated with our security borrowing and the lending business. The Q-over-Q increase was mainly due to higher margin financing interest expenses as a result of higher funding costs for Hong Kong dollars. Processing and the servicing costs were HK$151 million, up 45% year-over-year and a 16% Q-over-Q. The increase was largely due to higher market information and the data fee for new products with higher system usage fees. As a result, total gross profit was HK$3.7 billion, an increase of 89% from HK$1.9 billion in the fourth quarter of 2023.

Gross margin was 82.5% as compared to 81.7% in the fourth quarter of 2023. Operating expenses was 57% year-over-year and a 33% Q-over-Q to HK$1.4 billion. Funding expenses was HK$399 million, up 10% year-over-year and a 4% Q-over-Q. This increase was partially due to cost related to organizational restructuring in the fourth quarter of 2024. Selling and marketing expenses were HK$464 million, up 154% year-over-year and a 48% Q-over-Q. The year-over-year increase was due to a triple-digit year-over-year increase in net new paying clients, partially offset by lower client acquisition costs. The Q-over-Q increase was in line with the growth of our new paying clients. General and administrative expenses was HK$576 million, up 55% year-over-year and a 51% Q-over-Q.

The year-over-year increase was primarily due to an increase in the general and administrative headcount. And the Q-over-Q increase was mainly due to higher bonus accrued for general and administrative personnel and to a less extent, cost related to organizational restructuring. As a result, income from operation increased 117% year-over-year and a 28% Q-over-Q to HK$2.2 billion. Operating margin increased to 50% from 43.1% in the fourth quarter of 2023, mostly due to strong top-line growth and operating leverage. Our net income increased by 113% year-over-year and a 42% Q-over-Q to HK$1.9 billion. Net income margin expanded to 42.2% in the fourth quarter as compared to 36.9% in the same quarter last year. Our effective tax rate for the quarter was 16.1%.

That concludes our prepared remarks. We’d now like to open the call to questions. Operator, please go ahead.

Q&A Session

Operator: [Operator Instructions] We will now take the first question from the line of Emma Xu from Bank of America Securities. Please go ahead.

Emma Xu : So, congratulations on the very strong result. I have two questions. The first question is about the new paying clients. You guided 800,000 new paying clients for this year, around 100,000 more than last year. But last year, you have two new markets, Malaysia and Japan. But this year, previously, you guided that you don’t have new market plans. So, just wondering why you are able to guide such a strong new paying client target. And the second question is about the CAC client acquisition cost. It increased moderately in the fourth quarter last year, despite very active market. In an active market, in general, CAC should be lower, thanks to the natural flows. So, just wondering, is it due to the change of the market, the mix of the new paying client market, or due to the change of the channels that lead to the increase of the CAC? And what’s your target of CAC for this year? Thanks.

Arthur Chen: Thanks, Emma. I will take these two questions. Let me translate. In terms of your first question regarding our new guidance for 2025, this 80,000 new paying client does not include any new markets we will enter in or not in 2025. So, this is all for the existing seven markets. The reason for this very strong guidance is, number one, we think these two new markets, such as Malaysia and Japan, which we entered into last year, still provide a very meaningful, robust growth outlook in 2025. Not to mention these relatively mature markets, such as Singapore and Hong Kong, we still see very good upside in client acquisitions, thanks to partially due to the Chinese asset rating, which we witnessed from the early days of this year.

And in terms of the second question regarding the client acquisition cost, we roughly target HK$2,500 to HK$3,000 CAC for this year. From the end of last year and going forward, we will spend more money in some brand equities in order to enhance our long-term user loyalty in our platform. Thank you.

Emma Xu: Thank you. Very clear.

Operator: Thank you. We will now take the next question from the line of Cindy Wang from China Renaissance. Please go ahead.

Cindy Wang : Thanks for taking my question and congrats for a very strong result in Q4. And I have two questions here. First question. Recently, we noticed that the U.S. and the Hong Kong market overall market trading volume has very strong quarter-over-quarter performance in the first quarter quarter-to-date. So, can management give us a little bit of color based on the current run rate? What is the trading volume, trading velocity, net asset inflow, and the margin financing, securities and lending guidance? The second question is related to the new product pipeline. So, we know like Futu has a lot of like product pipelines every year. So, can you give us roughly a pipeline on the equity derivatives and crypto products? Thank you.

Arthur Chen: So first of all, I give some color on the quarter-to-date operating matrices. We’ve seen this year, there was a lot of trading opportunities for both the Hong Kong and U.S. stock market. Our retail investors continue to be very highly engaged. And year-to-date, based on the current run rate, we forecast higher net new paying clients as compared to the fourth quarter last year. We’ve also seen higher net asset inflows, which coupled with the appreciation of China equities have led to a very meaningful sequential increase in total client assets. And based on this current run rate, we also forecast our total trading volume to further increase on top of the high base last quarter. We’ve seen that the clients remain highly engaged and very high risk tolerance year-to-date.

And regarding our product plan, so this year for all of our overseas markets, we have a very rich product pipeline in order to satisfy the client demand for different risk rewards. In Japan, for example, we’ll continue to catch up with our product trade capabilities around Japanese equities and at the same time, continue to optimize and extend our leadership in U.S. trading. In Malaysia, we also will have a number of product innovations and iterations based on local clients’ needs. In the U.S., we plan to roll out crypto training in the next couple of months. And in terms of wealth management, we plan to continue to expand our wealth management offerings, including offering more structured notes for our retail and high network clients. Thank you.

Cindy Wang: Thank you. Very clear.

Operator: [Operator Instructions] We will now take the next question from the line of Chiyao Huang from Morgan Stanley. Please go ahead.

Chiyao Huang : So, basically two questions. One is the what — basically, what areas of the business that management think have the most potential to integrate AI models like DeepSeek and what kind of efficiency gains? And how should that strengthen the product offerings and services? And the second question is on crypto offerings. And just wondering, is there any update on the licensing process or what can be done to accelerate the client penetration or investor education and the marketing side on the crypto business in Hong Kong and Singapore. So — and then what will be most differentiated offering from Futu’s crypto office compared to peers? Thank you.

Arthur Chen: Thank you, Chiyao. Leaf will answer your first question, and my colleagues, Robin will answer your second question regarding crypto. Thank you.

Leaf Li: So in the past couple of years, we’ve made a number of explorations in AI, based on different usage scenarios. And we think corporate AI capabilities both for internal operations and for client-facing capabilities, and we are also doing local deployment of DeepSeek. So internally, we’ve found that AI help us to meaningfully lift our efficiency in terms of the market use and data generation, filtering of content in our social community and the designing and the graphics, et cetera. And in terms of client-facing user experiences. So in Hong Kong, we’ve launched a new synthesis function for individual stocks, twice a day in the morning and at night. We also have an automatic interpretation of the corporate announcement and analysis of the financial results.

These are all based on the AI model, which we believe help our clients to quickly understand market dynamics and reduce the time needed for them to make investment decisions. And we are also doing a lot of study and research in terms of how better to incorporate AI to empower more applications for retail investors. And we believe that if we use AI to help with decision-making that puts a much higher requirement in terms of the timeliness and the accuracy of the information generated. So the unpredictable quality of the responses will actually increase the investment thresholds for the retail investors and prolong the time needed for them to make effective investment decisions, thereby lowering their investment experiences. And we hope to make a lot of thorough preparations and to make sure that the information we generate through AI in different usage scenarios are highly accurate.

And at the same time, we need to do very prudent assessment and very comprehensive testing to make sure that we strike the right balance between user experience, compliance and technological innovation, so as to maximize our investors’ benefits and also to protect their needs. Thank you.

Operator: We will now take the next question from the line of Charles Zhou from UBS. Please go ahead.

Charles Zhou : So I have two questions. The first one, we understand the company plans to develop Wealth Management business in both Hong Kong and also Singapore. So what is your expectation for the total addressable market size? And also how does the Futu differentiate from its competitors in other — I mean, say, for example, private banks or insurance companies? And can you maybe talk about your competitive advantage from product distribution, et cetera? And do you think the business will be scalable? My second question is following the strong trading volume in Q4 last year. U.S. stock corrected sharply over the past month. How did it impact your trading volume in Q1 and if the sales momentum continues in the U.S. to persist, the client AUM will decline? Will this also affect overall our trading volume in the rest of this year in 2025? Thank you.

Arthur Chen: In terms of the trading volumes, despite we saw some setback in the U.S. stock market in the first quarter so far. But actually, the market setbacks create more volatilities, which inspire more clients trading to bottom fish, the markets in the U.S. stock market. And then in the meantime, the trading volumes in Hong Kong made a huge spike due to China assets rating and a lot of DeepSeek related scene. So on a collective basis, we — as Daniel mentioned before, in the first quarter, so far, we see the overall trading volumes remain very robust. Now I hand over to Robin.

Robin Xu: So I’ll first translate about the crypto updates, and then Robin also touched on Wealth Management. So in the fourth quarter, the crypto market had a huge boost, which lifted our clients trading interest and sentiments. We’ve seen that in November and December, the crypto trading volume on our platform grew exponentially, which is almost 5 times of what we saw in October. And our daily trading volume surpassed $35 million. And we’ve also seen a similar growth rate in terms of our number of crypto traders on our platform. So in the first quarter, we’ve seen that the crypto prices experienced some pullback. And at the same time, there’s a lot of trading opportunities in the Hong Kong and U.S. stock market. So we’ve seen a supplying interest in crypto trading on our platform, but the trading volume and the crypto traders are still at a relatively high level.

Right now in Hong Kong, we offer four trading pairs to our retail investors, and we offer six training pairs in Singapore. And in the future, we plan to allow more kind of mainstream trading pairs. And at the same time, I think will enhance our management of the capital efficiency and also the liquidity and the security and also kind of lower the cost of our clients moving funds in and out, which we believe will help with client conversion and with further penetration of crypto trading. We believe in Hong Kong and Singapore, most of their retail investors are still in the very early stage of building up awareness of those asset class. And we think there’s a lot of further room for penetration. And we hope to leverage more investor education materials, a seamless fund deposit experience to each client concerns towards this relatively new asset class.

And as the regulatory framework is more clear in these two markets. Futu has one of the earliest retail play players and the space will enjoy the early mover advantage in building up our user mind share, especially in terms of compliant operations, which will help us in advantage as the crypto asset class becomes more mainstream in these two markets. And as we mentioned earlier, we are also planning to roll out crypto trading in U.S. this year, and we are expecting a higher penetration of crypto among our U.S. client base compared to what we have seen in Hong Kong and Singapore so far. And as regards to our vApp license, so we got a conditional approval from SSC. And we are working on our product development. We don’t have a very specific time line for our official launch yet, and we look forward to giving more color down the road.

And then about the Wealth Management. So this year, we’ve entered into a rate cut cycle. But we still believe money market funds yield will continue to be attractive to our clients in the foreseeable future. And at the same time, we have provided very seamless automatic subscription and redemption functions for our money market funds, which really maximizes our clients’ capital efficiency. So that’s to help them to seize the trading opportunities in the market and at the same time, earn yields on their IR cash. And we — typically, we expect an outperformance of fixed income-related assets during a rate cycle, and we have built a comprehensive set of products in the space, in Hong Kong and Singapore, which we believe will help our clients navigate these different investment cycles to achieve long-term capital appreciation.

And at the same time, as mentioned earlier, we intend to further enrich our Wealth Management product offerings, including more structured notes for both our retail and high net worth clients, and we are optimistic about the AUM growth for our Wealth Management. And to have some additional color to what Robin just said about Wealth Management, I think there are some of our key competitive advantages in this space is, number one, we really offer our clients, is seamless experience to navigate across different outlet classes on our platform, whether it’s equities or Wealth Management or crypto, et cetera. So I think that is one of our key competitive advantage. We don’t just lead our competitors in just one specific asset class, but it is a very seamless once-off experience for clients to very easily switch between asset classes and to cross navigate different cycles.

And number two, I think we adopt a platform model, which is a key advantage for our high net worth clients, Wealth Management business. For example, like in terms of structured products, we onboard structured offerings from a number of different private banks and our clients can compare these returns and the performances and pick the best asset class on our platform as opposed to maybe some other institutions will prefer to sell to their clients, their own proprietary products. So this platform model really gives our clients access to a variety of different assets and us as an intermediary is very neutral and just make sure that we will be able to provide our clients with the most attractive investment opportunity. Thank you.

Operator: We will now take the next question from the line of You Fan from CICC. Please go ahead.

You Fan : This is You Fan from CICC and the two questions. The first one is regarding the AUM breakdown in 4Q. So how much is from the client net asset inflow and how much from market-to-market impact? And what’s the original breakdown of the client assets? And the second question, we see the active Hong Kong IPO subscription recently. So what’s the impact on our income statement and what’s the contribution to our new paying clients and the net asset inflow?

Arthur Chen: In terms of the net asset inflow, breakdowns in the fourth quarter. As we mentioned before, the market to market implications in the fourth quarter actually was a negative number. So the client asset inflow, the number is much larger than the movement of the balance between two quarters. And among the 24% of the asset inflow actually come from Great China areas. This number one year ago was 21%, we see it is a very good indicator for our overseas markets, continuous engagement for clients. Then the second question, the direct revenues from Hong Kong IPO is just contributed low single digits of our total revenue, given that we are further diversifying our revenue stream in the past four to five years. And also due to the new mechanisms in Hong Kong, such as FINI, the settlement duration, the leverage financing duration were both shortened.

So, on one side, it is a negative to all the brokers’ direct commission and the interest income. But on the other hand, it further engaged clients to the markets to enhance the market liquidity and there’s more interest in terms of the retail clients participate in this market. So on a net-net basis, it is still very positive to our business. Thank you.

Operator: We will now take the next question from the line of JP Morgan. Peter Zhang, please go ahead from JP Morgan.

Peter Zhang: Many thanks for giving me the opportunity to ask questions. This is Peter Zhang from JP Morgan. And I have two questions. First is about the operating expense, and we noticed that from a sequential perspective, the G&A expense increased by over 50% Q-on-Q in fourth quarter, while R&D expense only moderately pick up by 4%. So we wish to understand what’s the drivers behind this divergent trend for the two different operating expense in fourth quarter? And what will be your outlook for 2025 in terms of your headcount growth and your R&D and expense growth into 2025? And my second question is about other income. We noticed that the other income grew by 69% Q-on-Q to a record quarterly high in fourth quarter. We wish to understand what’s the drivers behind this increase? And what’s the outlook into 2025?

Arthur Chen: For two questions. Number one is regarding the G&A Q-on-Q expenses increase mainly due to three reasons. Number one is our year-end bonus equipment, especially for the overseas market management. Secondly is due to some one-off professional expenses relating to some new license applications and new market feasibility studies. Thirdly is due to some one-off organizational restructuring. Looking forward to 2025, we expect the number of our headcount will continue to increase in mid — in low to middle single digit versus the situation in 2024. Then for second question regarding the breakdown of the key drivers of the other income mainly comes from two facts. Number one is revenues derived from the Wealth Management, including the funds distribution and also more fees from the structured products like structured nodes and the T-bills, et cetera.

The other is relating to FX exchange fees. This is partially due to very divergent market performance between the U.S. market and the Hong Kong market in fourth quarter. We saw more clients trying to switch their assets between these two markets. Thank you.

Operator: We will now take the next question from the line of Zoey Zong from Jefferies. Please go ahead.

Zoey Zong : Thank you, management for taking my questions. And congratulations on the strong results. I have two questions. First, we have seen the blended trading commission rate declined both year-over-year and sequentially in Q4. However, the trading volume contribution from HK stock actually increased in Q4. So excluding the structural impact, what’s the reason for the commission rate decline? And then my second question is about capital return. We ever had $500 million share buyback program, which is effective period of December this year. May I ask how much is the remaining quarter? And what’s your capital return plan this year? Also, do we have any consideration of regular dividends? Thank you.

Arthur Chen: In terms of the blended commission rate, the Q-over-Q decrease was mainly due to the product mix change. In the fourth quarter, more clients trading these high-value nominal values U.S. stocks and also high nominal value U.S. options, which made the blended take rates have some Q-on-Q decrease. And in the fourth quarter, so far, we saw our take rate remains very stable. Then the second question regarding the shareholder returns. So far, we have not utilized our share repurchase program, which would be expired at the end of 2025. We still think these new market, new business lines were still in a fast growth stage. There will be a huge room for us to deploy the capital for this new business and the new markets, which we think in the long run will enhance our competitive edge in the markets and also our profitability.

Having said that, we — as we mentioned in our third quarter, we do concur part of our shareholders is very focusing or care about cash dividends. And we will revisit and evaluate our dividend payout policies when 2025 full year complete and we’ll consider the relative measures to provide a reward to thanks our long-term shareholders. Thank you.

Operator: We will now take the next question from the line of Hanyang Wang from 86Research. Please go ahead.

Hanyang Wang: Thanks management for taking my questions. This is Hanyang from 86Research. I have one single question regarding on the derivatives trading. So what is the approximately the percentage of derivatives in the total trading volume in the fourth quarter? And considering the increase in market volatility recently, do you see an increase in the proportion of delivered trading on our platform in Q1? Thank you.

Arthur Chen: In terms of the derivative commissions, it’s roughly accounts for one-third of our total trading commissions in the fourth quarter, slightly down to our historical high in the past. And in the first quarter so far, we do not witness any material change for this ratio. Thank you.

Operator: We will now take the next question from the line of Alan Chan from Citi. Please go ahead.

Alan Chan : Thanks management for giving change to ask questions. This is Alan from Citibank. Can you give us some breakdown of the interest income in terms of either cash interest income versus margin financing, security lending income? And if management increase share, what’s the prevailing interest rate on Futu’s clients idle cash, what was the idle cash yield in 4Q ’24? And since September last year, we have already seen the Fed cutting the Fed rate of 100 basis points. I’m wondering how much of that 100 basis points Fed rate cut has already been reflected into the client’s other cash interest rate?

Arthur Chen: Now in terms of the breakdown of the interest income, roughly 40% to 45% interest income was derived from the idle cash deposits and the remaining belongs to the margin financing and the security lending, et cetera. And the impact for the rate cut, if we use the fourth quarter end client assets numbers to make projections. Every 25 basis cut by the Fed rate, our pretax profit monthly pretax profit will be negatively impacted by HK$8 million to HK$10 million. Thank you.

Operator: We will now take the last question from the line of Jian Wang from Goldman Sachs. Please go ahead.

Jian Wang : My first question is, do we have a regional breakdown of the new paying client growth in 4Q? And for 2025, what proportion of 800,000 new paying client is expected to be from new markets and what proportion from mature markets? And my second question is, do we have a guidance for AUM client growth in 2025? Will it be diluted as paying client growth is very fast and majority of them may be from a new market? And in the long run, what levels do we expect the AUM per client to reach in each region? Thank you.

Arthur Chen: In terms of the breakdown of the new client acquisition, geographic locations for these mature markets like Hong Kong and Singapore, which on a collective basis, contributed roughly 40% to 45% of our total new paying clients acquired in the fourth quarter. And the remaining countries in Asia alongside Australia contribute roughly 40% as well. Then the remaining 20% belongs to the North America. Thank you.

Daniel Yuan: Let me briefly translate. So first of all, I just want to comment on net asset inflow. In 2024, we saw a very meaningful step-up in net asset inflow in comparison to 2023. And we foresee a similar very robust net asset inflow in 2025 as well. And as you understand like average client assets are, first of all, impacted by our new client mix between different markets and also impacted by mark-to-market trends. And both of these factors are less within our control and that asset inflows. It’s very hard to predict how average client assets was going to trend for 2025. And in terms of average client assets in different markets. Well, some markets will structurally have high average client assets. For example, Hong Kong and Singapore, like these clients will have higher investable income and therefore, we’ll have more capital that they can deploy on Futu’s platform.

But at the same time, we found super encouraging is by in the fourth quarter, all of our markets experienced very meaningful Q-on-Q growth in average client assets. And we expect this trend to continue because as we onboard more products, and there’s a lot of cross-selling opportunity, and we think there’s ample opportunity for our existing clients to put more assets onto our platform. At the same time, as our product capabilities get enhanced and as our brand equity gets enhanced, we’re able to attract more high-quality clients, including high net worth clients in many of these markets. Thank you.

Operator: Thank you. I would now like to turn the conference back to Daniel Yuan for closing remarks.

Daniel Yuan: Well, that concludes our earnings call. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you, and goodbye.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.