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spk09: Hello ladies and gentlemen. Welcome to Food2 Holdings' fourth quarter and full year 2023 earnings conference call. At this time all participants are in a listen-only mode. After management's 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 and Head of IR at Futu. Please go ahead, sir.
spk03: Thanks, operator. And thank you all for joining us today to discuss our fourth quarter and full year 2023 earnings results. Joining me on the call today are Mr. Leif Lee, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today's call may include four looking statements. which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involving hearing vests 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 vests and uncertainties, please refer to the company's filings with the SEC, including a SANO report. With that, I will now turn the call over to Leif. Leif will make his comments in Chinese and I will translate.
spk08: Thank you all for joining our earnings call today.
spk03: In the fourth quarter, we added over 59,000 paying clients. Our total paying clients as of year-end reached over 1.7 million, representing 15% growth year-over-year and exceeding our guidance.
spk08: In the fourth quarter, Singapore's goods and services continued to grow at a high speed. In the context of high interest rates and market growth, the monetary fund continued to gain customers' trust. In December, we cooperated with Fudun Fund Management to sell a new monetary fund. Client acquisition in Singapore sustained high growth into the fourth quarter.
spk03: Money market funds continue to garner significant client interest amid high interest rate and market volatility. In December, we became the first and only distributor of Fullerton Fund Management's Singapore Dollar Denominated Money Market Fund. the only T-plus-zero Singapore dollar money market fund for retail investors in Singapore.
spk08: With our rich market information, comprehensive financial data, and active community, we continue to lead the new users in Japan. According to Data.ai's data, the fourth quarter, MUMU ADP's Japanese download volume is ranked third in all exchanges in Japan, surpassing the local old-style chain stores' wild village securities and Songjing securities. As the Japanese capital index rose significantly and continued to rise, the number of customers in Japan in the first quarter was significantly higher than before. We continue to optimize the opening process and reduce losses from users to clients with assets. We are also continuing to promote key products. In December, we launched a growth-type NISA account. We plan to launch a Japanese stock transaction soon. It is also expected to provide Japanese stock transactions to clients in Hong Kong and Singapore in the second quarter.
spk03: We continue to gain user mindshare in Japan with our rich market information, comprehensive market data, and interactive social community. In the fourth quarter, the average daily downloads of Moomoo app in Japan ranked top three among all brokers and surpassed those of Nomura and Matsui Security, according to DataEI. With Nikkei recording remarkable gains and hitting new highs, client acquisition in Japan also showed a notable sequential increase in the first quarter. We continue to streamline the account opening process to reduce leakage in the conversion funnel and focused on R&D for key investment products. We launched a NISA growth account in December. It will soon roll out Japan equities trading. Our clients in Hong Kong and Singapore will also have access to Japan stock trading in the second quarter.
spk08: In the fourth quarter, due to the low mood of the Hong Kong market, the local goods and services have slowed down. But this year's first quarter, with the return of the Hong Kong stock, there is a rebound. Client acquisition in Hong Kong slowed down due to sluggish market sentiments. It rebounded in the first quarter along with the recovery of the Hong Kong stock market. In the U.S., we continue to prioritize client quality over quantity.
spk03: with the average asset balance of new paying clients in their first quarter of onboarding increasing by over 30% compared to the last quarter. In Australia, we focused on cultivating brand equity and adding new products, including cash management.
spk08: This year, on February 26th, we officially launched our token economy service in Malaysia. Since the launch of the service, the number of customers has been strong. Within one week, more than 30,000 customers have opened up. This is the fastest growth in all of our international markets. Over 30,000 clients flocked to our platform within one week of the official launch, representing the fastest growth in any of our international markets.
spk03: We managed to generate high brand awareness in Malaysia from the outset, thanks to our rapid share gain in Singapore over the past three years.
spk08: This year, we have seen a strong growth of real estate customers in all markets. The competition between real estate customers and close entry-level customers in the first two months of this year has exceeded the fourth record of last year. As of this year, we have seen a strong growth of real estate customers, with 350,000 competitors in 2024.
spk03: We observed robust paying client growth across all markets this year. In fact, we attracted more paying clients and net asset inflows in the first two months this year than the entire fourth quarter. Given the strong momentum year-to-date, we are gathering 150,000 net new paying clients in 2024.
spk08: Customer total assets increased by 16% and decreased by 4%, reaching 4860 billion Hong Kong dollars. Comparing growth is mainly due to the growth of the market value of each share of the customer, as well as the strong income from all markets. In Singapore, due to the strong income from all cohorts of customers, the total assets and flat assets of customers are comparing growth of 25% and 17% respectively. The total assets are more than 17,000,000 yuan. As our brand's influence continues to grow, we have more and more high-end people.
spk03: Total client assets increased by 16% year-over-year and 4% quarter-over-quarter to HK$486 billion. The sequential increase was largely due to robust net asset inflow across all regions and the market appreciation of our clients' U.S. stock holdings. In Singapore, total client assets and average client assets posted sequential increase of 25% and 17% respectively. Average client assets was over 17,000 Singapore dollars due to strong inflows across cohorts. As we continue to build brand equity, Moomoo gained traction among high-net-worth clients in Singapore.
spk08: At the end of the quarter, the share price rose by 2%. Although the share price of U.S. stocks rose, some customers sold out in the fourth quarter, resulting in a drop in the share price.
spk03: As of quarter-end, margin financing and securities lending balance increased marginally by 2% quarter-over-quarter. While we saw an uptick in securities lending balance for U.S. stocks, margin financing balance declined as clients unwound their positions.
spk08: The total trading volume is 95.7 billion Hong Kong dollars, which fell by 12% compared to the average. At the end of the fourth quarter, the trading volume of Hong Kong and U.S. stocks fell by 13% and 12% respectively. Total trading volume was 957 billion Hong Kong dollars, down 12% year over year and quarter over quarter.
spk03: In the fourth quarter, Hong Kong and U.S. stock trading volume were down 13% and 12% sequentially. Weak sentiments around Hong Kong equities and lower turnover in U.S. tech stocks struck total trading volume. Our share gains in the derivatives market in Hong Kong was a bright spot. Hong Kong futures and options trading had 8.5% and 14.7% market share in the fourth quarter, respectively.
spk08: The financial management of the customer's assets reached 5.8 billion Hong Kong dollars, which is 82% higher than the current rate, and 11% higher than the current rate, accounting for 12% of the total customer's assets. In order to obtain stable revenue, the private sector continues to increase the configuration of the currency fund and U.S. national debt, so the bond size is 60% higher than the current rate. This quarter, we continue to enrich the supply of structured products, and the list of accumulated accrued期权票据, the product can allow customers to sell their stocks at a low price.
spk03: Total client assets and wealth management increased by 82% year-over-year and 11% quarter-of-a-quarter to 58 billion Hong Kong dollars, accounting for 12% of total client assets. Clients increased their allocation in money market funds and U.S. Treasury bills to harvest high yields. Total bond holdings, as a result, increased by over 60% quarter-of-a-quarter. We continue to enrich our structured products by onboarding the accumulator nodes. a product that allows clients to sell their stock positions at a premium. Our enterprise business has 414 IPO distribution and IR clients of 24% year-over-year. In the fourth quarter, we acted as joint book runners for several high-profile Hong Kong IPOs, including those of JMT Express and UV Tech. We underwrote 37 Hong Kong IPOs in 2023 and ranked first among all brokers, according to WIND.
spk08: Next, I'd like to invite our CFO Arthur to discuss our financial performance.
spk11: Thank you, Lee and Daniel. Before going through our financial performance, I'd like to give you an update on our latest share repurchase program announced on March 11, 2022. As of December 31, 2023, the expiration date of the program, we had a repurchase and aggregate of 11 million ADS with approximately $365 million total repurchase amount in open market transactions. We have put in place a new share repurchase program which approves and authorizes us to repurchase up to $500 million of ADS before December 31, 2025. Now, please allow me to walk you through our financial performance. All numbers are in Hong Kong dollar unless otherwise noted. Total revenue was 2.4 billion, a 4% from 2.3 billion in the fourth quarter of 2022. We ended 2023 with full year revenue growing 31% to 10 billion. Brokerage commission and handling charge income were 904 million, a decrease of 14% year over year and 10% Q over Q. The decrease was mainly driven by lower trading volume. Interest income was $1.3 billion, up 17% year-over-year and down 11% Q-over-Q. The year-over-year increase was mainly driven by high interest income from clients' cash deposits due to higher benchmark interest rate and higher margin financing income due to an increase in daily average margin balance. The Q-over-Q decrease was mostly driven by the lower interest income from clients' cash deposits due to decrease in daily average client cash balance. Other income was $137 million of 46% year-over-year and largely flat . The year-over-year increase was primary attribute to higher fund distribution income partially offset by lower enterprise public relationship service income and underwriting fee income. Our total cost was $433 million, an increase of 27% from $342 million in the fourth quarter of 2022. Brokerage commission and handling charge expenses were $59 million, down 8% year-over-year and 6% Q-by-Q. The decrease was roughly in line with our decrease of our brokerage commission and handling charge income, partially offset by the cost of migrating our SGX equities to our self-clearing system. Interest expenses were $271 million, a 49% year-over-year and a down 6% Q over Q. The year-over-year increase was driven by high interest expenses associated with our security borrowing and the lending business and the higher margin financing interest expenses. The Q over Q decrease was mostly due to lower interest expenses associated with our security borrowing and the lending business, partially offset by high margin financing interest expenses. Processing and servicing costs was $104 million of 7% year-over-year and 21% year-over-year. The increase was largely due to higher product service fee for new markets and higher system usage fees. As a result, our total gross profit was $1.9 billion, largely flat year-over-year. Gross margin was 81.7% as compared to 85% in the fourth quarter of 2022. Operating expenses was up 12% year-over-year and 3% QVQ, so $916 million. R&D expenses was $363 million, up 9% year-over-year and 1% QVQ. The year-over-year increase was mainly due to increasing R&D headcount as we continue to support new product offerings in international markets. Selling and marketing expenses was $182 million, up 19% year-over-year and down 14% QVQ. The year-over-year increase was due to a 41% year-over-year increase in net new paying clients, partially offset by lower customer acquisition costs. And the Q-over-Q decrease was due to fewer net new clients and the lower customer acquisition costs. G&E expenses were $370 million, up 12% year-over-year, and 15% Q-over-Q. The increase was primarily due to an increase in headcount for general and administrative personnel partially offset by lower professional service fees. As a result, income from operations decreased 9% year-over-year and a 22% Q over Q to $1 billion. Operating margins declined to 43.1% from 49.1% in the fourth quarter of 2022, mostly due to operating deleverage. Our net income decreased by 9% year-over-year and a 20% Q over Q $876 million net income margin shrank to 36.9% in the fourth quarter as compared to 42% in the same quarter last year. Among our international business, Singapore was the first to achieve break-even on a quarterly basis, even with apportioned post-firm pet quarter. As client assets continue to grow, we believe the uni-economic Singapore will maintain an upward trajectory. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead. Thank you.
spk09: Thank you. To ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. So once again, that's star 1 and 1 to ask a question. Please stand by while we compile the Q&A roster.
spk10: Thank you. We'll now take the first question.
spk09: Please stand by. First question today is from the line of Cindy Wang from China Renaissance. Please go ahead.
spk06: Okay. Thank you, Ms. Wang, for giving me the first opportunity to ask a question. I have two questions I'd like to ask. The first one is, could you please explain to us how Japan's current gold flow has improved and how it's opening up? Hong Kong, Singapore, Japan, Thanks for taking my call. And I have two questions. First one is what's your progress of improving account opening process in Japan? And could you provide more color on new paying clients acquisition in first quarter last year versus first quarter this year so far in Japan? And when would you expect to launch Japan stock trading? And the second question is regarding to the new paying client. So we see the new paying client target of $350,000 in 2024 is very impressive. Could you break down by key markets, including like Hong Kong, Singapore, U.S., Japan, et cetera? Thank you.
spk11: Thank you, Cindy. I will take your second question first, and I will leave the first question to my colleague, Daniel. In terms of our new targets for 2024, the contributions from Singapore, Hong Kong, and the Australian existing markets, our absolute terms should be similar to last year. So the incremental growth drivers mainly come from certain new markets we entered into this year and recently in the fourth quarter last year. such as Japan, Canada, and Malaysia. Thank you.
spk03: Hi, Cindy. This is Daniel, and I'll take your question on Japan. So in the fourth quarter, we continue to optimize the recount opening process and to integrate the redundant processes and pages in that process and to iterate on the key friction points. And we have seen, therefore, a very meaningful increase in the conversion rate from users to registered clients, to paying clients. But in comparison to other international markets, there is still a lot of room for improvement in that conversion number. And to continue to optimize that account opening golden process will be a key priority for us this year. And in terms of Japan equities trading, yes, we are planning to roll out Japan equities trading to our Japan clients. by the end of March. And then in April or May, we're going to roll out Japan equities trading to our clients in Hong Kong and Singapore. Thank you.
spk10: Thank you.
spk09: We'll now take our next question. And this is from the line of from Morgan Stanley. Please go ahead.
spk01: Thank you for giving me the opportunity to ask questions. I am Huang Chi-Yao, an analyst at Morgan Stanley. I would like to ask Mr. Guan to introduce the progress of Singapore, including the number of customers in Singapore and the overall share of customers in Singapore. In 2024, what new strategies do we have for Singapore? What changes do you see in the current competitive environment? At the same time, it is also important to understand whether the risks of Singapore's customers have changed. My question is on the Singapore. So what was roughly the client number and the client asset contribution on the overall firm basis? And also wonder what's the strategy in Singapore for 2024 and how's the competitive landscape changing in Singapore? And also, what's the risk appetite evolving for Singapore clients in 24, given the U.S. market is still performing quite well? Are they trading more stocks? Thank you.
spk11: Thank you, Chi-Yong.
spk13: My colleagues, Robin, will answer this question for you. Hello. Thank you for the question.
spk14: Let me answer this question. In the fourth quarter, Singapore's entire customer speed has maintained a growth of documents. Wei Group has contributed about 30% to the increase in real estate customers. This is mainly due to the continuous income and quality of new customers. At the end of the year, the total assets and mutual assets of Singapore have achieved a 25% and 17% high-speed growth. The total asset size has also maintained this strong growth trend since the start of the industry. In addition, the mutual fund asset industry of real estate customers has maintained this trend for six consecutive seasons. By the end of the fourth quarter, it has exceeded 17,000 new coins. As we continue to strengthen our brand trust in Singapore, as well as the continuous improvement of product guidance and customer service, Mumu will also gain more and more high-quality people's trust. The growth of high-quality businesses has also maintained a relatively good trend. In addition, we have seen that Singapore's economic model has gradually improved in the past two years. After considering the cost distribution of the headquarters, Singapore branch companies have crossed the balance point for the first time in four seasons. Since the beginning of this year, we have seen a very good growth trend. Another question is about the investment structure and risk bias of our entire Singapore investment clients. We are indeed in the window period of the US stock market, In the fourth quarter, Singapore recorded very steady client growth.
spk03: and contributed about 30% of our total net new clients for the entire quarter. And thanks to the continued net asset inflow of our existing clients and the higher quality new clients, the total client assets and average client assets in Singapore recorded 25% and 17% sequential growth respectively. And the total client assets recorded sequential increase for every single quarter since we launched the business. And average client assets have been on an upward trajectory for six consecutive quarters. And as of the end of last year, average client assets in Singapore was over 17,000 Singapore dollars. And we believe that as we continue to enhance our brand awareness, to diversify and enrich our product offerings, and to improve our client services, Moomoo will continue to attract more high net worth individuals. And we've also seen the unit economics in Singapore to continue to improve in the past two years. And taking into account the cost from the headquarters to support Singapore, the Singapore subsidiary broke even for the first time during the fourth quarter. And we have seen very good growth year to date. And in terms of clients' risk appetite, so during the past rate hike cycle, we started to promote our Cash Plus product, which is the money market fund product. And we continue to cross-sell different investment products based on our clients' risk appetite. And this year, we have seen very strong traction in U.S. equities among our Singapore clients. Thank you.
spk01: Thank you very much.
spk09: Thank you. We'll now take our next question. This is from the line of Yufan from CICC. Please go ahead.
spk04: Hello, thank you for giving me the opportunity to ask this question. I am Fan You, a researcher at Zhongjin Company. I have two questions to ask. The first one is about the comprehensive commission rate. We can see that the return rate of this quarter has been further improved. I would like to ask the reason behind it. The second question is about the cost of goods and services. We can see that the overall cost of goods and services of this quarter is clearly decreasing. My first question is regarding the blended commission rate. We see the commission rate increase this quarter, so what's the reason behind? And the second question is about the CAC. So we see the CAC decrees a lot of this culture. So what's the reason behind? And how do you view the future trend of the CAC?
spk11: Thank you. I will take these two questions. For commission rate, the combined take rate is almost flat on a Q-on-Q basis, slightly up because of the product mixture and more contributions from our derivative products. Then for the CAC, We further optimize our different marketing campaigns channels to control and even decrease our CAC, which bear very strong results in the fourth quarter. And looking forward and based on the year-to-date situations, we do expect this year the CAC number will decrease compared with last year, hopefully by 10% to 20% year-on-year basis.
spk13: Thank you.
spk04: Thank you very much.
spk09: Thank you. Thank you. We'll now take our next question. Please stand by. Next question is from the line of Emma Zhu from Bank of America Securities. Please go ahead.
spk05: Thank you for giving me this opportunity to ask a question. I also have two questions. The first question is about the Singapore customer we just introduced. China China China China China
spk10: uh uh
spk05: So I have two questions. The first one is about the client quality in other international markets you mentioned earlier about the positive progress in a single client quality but how about other in international markets do you also see improvement in the average client asset and for your Hong Kong market with you penetrating into the mass market how will the client profile and average client asset change And the second question is about your trading velocity and trading volume. The trading velocity declined to a record low in fourth quarter, and it is quite understandable that the Hong Kong trading velocity declined due to the weak market. However, U.S. markets actually performed quite well in the fourth quarter, but your U.S. trading volume also declined. So how should we think about that? connection between the market performance and your trading velocity? Do we see a notable rebound of your trading velocity in the first quarter?
spk11: Thank you. I will take your second question first and leave the first question to my colleague, Daniel. In terms of trading velocity, you are right. The trading velocity is down in Hong Kong and the US in the fourth quarter. Despite the U.S. stock performed very well in the fourth quarter, but it remains a very strong continuous uptrend for the whole quarters. So most of our clients actually use a buy and hold strategy to enjoy the rallies. And implied volatility in the U.S. markets in the fourth quarter actually went down compared with third quarters. So the trading velocities decreased. actually, you know, based on our humble observations, is in line with a lot of other U.S. discounted brokers operating matrix as well. Then in the first quarter of this year so far, we have seen a very healthy pickup, not only in the U.S., but also in Hong Kong in terms of the trading volume and also the trading velocity. Thank you.
spk03: Thank you, Emma. This is Daniel, and I will take your question on the client quality in international markets. And actually, we have seen an improvement in average AUM not only in Singapore, but also in our other international markets, including the U.S., Australia, and Japan, mostly because unlike some of our other peers, I think FUTU really cares about quality growth. And net inflow of AUM is a key KPI, very important KPI for all of our marketing teams across different international regions. And in the fourth quarter, we have seen very strong AUM inflow despite weak market sentiments. And in the first two months this year, as Lee mentioned in his opening remarks, we have a higher net asset inflow in the first two months of this year than the entire fourth quarter combined. And actually, over one-third of that net asset inflow comes from international markets. So we'll expect continued upward trajectory in our client assets across international markets. And for Hong Kong, in the past couple of quarters, we continue to attract older clients, especially with our offline store. And we have seen that these clients typically have higher average assets. But because of the large base effect, these new clients didn't change the overall client profile much in Hong Kong. Thank you.
spk10: Thank you. This is really encouraging. Thank you. We'll now take our next question.
spk09: This is from the line of Leon Key from Daiwa. Please go ahead.
spk02: Okay. Thank you very much for giving me this opportunity to ask a question. I'm Leon Key. I have two questions for the management team. First of all, in terms of our marketing strategy in Hong Kong, because we talked about Singapore a lot just now, I also heard from Guan LiChen about the guidance of the new real estate customers, that is, the new real estate customers in Hong Kong next year will be similar to the one in 2024 and 2023. As the number of real estate customers in Hong Kong increases, I don't know if Guan LiChen will gradually turn the focus on business operations from the number of customers to the customer base assets. I want to know How do you plan to manage this? Secondly, I would like to ask about our U.S. stocks. I know that technically, we can self-calculate. But in reality, are U.S. stocks completely self-calculated? After we self-calculate, in addition to helping us to make a profit, do we improve our trading efficiency? I don't know if there are some U.S. companies in this area that can give us a comparison, such as Interactive Broker. Okay, I will translate it in English. Thanks for taking my questions. This is Leon Chee. I want to ask two questions today. Firstly, it's on our Hong Kong marketing and client acquisition strategy. Just now, management shared a lot of details on Singapore, but I'm interested in Hong Kong now. Given we have an increasing number of client base, paying client base now, would management feel that going forward, it will be increasingly more difficult for us to acquire new customers Are we considering gradually shifting our focus from the number of customers into average AUM or the quality of our customers? We do appreciate the new customer guidance that management talked about just now, that Hong Kong new customers guidance in 2024 will be similar to 2023. Second question is on self-clearing in U.S. stocks. May I confirm that all of our trades in U.S. has already been self-cleared. In addition to the positive impact on our net interest income, do we see any improvement in terms of our trading execution efficiencies by using self-clearing? Wondering if we can make any comparisons. with our competitors in the U.S., such as interactive brokers, etc. Thank you very much.
spk11: Thank you, Leo. I'll leave to take the first question, and I will answer the second one.
spk08: Thank you for the question. I'll answer the question about Hong Kong. The Hong Kong market is our backbone. In 2023, we will continue to maintain a very high penetration rate among the young people in Hong Kong. We are also improving the penetration rate of other age groups. Until the fourth quarter, the penetration rate of real estate customers in the 35 to 55-year-old population in Hong Kong has exceeded 10%. In the Hong Kong market, our goal is high-quality growth. We are focusing on acquiring high-quality customers and doing detailed operations for pure customers. Therefore, in the market, Thank you.
spk03: The Hong Kong market is our home base, and in 2023, we continue to maintain very high penetration among the younger clients, and we also steadily improve our penetration into clients from other age groups. As of the end of Q4, our paying client penetration among the adults age 35 to 55 in Hong Kong was over 10%. And in Hong Kong, our goal is to achieve high-quality growth, and we focus on acquiring high-quality clients, and also focus on attracting net asset inflow from existing clients. That's why during Q4 and also in the past where market sentiments were weak, we continue to see very robust net asset inflow from Hong Kong. And going forward, we'll leverage our comprehensive product offerings and have different operational strategies for clients with different asset amounts and different investment needs. and will very closely track the net asset inflow trend in Hong Kong. Thank you.
spk11: For the second question, you're right. We have already largely completed the U.S. self-clearing so far. And I think actually the positive contributions from this migration will continue thanks to the increased client assets, coho, and also the contributions from the new markets such as Japan and Malaysia. And in terms of the operating efficiency, definitely after the self-clearing capabilities, our service downtimes versus before has been meaningfully decreased. And also the trading execution in terms of the reporting, et cetera, will be more smooth.
spk13: Thank you. Thank you very much.
spk09: Thank you. As a reminder, if you would like to ask a question, you can press star 1 and 1 on your keypad. We will now take our next question. Please stand by. The next question is from the line of Peter Shang from JP Morgan. Please go ahead.
spk07: Thank you for the opportunity to ask me a question. I am Peter from Morgan Datong. My first question is about interest income. The interest income has dropped this quarter. I would like to ask Mr. Guan, what is the reason behind this? Could you please explain to Mr. Guan the situation of the client's cash funds and some of our interest rates, some of the interest rates of the bank's deposits? And then I would like to ask... um um My first question is about the interest income. We noticed that interest income had been decreased sequentially in first quarter. We wish to understand what's the first quarter trend for clients' adult cash and food deposit rates. I also wish to understand what's the trend in first quarter for clients' adult cash balance. My second question is about operating expense. I wish to understand what's FUTU's plan for the headcount increase in 2024 and what's management's guidance for FUTU's operating expense increase or, say, cost of income ratio trend. Thank you.
spk11: Thank you, Peter. I will take these two questions. For idle cash, roughly idle cash accounts for 10% to 15% of our total client assets in the past quarter, and also the similar situations happened in the first quarter so far. And the decrease of the interest revenue in the fourth quarter, as I mentioned in the open remarks, is mainly due to the decrease of the average balance decrease for the security borrowing and the lending, despite if you see the balance sheet date, the margin and the security lending balance was higher than that in the third quarter. Then for your second half questions, in terms of headcounts, we are looking for mid to high single-digit headcount growth. Mainly will be deployed for our international market expansion and further enhance our R&D capabilities. Unfortunately, we do not have a cost income ratio guidance. Given the nature of our business, our revenue is very difficult to predict due to the market volatility. So we were more focusing on the people side, given this is one of the largest cost components for our overall cost structure. Thank you.
spk12: Thank you. Thank you.
spk09: Thank you. And this does conclude the question and answer session. So at this time, I would like to hand the conference back to Daniel Yuan for closing remarks. Thank you.
spk03: That concludes our call today. 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.
spk09: Thank you. This does conclude today's conference call. Thank you for participating and you may now disconnect.
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