Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-38820 |
Entity Registrant Name | Futu Holdings Ltd |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 11/F, Bangkok Bank Building |
Entity Address, Address Line Two | No. 18 Bonham Strand W |
Entity Address, Address Line Three | Sheung Wan |
Entity Address, City or Town | Hong Kong S.A.R |
Entity Address, Country | CN |
Document Period End Date | Dec. 31, 2022 |
Entity Filer Category | Large Accelerated Filer |
Entity Voluntary Filers | No |
Entity Well Known Seasoned Issuer | Yes |
Entity Interactive Data Current | Yes |
Entity Current Reporting Status | Yes |
Entity Shell Company | false |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Central Index Key | 0001754581 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Auditor Name | PricewaterhouseCoopers Zhong Tian LLP |
Auditor Location | Shenzhen, the People’s Republic of China |
Auditor Firm ID | 1424 |
Class A Ordinary Shares [Member] | |
Document Information [Line Items] | |
Security Exchange Name | NASDAQ |
Title of 12(b) Security | Class A ordinary shares, par value US$0.00001 per share* |
Entity Common Stock, Shares Outstanding | 736,688,588 |
No Trading Symbol Flag | true |
Class B Ordinary Shares [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 380,552,051 |
ADR [Member] | |
Document Information [Line Items] | |
Security Exchange Name | NASDAQ |
Trading Symbol | FUTU |
Title of 12(b) Security | American depositary shares (one American depositary share representing eight Class A ordinary shares, par value US$0.00001 per share) |
Business Contact | |
Document Information [Line Items] | |
Entity Address, Address Line One | 11/F, Bangkok Bank Building |
Entity Address, Address Line Two | No. 18 Bonham Strand W |
Entity Address, Address Line Three | Sheung Wan |
Entity Address, City or Town | Hong Kong S.A.R |
Entity Address, Country | CN |
Contact Personnel Name | Arthur Yu Chen |
Contact Personnel Email Address | ir@futuholdings.com |
City Area Code | 852 |
Local Phone Number | 2523-3588 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
ASSETS | |||
Cash and cash equivalents | $ 5,028,898 | $ 644,607 | $ 4,555,096 |
Cash held on behalf of clients | 50,685,472 | 6,496,888 | 54,734,351 |
Restricted cash | 1,215 | 156 | 2,065 |
Term deposit | 5,860 | 751 | |
Short-term investments | 675,064 | 86,530 | 1,169,741 |
Securities purchased under agreements to resell | 32,000 | 4,102 | 106,203 |
Loans and advances - current (net of allowance of HK$12,258 thousand and HK$27,840 thousand as of December 31, 2021 and 2022, respectively) | 26,676,358 | 3,419,388 | 29,587,306 |
Receivables: | |||
Clients | 513,358 | 65,802 | 469,577 |
Brokers | 5,914,963 | 758,183 | 7,893,927 |
Clearing organizations | 3,066,953 | 393,124 | 1,961,121 |
Fund management companies and fund distributors | 79,086 | 10,137 | 72,340 |
Interest | 254,310 | 32,598 | 50,829 |
Prepaid assets | 28,507 | 3,654 | 18,306 |
Other current assets | 102,258 | 13,107 | 81,594 |
Total current assets | 93,064,302 | 11,929,027 | 100,702,456 |
Operating lease right-of-use assets | 196,864 | 25,234 | 243,859 |
Long-term investments | 239,694 | 30,724 | 23,394 |
Loans and advances - non-current | 36,765 | 4,713 | |
Other non-current assets | 965,205 | 123,720 | 568,805 |
Total non-current assets | 1,438,528 | 184,391 | 836,058 |
Total assets | 94,502,830 | 12,113,418 | 101,538,514 |
LIABILITIES | |||
Amounts due to related parties | 52,725 | 6,758 | 87,459 |
Payables: | |||
Clients | 57,209,066 | 7,333,087 | 59,127,439 |
Brokers | 11,815,274 | 1,514,487 | 7,599,233 |
Clearing organizations | 51,867 | 6,648 | 393,782 |
Fund management companies and fund distributors | 90,801 | 11,639 | 56,690 |
Interest | 9,864 | 1,264 | 15,359 |
Borrowings | 2,480,532 | 317,956 | 6,357,405 |
Securities sold under agreements to repurchase | 4,467,861 | ||
Lease liabilities - current | 109,416 | 14,025 | 96,860 |
Accrued expenses and other current liabilities | 1,706,159 | 218,696 | 2,176,213 |
Total current liabilities | 73,525,704 | 9,424,560 | 80,378,301 |
Lease liabilities - non-current | 101,727 | 13,039 | 163,719 |
Other non-current liabilities | 13,620 | 1,746 | 10,935 |
Total non-current liabilities | 115,347 | 14,785 | 174,654 |
Total liabilities | 73,641,051 | 9,439,345 | 80,552,955 |
Commitments and Contingencies (Note 28) | |||
SHAREHOLDERS' EQUITY | |||
Additional paid-in capital | 18,154,442 | 2,327,045 | 17,935,752 |
Treasury stock (29,462,760 and 121,363,408 shares as of December 31, 2021 and 2022, respectively) | (4,324,565) | (554,325) | (1,178,755) |
Accumulated other comprehensive (loss)/income | (47,846) | (6,133) | 75,994 |
Retained earnings | 7,079,416 | 907,443 | 4,152,472 |
Total shareholders' equity | 20,861,544 | 2,674,043 | 20,985,559 |
Non-controlling interest | 235 | 30 | |
Total equity | 20,861,779 | 2,674,073 | 20,985,559 |
Total liabilities and equity | 94,502,830 | 12,113,418 | 101,538,514 |
Class A ordinary shares | |||
SHAREHOLDERS' EQUITY | |||
Ordinary shares | 68 | 9 | 58 |
Class B ordinary shares | |||
SHAREHOLDERS' EQUITY | |||
Ordinary shares | $ 29 | $ 4 | $ 38 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Thousands | Dec. 31, 2022 HKD ($) shares | Dec. 31, 2021 HKD ($) shares |
Allowances for loans and advances | $ | $ 27,840 | $ 12,258 |
Treasury stock shares | 121,363,408 | 29,462,760 |
Class A ordinary shares | ||
Ordinary shares, shares authorized | 48,700,000,000 | 48,700,000,000 |
Ordinary shares, shares issued | 858,051,996 | 737,944,914 |
Ordinary shares, shares outstanding | 858,051,996 | 737,944,914 |
Class B ordinary shares | ||
Ordinary shares, shares authorized | 800,000,000 | 800,000,000 |
Ordinary shares, shares issued | 380,552,051 | 494,552,051 |
Ordinary shares, shares outstanding | 380,552,051 | 494,552,051 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 HKD ($) $ / shares shares | Dec. 31, 2020 HKD ($) $ / shares shares | |
Revenues | ||||
Brokerage commission and handling charge income | $ 4,007,642 | $ 513,701 | $ 3,913,027 | $ 1,990,138 |
Interest income | 3,214,327 | 412,014 | 2,518,198 | 965,627 |
Other income | 392,058 | 50,254 | 684,095 | 355,057 |
Total revenues | 7,614,027 | 975,969 | 7,115,320 | 3,310,822 |
Costs | ||||
Brokerage commission and handling charge expenses | (329,789) | (42,273) | (572,159) | (361,486) |
Interest expenses | (292,503) | (37,493) | (376,902) | (185,090) |
Processing and servicing costs | (373,840) | (47,919) | (257,003) | (149,378) |
Total costs | (996,132) | (127,685) | (1,206,064) | (695,954) |
Total gross profit | 6,617,895 | 848,284 | 5,909,256 | 2,614,868 |
Operating expenses | ||||
Research and development expenses | (1,222,077) | (156,646) | (805,325) | (513,283) |
Selling and marketing expenses | (895,772) | (114,820) | (1,392,070) | (385,320) |
General and administrative expenses | (931,144) | (119,354) | (529,048) | (248,404) |
Total operating expenses | (3,048,993) | (390,820) | (2,726,443) | (1,147,007) |
Others, net | (210,295) | (26,956) | 2,478 | (17,238) |
Income before income tax expenses and share of loss from equity method investments | 3,358,607 | 430,508 | 3,185,291 | 1,450,623 |
Income tax expenses | (413,962) | (53,062) | (375,081) | (124,793) |
Share of loss from equity method investments | (17,752) | (2,275) | (307) | |
Net income | 2,926,893 | 375,171 | 2,810,210 | 1,325,523 |
Attributable to: | ||||
Ordinary shareholders of the Company | 2,926,944 | 375,178 | 2,810,210 | 1,325,523 |
Non-controlling interest | (51) | (7) | ||
Net income | 2,926,893 | 375,171 | 2,810,210 | 1,325,523 |
Other comprehensive income/(loss), net of tax | ||||
Foreign currency translation adjustment | (123,840) | (15,874) | ||
Foreign currency translation adjustment | $ | (123,822) | 71,020 | 9,420 | |
Total comprehensive income | 2,803,086 | 359,302 | 2,881,230 | 1,334,943 |
Attributable to: | ||||
Ordinary shareholders of the Company | 2,803,086 | 359,302 | 2,881,230 | 1,334,943 |
Non-controlling interests | (33) | (5) | ||
Total comprehensive income | $ 2,803,053 | $ 359,297 | $ 2,881,230 | $ 1,334,943 |
Net income per share attributable to ordinary shareholders of the Company | ||||
Basic | (per share) | $ 2.57 | $ 0.33 | $ 2.34 | $ 1.28 |
Diluted | (per share) | $ 2.54 | $ 0.33 | $ 2.30 | $ 1.26 |
Weighted average number of ordinary shares used in computing net income per share | ||||
Basic | 1,139,377,763 | 1,139,377,763 | 1,200,912,670 | 1,036,865,727 |
Diluted | 1,151,021,697 | 1,151,021,697 | 1,219,672,508 | 1,050,143,014 |
ADS | ||||
Net income per share attributable to ordinary shareholders of the Company | ||||
Basic | (per share) | $ 20.55 | $ 2.63 | $ 18.72 | $ 10.23 |
Diluted | (per share) | $ 20.34 | $ 2.61 | $ 18.43 | $ 10.10 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY $ in Thousands, $ in Thousands | Total shareholders' equity HKD ($) | Ordinary shares Class A Ordinary Shares [Member] Follow-on public offering HKD ($) shares | Ordinary shares Class A Ordinary Shares [Member] HKD ($) shares | Ordinary shares Class B Ordinary Shares [Member] HKD ($) shares | Treasury stock purchases HKD ($) shares | Additional paid in capital Follow-on public offering HKD ($) | Additional paid in capital HKD ($) | Accumulated other comprehensive (loss)/income HKD ($) | Retained earnings HKD ($) | Noncontrolling Interest HKD ($) | Class A Ordinary Shares [Member] HKD ($) shares | Class A Ordinary Shares [Member] USD ($) shares | Follow-on public offering HKD ($) | HKD ($) | USD ($) |
Beginning balances at Dec. 31, 2019 | $ 36 | $ 42 | $ 2,536,182 | $ (4,446) | $ 16,739 | $ 2,548,553 | |||||||||
Beginning balance (in shares) at Dec. 31, 2019 | shares | 459,090,941 | 544,552,051 | |||||||||||||
Profit for the year | 1,325,523 | 1,325,523 | |||||||||||||
Net income | 1,325,523 | ||||||||||||||
Share-based compensation | 32,573 | 32,573 | |||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") | 16,799 | 16,799 | |||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") (in shares) | shares | 5,048,824 | 5,048,824 | 5,048,824 | ||||||||||||
Issuance of ordinary shares | $ 7 | $ 2,339,711 | $ 2,339,718 | ||||||||||||
Issuance of ordinary shares (in shares) | shares | 76,000,000 | ||||||||||||||
Surrendered and cancellation of Class A ordinary shares (in shares) | shares | (5) | ||||||||||||||
Share conversion from Class B to Class A | $ 4 | $ (4) | |||||||||||||
Share conversion from Class B to Class A (in shares) | shares | 50,000,000 | (50,000,000) | |||||||||||||
Issuance of Pre-funded warrants | 2,035,104 | 2,035,104 | |||||||||||||
Foreign currency translation adjustment, net of tax | 9,420 | 9,420 | |||||||||||||
Ending balances at Dec. 31, 2020 | $ 47 | $ 38 | 6,960,369 | 4,974 | 1,342,262 | 8,307,690 | |||||||||
Ending balance (in shares) at Dec. 31, 2020 | shares | 590,139,760 | 494,552,051 | |||||||||||||
Profit for the year | 2,810,210 | 2,810,210 | |||||||||||||
Net income | 2,810,210 | ||||||||||||||
Share-based compensation | 98,913 | 98,913 | |||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") | 19,957 | 19,957 | |||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") (in shares) | shares | 6,805,264 | 5,875,592 | 5,875,592 | ||||||||||||
Issuance of ordinary shares | $ 7 | 10,856,517 | 10,856,524 | ||||||||||||
Issuance of ordinary shares (in shares) | shares | 87,400,000 | ||||||||||||||
Treasury stock purchases | $ (1,178,755) | $ (1,178,800) | $ (151,200) | (1,178,755) | |||||||||||
Treasury stock purchases (in shares) | shares | (29,462,760) | 29,462,760 | 29,462,760 | ||||||||||||
Exercise of Pre-funded warrants | $ 4 | (4) | |||||||||||||
Exercise of Pre-funded warrants (in shares) | shares | 53,599,890 | ||||||||||||||
Foreign currency translation adjustment, net of tax | 71,020 | 71,020 | |||||||||||||
Ending balances at Dec. 31, 2021 | $ 58 | $ 38 | 17,935,752 | 75,994 | 4,152,472 | 20,985,559 | |||||||||
Ending balance at Dec. 31, 2021 | $ 20,985,559 | $ 58 | $ 38 | 17,935,752 | 75,994 | 4,152,472 | 20,985,559 | ||||||||
Ending balance (in shares) at Dec. 31, 2021 | shares | 737,944,914 | 494,552,051 | |||||||||||||
Ending balance, Treasury stock at Dec. 31, 2021 | $ (1,178,755) | ||||||||||||||
Ending balance, Treasury stock (in shares) at Dec. 31, 2021 | shares | (29,462,760) | ||||||||||||||
Profit for the year | 2,926,944 | $ 375,178 | |||||||||||||
Net income | 2,926,944 | 2,926,944 | $ (51) | 2,926,893 | 375,171 | ||||||||||
Share-based compensation | 204,529 | 204,529 | 204,529 | ||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") | 14,162 | $ 1 | 14,161 | 14,162 | |||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") (in shares) | shares | 6,107,088 | 2,968,984 | 2,968,984 | ||||||||||||
Surrendered and cancellation of Class A ordinary shares (in shares) | shares | (6) | ||||||||||||||
Share conversion from Class B to Class A | $ 9 | $ (9) | |||||||||||||
Share conversion from Class B to Class A (in shares) | shares | 114,000,000 | (114,000,000) | |||||||||||||
Treasury stock purchases | (3,145,810) | $ (3,145,810) | $ (4,324,600) | $ (553,200) | (3,145,810) | ||||||||||
Treasury stock purchases (in shares) | shares | (91,900,648) | 121,363,408 | 121,363,408 | ||||||||||||
Foreign currency translation adjustment, net of tax | (123,840) | (123,840) | 18 | (123,822) | |||||||||||
Acquisition of a subsidiary | 268 | 268 | |||||||||||||
Ending balances at Dec. 31, 2022 | 20,861,544 | 2,674,043 | |||||||||||||
Ending balance at Dec. 31, 2022 | $ 20,861,544 | $ 68 | $ 29 | $ 18,154,442 | $ (47,846) | $ 7,079,416 | $ 235 | $ 20,861,779 | $ 2,674,073 | ||||||
Ending balance (in shares) at Dec. 31, 2022 | shares | 858,051,996 | 380,552,051 | |||||||||||||
Ending balance, Treasury stock at Dec. 31, 2022 | $ (4,324,565) | ||||||||||||||
Ending balance, Treasury stock (in shares) at Dec. 31, 2022 | shares | (121,363,408) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
Cash flows from operating activities | ||||
Net income | $ 2,926,893 | $ 375,171 | $ 2,810,210 | $ 1,325,523 |
Adjustments for: | ||||
Depreciation and amortization | 54,714 | 7,013 | 36,436 | 27,231 |
Expected credit loss expenses | 15,619 | 2,002 | 3,200 | 9,075 |
Share of loss from equity method investments | 17,752 | 2,275 | 307 | |
Impairment from other non-current assets | 77,217 | 9,898 | 0 | 5,888 |
Foreign exchange losses/(gains) | 133,124 | 17,064 | (138,234) | 11,493 |
Share-based compensation | 204,529 | 26,217 | 98,913 | 32,573 |
Realized gain from short-term investments | (23,059) | (2,956) | (665) | |
Fair value gain | (1,728) | (221) | (26) | |
Deferred income tax benefit | (52,112) | (6,680) | (21,431) | (13,146) |
Amortisation of right-of-use assets | 94,933 | 12,169 | 83,695 | 52,548 |
Changes in operating assets: | ||||
Net (increase)/decrease in securities purchased under agreements to resell | 74,203 | 9,511 | (106,203) | |
Net (increase)/decrease in loans and advances | 2,858,601 | 366,417 | (10,765,123) | (14,645,752) |
Net (increase)/decrease in accounts receivable from clients and brokers | 1,936,445 | 248,214 | (1,847,898) | (5,042,241) |
Net increase in accounts receivable from clearing organizations | (1,101,912) | (141,244) | (717,193) | (939,848) |
Net (increase)/decrease in accounts receivable from fund management companies and fund distributors | (6,746) | (865) | 225,282 | (297,622) |
Net increase in interest receivable | (199,714) | (25,599) | (30,953) | (2,984) |
Net decrease/(increase) in prepaid assets | (8,904) | (1,141) | (6,653) | 1,048 |
Net increase in other assets | (445,903) | (57,156) | (105,145) | (156,222) |
Changes in operating liabilities: | ||||
Net increase/(decrease) in amounts due to related parties | 3,690 | 473 | (37,983) | 83,429 |
Net increase in accounts payable to clients and brokers | 2,297,647 | 294,513 | 16,130,249 | 33,673,301 |
Net increase/(decrease) in accounts payable to clearing organizations | (341,915) | (43,827) | 69,516 | 324,266 |
Net increase/(decrease) in accounts payable to fund management companies and fund distributors | 34,111 | 4,372 | (70,752) | 101,061 |
Net increase in payroll and welfare payable | 337,237 | 43,227 | 213,981 | 217,200 |
Net increase/(decrease) in interest payable | (5,495) | (704) | 9,866 | 4,974 |
Net decrease in operating lease liabilities | (93,093) | (11,933) | (79,544) | (38,077) |
Net increase/(decrease) in securities sold under agreements to repurchase | (4,467,861) | (572,693) | (985,176) | 5,451,447 |
Net increase/(decrease) in other liabilities | (843,342) | (108,100) | 1,242,937 | 271,910 |
Net cash generated from operating activities | 3,474,931 | 445,417 | 6,011,971 | 20,456,717 |
Cash flows from investing activities | ||||
Purchase of property and equipment and intangible assets | (90,520) | (11,603) | (70,456) | (44,649) |
Purchase of short-term investments | (4,061,490) | (520,604) | (1,169,715) | (206,793) |
Proceeds from disposal of short-term investments | 4,590,834 | 588,455 | 307,267 | |
Acquisition of long-term investments | (235,434) | (30,178) | (23,394) | |
Placement of term deposit | (300,000) | |||
Maturity of term deposit | 300,000 | |||
Cash paid for acquisitions, net of cash acquired | (109,531) | (14,040) | ||
Net cash used in/generated from investing activities | 93,859 | 12,030 | (963,565) | (244,175) |
Cash flows from financing activities | ||||
Proceeds from public offering, net of issuance costs | 10,856,524 | 2,339,718 | ||
Proceeds from exercise of employee share options | 16,332 | 2,093 | 23,492 | 16,842 |
Proceeds from issuance of pre-funded warrants | 2,035,104 | |||
Purchase of treasury stocks | (3,145,810) | (403,231) | (1,178,755) | |
IPO loan borrowings (net) | (300,199) | 300,199 | ||
Proceeds from other borrowings | 70,806,177 | 9,075,971 | 53,483,435 | 23,808,006 |
Repayment of other borrowings | (74,686,220) | (9,573,314) | (52,313,417) | (20,092,973) |
Payment of other financing expenses | (16,862) | |||
Net cash generated from/used in financing activities | (7,009,521) | (898,481) | 10,554,218 | 8,406,896 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (135,196) | (17,329) | 167,130 | (1,117) |
Net increase/(decrease) in cash, cash equivalents and restricted cash | (3,575,927) | (458,363) | 15,769,754 | 28,618,321 |
Cash, cash equivalents and restricted cash at beginning of the year | 59,291,512 | 7,600,014 | 43,521,758 | 14,903,437 |
Cash, cash equivalents and restricted cash at end of the year | 55,715,585 | 7,141,651 | 59,291,512 | 43,521,758 |
Cash, cash equivalents and restricted cash | ||||
Cash and cash equivalents | 5,028,898 | 4,555,096 | 1,034,668 | |
Cash held on behalf of clients | 50,685,472 | 54,734,351 | 42,487,090 | |
Restricted cash | 1,215 | 2,065 | ||
Cash, cash equivalents and restricted cash at end of the year | 55,715,585 | 59,291,512 | 43,521,758 | |
Supplemental disclosure | ||||
Interest paid | (297,998) | (38,198) | (367,036) | (181,706) |
Income tax paid | (694,973) | (89,082) | (102,890) | (16,250) |
Cash paid for amounts include in operating lease liabilities | $ (106,497) | $ (13,651) | $ (89,427) | $ (58,686) |
GENERAL INFORMATION, ORGANIZATI
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2022 | |
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES | |
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES Futu Holdings Limited (the “Company”) is an investment holding company incorporated in the Cayman Islands with limited liability and conducts its business mainly through its subsidiaries, and the consolidated variable interest entities (“VIEs”) and subsidiaries of the VIEs (collectively referred to as the “Group”). The Group principally engages in online financial services including securities and derivative trades brokerage, margin financing and fund distribution services based on internally developed software and digital platform “Futubull” and “Moomoo”. The Group also provides financial information and online community services, etc. The Company completed its IPO on March 8, 2019 on the Nasdaq Global Market. Each American Depositary Shares (“ADSs”) of the Company represents eight Class A ordinary shares. As of December 31, 2022, the Company’s principal subsidiaries and the consolidated VIE are as follows: Place of Percentage of Date of Incorporation/ Incorporation/ Direct or Indirect Subsidiaries Establishment/ Establishment Economic Interest Principal Activities Futu Securities International (Hong Kong) Limited (“Futu Securities”) April 17, 2012 Hong Kong 100 % Financial services Moomoo Financial Inc (1) (previous name: Futu Inc.) December 17, 2015 Delaware, USA 100 % Financial services Futu Clearing Inc. August 13, 2018 Delaware, USA 100 % Financial services Moomoo Financial Singapore Pte. Ltd (1) (previous name: Futu Singapore Pte. Ltd) December 17, 2019 Singapore 100 % Financial services Futu Securities (Australia) Ltd. February 15, 2001 New South Wales, AUS 100 % Financial services Moomoo Securities Japan Co., Ltd. (1) (previous name:Hibiki Securities Inc) April 5, 1920 Tokyo, Japan 100 % Financial services Futu Securities (Hong Kong) Limited May 2, 2014 Hong Kong 100 % Investment holding Futu Network Technology Limited May 17, 2015 Hong Kong 100 % Research and development and technology services Futu Network Technology (Shenzhen) Co., Ltd. October 14, 2015 Shenzhen, PRC 100 % Research and development and technology services Shen Si Network Technology (Beijing) Co., Ltd. (“Shen Si”) September 15, 2014 Beijing, PRC 100 % No substantial business VIE Shenzhen Futu Network Technology Co., Ltd. (2) (“Shenzhen Futu”) December 18, 2007 Shenzhen, PRC 100 % Research and development and technology services Note: (1) These subsidiaries changed company names in June and September 2022. (2) Mr. Leaf Hua Li and Ms. Lei Li are beneficiary owners of the Company and held 85% and 15% equity interest in Shenzhen Futu, respectively. Mr. Leaf Hua Li is the founder, chairman and chief executive officer of the Company, and Ms. Lei Li is Mr. Leaf Hua Li’s spouse. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and subsidiaries of the VIEs for which the Company or its subsidiary is the primary beneficiary . A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to appoint or remove the majority of the members of the Board of Directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the ability to direct the activities that most significantly impact the entity’s economic performance and receive the economic benefits from the VIEs that could be significant to the VIEs , and therefore the Company or its subsidiary is considered the primary beneficiary of the VIEs for accounting purposes, and has consolidated the VIEs’ financial results of operations, assets and liabilities in the Company’s consolidated financial statements in accordance with U.S. GAAP. All transactions and balances among the Company, its subsidiaries, the VIEs and subsidiaries of the VIEs have been eliminated upon consolidation . VIE Companies 1) Contractual Agreements with VIEs The following is a summary of the contractual agreements (collectively, “Contractual Agreements”) between the Company’s PRC subsidiary, Shen Si, and the VIEs. Through the Contractual Agreements, the VIEs are effectively controlled by the Company . Shareholders’ Voting Rights Proxy Agreements. Pursuant to the Shareholders’ Voting Rights Proxy Agreements, each shareholder of VIEs irrevocably authorized Shen Si or any person(s) designated by Shen Si to exercise such shareholder’s rights in VIEs, including without limitation, the power to participate in and vote at shareholder’s meetings, the power to nominate and appoint the directors, senior management, and other shareholders’ voting right permitted by the articles of association of VIEs. The shareholders’ voting rights proxy agreements remain irrevocable and continuously valid from the date of execution until the expiration of the business term of Shen Si and can be renewed upon request by Shen Si . Business Operation Agreements . Pursuant to the Business Operation Agreements, VIEs and their shareholders undertake that without Shen Si’s prior written consent, VIEs shall not enter into any transactions that may have a material effect on VIEs’ assets, business, personnel, obligations, rights or business operations. VIEs and their shareholders shall elect directors nominated by Shen Si and such directors shall nominate officers designated by Shen Si. The business operation agreements will remain effective until the end of Shen Si’s business term, which will be extended if Shen Si’s business term is extended or as required by Shen Si . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 1) Contractual Agreements with VIEs (Continued) Equity Interest Pledge Agreements. Pursuant to the Equity Interest Pledge Agreements, each shareholder of VIEs agrees that, during the term of the Equity Interest Pledge Agreements, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Shen Si. The Equity Interest Pledge Agreements remain effective until the latter of the full payment of all secured debt under the equity interest pledge agreements and VIEs and their shareholders discharge all their obligations under the contractual arrangements . Exclusive Technology Consulting and Services Agreements. Under the Exclusive Technology Consulting and Services Agreements between Shen Si and the VIEs, Shen Si has the exclusive right to provide VIEs with technology consulting and services related to, among other things, technology research and development, technology application and implementation, maintenance of software and hardware. Without Shen Si’s written consent, VIEs shall not accept any technology consulting and services covered by these agreements from any third party. VIEs agree to pay a service fee at an amount equivalent to all of its net profit to Shen Si. Unless otherwise terminated in accordance with the terms of these agreements or otherwise agreed with Shen Si, these agreements will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended . Exclusive Option Agreements. Pursuant to the Exclusive Option Agreements, each shareholder of VIEs has irrevocably granted Shen Si an exclusive option, to the extent permitted by PRC laws, to purchase, or have its designated person or persons to purchase, at its discretion, all or part of the shareholder’s equity interests in VIEs. Unless PRC laws and/or regulations require valuation of the equity interests, the purchase price shall be RMB 1.00 or the lowest price permitted by the applicable PRC laws, whoever is higher. Each shareholder of VIEs undertakes that, without the prior written consent of Shen Si, he or she will not, among other things, (i) create any pledge or encumbrance on his or her equity interests in VIEs, (ii) transfer or otherwise dispose of his or her equity interests in VIEs, (iii) change VIEs’ registered capital, (iv) amend VIEs’ articles of association, (v) liquidate or dissolve VIEs, or (vi) distribute dividends to the shareholders of VIEs. In addition, VIEs undertake that, without the prior written consent of Shen Si, they will not, among other things, dispose of VIEs’ material assets, provide any loans to any third parties, enter into any material contract with a value of more than RMB 500,000 , or create any pledge or encumbrance on any of their assets, or transfer or otherwise dispose of their material assets. Unless otherwise terminated by Shen Si, these agreements will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure The following table sets forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs and their subsidiary taken as a whole, which were included in the Group’s consolidated financial statements with intercompany balances and transactions eliminated between the VIEs and their subsidiaries : As of December 31, 2021 2022 (HK$ in thousands) Total assets 254,602 309,708 Total liabilities 176,204 191,263 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Total operating revenue 103,433 210,161 226,468 Net income 20,727 52,741 39,542 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Net cash (used in)/generated from operating activities (14,847) 2,340 34,727 Net cash generated from/(used in) investing activities 17,104 (3,327) (3,201) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — (1,476) Net increase/(decrease) in cash, cash equivalents and restricted cash 2,257 (987) 30,050 Cash, cash equivalents and restricted cash at beginning of the year 1,481 3,738 2,751 Cash, cash equivalents and restricted cash at end of the year 3,738 2,751 32,801 Transactions between the VIE and other entities in the consolidated group Total assets for 2021 and 2022 include amounts due from internal companies in the consolidated group in the amount of HK $ 190,424 thousand and HK$ 222,446 thousand, respectively. Total liabilities include amounts due to the internal companies in the amount of HK$ 80,435 thousand and HK$ 88,487 thousand, respectively. During 2020, 2021 and 2022, the VIEs earned inter-company revenues in the amounts of HK$ 94,500 thousand, HK$ 187,774 thousand and HK$ 202,834 thousand, respectively. In addition, advances from Group companies to the VIEs in 2020, 2021 and 2022 are in the amount of nil , nil and HK $8,120 thousand, respectively, the repayment of advances to Group companies by the VIEs in 2020, 2021 and 2022 are in the amount of nil , nil , and HK $8,120 thousand, respectively. All of these balances and transactions have been eliminated in consolidation. A series of contractual agreements have been entered into by and among the WFOE, the VIEs and their respective shareholders. The Company depends on these contractual arrangements to provide the subsidiary with a “controlling financial interest” in the VIEs, as defined in FASB ASC 810, making it the primary beneficiary of the VIEs. Terms contained in each set of contractual arrangements with the VIEs and their respective shareholders are substantially similar, which enable the Company to (1) have power to direct activities that most significantly impact the entity’s economic performance, and (2) receive the economic benefits from the VIEs that could be significant to the VIEs. Therefore, the Company is considered the primary beneficiary of the VIEs and there is no asset of the VIEs that can only be used to settle obligations of the VIEs and VIEs’ subsidiaries, except for registered capital of the VIEs and their subsidiaries amounting to RMB 10 million as of December 31, 2021 and 2022, respectively. Since the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company. There is currently no contractual arrangement that would require the Company to provide additional financial support to the VIEs. However, as the Company is conducting certain businesses through the VIEs and VIEs’ subsidiaries, the Company may provide such support on a discretionary basis in the future, which could expose the Company to a loss . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure (Continued) In the opinion of the Company’s management, the contractual arrangements among its subsidiary, the VIEs and their respective Nominee Shareholders are in compliance with current PRC laws and are legally binding and enforceable. However, uncertainties in the interpretation and enforcement of the PRC laws, regulations and policies could limit the Company’s ability to enforce these contractual arrangements. As a result, the Company may be unable to consolidate the VIEs and VIEs’ subsidiaries in the consolidated financial statements . On March 15, 2019, the Foreign Investment Law was formally passed by the thirteenth National People’s Congress and it was taken effect on January 1, 2020. The Foreign Investment Law replaces the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Cooperative Joint Ventures and the Law on Foreign-Capital Enterprises to become the legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates certain forms of foreign investment. However, the Foreign Investment Law does not explicitly stipulate contractual arrangements such as those we rely on as a form of foreign investment. Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment includes “foreign investors investing through any other methods under laws, administrative regulations or provisions prescribed by the State Council.” Future laws, administrative regulations or provisions prescribed by the State Council may possibly regard Contractual Arrangements as a form of foreign investment. In the event that the State Council in the future promulgates laws and regulations that deem investments made by foreign investors through contractual arrangements as “foreign investment”, the Group’s ability to use the contractual arrangements with its VIEs and the Group’s ability to conduct business through the VIEs could be severely limited . The Company’s ability to direct the activities of the VIEs also depends on the power of attorney Shen Si has to vote on all matters requiring shareholders’ approvals in the VIEs. As noted above, the Company believes these power of attorney are legally binding and enforceable but may not be as effective as direct equity ownership. In addition, if the Group’s corporate structure or the contractual arrangements with the VIEs were found to be in violation of any existing PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions : ● revoke the Group’s business and operating licenses; ● require the Group to discontinue or restrict its operations; ● restrict the Group’s right to collect revenues; ● block the Group’s websites; ● require the Group to restructure its operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets; ● impose additional conditions or requirements with which the Group may not be able to comply; or ● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure (Continued) The imposition of any of these restrictions or actions may result in a material adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these restrictions causes the Group to lose the right to direct the activities of the VIEs or the right to receive their economic benefits, the Group would no longer be able to consolidate the financial statements of the VIEs. In the opinion of management, the likelihood of losing the benefits in respect of the Group’s current ownership structure or the contractual arrangements with its VIEs is remote . Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues, costs and expenses during the reported period in the consolidated financial statements and accompanying notes. These accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to, the estimation of the expected usage and the estimated relative standalone selling price of the incentive points and coupons, the valuation and recognition of share-based compensation arrangements, depreciable lives of property and equipment, useful life of intangible assets, expected credit losses on financial instruments, assessment for impairment of long-term investments and other non-current assets, purchase price allocation for business acquisition, present value for expected future leasing payment, contingency reserve, provision of income tax and valuation allowance for deferred tax asset, and valuation of financial instruments measured at fair value. Actual results could differ from those estimates . Comprehensive Income and Foreign Currency Translation The Group’s operating results are reported in the consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Group’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of entities, of which functional currency is other than Hong Kong dollar which is the presentational currency of the Group, net of related income taxes, where applicable. Such subsidiaries’ assets and liabilities are translated into Hong Kong dollars at period-end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the Hong Kong dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the consolidated balance sheets . Convenience Translation Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from HK$ into US$ as of and for the year ended December 31, 2022 are solely for the convenience of the readers and were calculated at the rate of U S$1.00=HK$ 7.8015 , representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 30, 2022. No representation is made that the HK$ amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 30, 2022, or at any other rate. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Current Expected Credit Losses On January 1, 2020, the Group adopted FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology. The guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. The Group’s in-scope assets are primarily loans and advances that are collateralized by client securities and the collateral is required to be maintained at specified minimum levels at all times. The Group monitors margin levels and requires clients to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. The Group applies the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for the loans and advances. In accordance with the practical expedient, when the Group reasonably expects that borrowers (or counterparties, as applicable) will replenish the collateral as required, there is no expectation of credit losses when the collateral’s fair value is greater than the amortized cost of the financial assets. If the amortized cost exceeds the fair value of collateral, then credit losses are estimated only on the unsecured portion. For the year ended December 31, 2020, 2021 and 2022, expected credit loss expenses of HK$ 9,075 thousand, HK$ 3,200 thousand and HK $15,619 thousand resulting from the assessment of credit losses for the loans and advances under ASC Topic 326 at period-end were recognized in “Others, net” in the consolidated statements of comprehensive income respectively. An allowance for credit losses on other financial assets, including receivables from clients, brokers, clearing organizations and fund management companies and fund distributors, is estimated based on the aging of these financial assets. Receivables from clients are due within the settlement period commonly adopted in the relevant market practices, which is usually within a few days from the trade date. Because these receivables involve customers who have no recent history of default, and the settlement periods are usually short, the credit risk arising from receivables from clients is considered low. In respect of the receivables from brokers, clearing organizations and fund management companies and fund distributors, the management considers that these receivables have a low risk of default and the counterparties have a strong capacity to meet their contractual obligation. As a result, the allowance for credit losses for other financial assets were immaterial for all periods presented. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand, demand deposits and time deposits placed with banks or other financial institutions, which are unrestricted to withdrawal or use, and which have original maturities of three months or less. Cash Held on Behalf of Clients The Group has classified the clients’ monies as cash held on behalf of clients under the assets section in the consolidated balance sheets and recognized the corresponding accounts payables to the respective clients under the liabilities section. Term Deposit Term deposit consists of bank deposits with an original maturity of greater than three months. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Restricted Cash The Group is required to maintain restricted cash deposits for certain property leases. These funds are restricted and have been classified as such on our consolidated balance sheets due to the nature of restriction. Short-term Investments The Group classifies certain financial assets with highly liquidity and original maturities less than twelve months as short-term investments. The Group’s short-term investments consist of investments in money market funds, treasury bills and financial assets at fair value through profit or loss. Treasury bills are carried at amortized cost. Besides, the Group values its money market funds and financial assets at fair value through profit or loss using quoted prices in active markets for these investments, and accordingly, the Group classifies the valuation techniques that use these quoted prices as Level 1. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Transactions involving purchases of securities under agreements to resell (resell agreements) and transactions involving sales of securities under agreements to repurchase (repurchase agreements) are treated as collateralized financing transactions. Under resell agreements, the Group pays cash to counterparties and receives securities as collateral. These agreements are carried at amounts at which the securities will subsequently be resold, and the interest income incurred by the Group is recorded as interest income in the consolidated statements of comprehensive income. Under repurchase agreements, the Group receives cash from counterparties and provides securities as collateral. These agreements are carried at amounts at which the securities will subsequently be repurchased, and the interest expense incurred by the Group is recorded as interest expenses in the consolidated statements of comprehensive income. Loans and advances Loans and advances include margin loans, IPO loans extended to clients and other advances, mainly collateralized by securities and are carried at the amortized cost, net of an allowance for credit losses. Revenues earned from the loans and advances are included in interest income. Margin loans are extended to clients on a demand basis and are not committed facilities. Securities owned by the customers, which are not recorded in the consolidated balance sheets, are held as collateral for amounts due on the margin loans. IPO loans for subscription of new shares are normally settled within one week from the drawdown date. Once IPO stocks are allotted, the Group requires clients to repay the IPO loans. Force liquidation action would be taken if the clients fail to settle their shortfall after the IPO allotment result is announced. Other advances mainly consist of bridge loans to enterprises which mainly pledged unlisted or listed shares they hold as collateral. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Loans and advances (Continued) Loans and advances are initially recorded net of directly attributable transaction costs and are measured at subsequent reporting dates at amortized cost. Finance charges, premiums payable on settlement or redemption and direct costs are accounted for on an accrual basis to the surplus or deficit using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. The balances will be written off to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Trading Receivables from and Payables to Clients Trading receivables from clients include amounts due on brokerage transactions on a trade-date basis. Trading payables to clients represent the closing cash balance to the customers, which mainly include cash deposits and amounts due on brokerage transactions on a trade date basis. Receivables from and Payables to Brokers, Clearing Organizations and Fund Management Companies and Fund Distributors Receivables from and payables to brokers, clearing organizations and fund management companies and fund distributors include receivables and payables from unsettled trades on a trade-date basis, including amounts receivable for securities, derivatives or funds trades not delivered by the Group to the purchaser by the settlement date cash deposits, and cash collateral deposited for securities borrowing transactions and amounts payable for securities, derivatives or funds trades not received by the Group from a seller by the settlement date, and cash collateral received for securities lending transactions. Clearing settlement fund deposited in the clearing organizations for the clearing purpose is recognized in receivables from clearing organizations. The Group borrowed margin loans from executing brokers, with the benchmark interest rate plus premium differentiated depending on the amount borrowed, and immediately lent to margin financing clients. Margin loans borrowed is recognized in the payables to brokers . The Group’s policy is to net the receivables from and payables to clearing organizations according to ASC Topic 210-20, when all of the following conditions are met: a) Each of two parties owes the other determinable amounts. b) The reporting party has the right to set off the amount owed with the amount owed by the other party. c) The reporting party intends to set off. d) The right of setoff is enforceable at law. Interest Receivable and Payable Interest receivable which is included in receivables is calculated based on the contractual interest rate of bank deposit, securities purchased under agreements to resell, loans and advances, securities loaned and receivables on an accrual basis, and is recorded as interest income as earned. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Securities Borrowed and Securities Loaned Interest payable which is included in payables is calculated based on the contractual interest rates of payables, borrowings, securities borrowed and securities sold under agreements to repurchase on an accrual basis, and is recorded as interest expense when incurred. Securities borrowed transactions require the Group to provide counterparties with collateral, which may be in the form of cash, or other securities. With respect to securities loaned, the Group receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Group monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Receivables and payables related to securities borrowed and securities loaned are included at receivables from and payables to brokers or clients in the consolidated balance sheets. Securities lending fees received and securities borrowing fees paid by the Group are included in interest income and interest expense, respectively, in the consolidated statements of comprehensive income . Leases In an operating lease, a lessee obtains control of only the use of the underlying asset, but not the underlying asset itself. An operating lease is recognized as a right-of-use asset with a corresponding liability at the date which the leased asset is available for use by the Group. The Group’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company makes an accounting policy election not to separate non-lease components to measure the lease liability and lease asset. The lease liability is initially measured at the present value of the future lease payments over the lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. The lease payments are discounted using the rate implicit in the lease or, if not readily determinable, the Group’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of debt issued with a similar risk profile as the Group and a duration similar to the lease term. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent. After commencement of the operating lease, the Group recognizes lease expenses on a straight-line basis over the lease term. The subsequent measurement of the lease liability is based on the present value of the remaining lease payments using the discount rate determined at lease commencement. The right-of-use asset is subsequently measured at cost less accumulated amortization and any impairment provision. The amortization of the right-of-use asset represents the difference between the straight-line lease expense and the accretion of interest on the lease liability each period. The interest amount is used to accrete the lease liability and to amortize the right-of-use asset. There is no amount recorded as interest expense. All of the Group’s leases are classified as operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities. As of December 31, 2021 and 2022 , the weighted-average remaining lease term on these leases is approximately four years a nd three years , respectively, and the weighted-average discount rate used to measure the lease liabilities was approximately 4.71 % and 4.68% , respectively. For the years ended December 31, 2020, 2021 and 2022, right-of-use assets obtained under operating leases was HK$ 85,827 thousand, HK$ 108,949 thousand and HK $76,249 thousand, respectively. The Group’s lease agreements do not contain any residual value guarantees, restrictions or covenants . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Refundable Deposit Refundable deposit is included in other assets in the consolidated balance sheets. As a clearing member firm of securities and derivatives clearing organizations in Hong Kong, Singapore and the U.S., the Group is also exposed to clearing member credit risk. These clearing organizations require member firms to deposit cash to a clearing fund. If a clearing member defaults in its obligations to the clearing organizations in an amount larger than its own margin and clearing fund deposits, the shortfall is absorbed pro rata from the deposits of the other clearing members. Many clearing organizations of which the Group is member have the authority to assess their members for additional funds if the clearing fund is depleted. A large clearing member default could result in a substantial cost if the Group is required to pay such additional funds. Property and Equipment, net Property and equipment, which are included in other assets in the consolidated balance sheets are stated at historical cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Residual rate is determined based on the economic value of the property and equipment at the end of the estimated useful lives as a percentage of the original cost. Category Estimated useful lives Residual rate Computers equipment 3 - 5 years 5 % Furniture and fixtures 3 - 5 years 5 % Office equipme |
FINANCIAL ASSETS AND FINANCIAL
FINANCIAL ASSETS AND FINANCIAL LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
FINANCIAL ASSETS AND FINANCIAL LIABILITIES | |
FINANCIAL ASSETS AND FINANCIAL LIABILITIES | 3. FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial Assets and Liabilities Measured at Fair Value The following tables set forth, by level within the fair value hierarchy (see Note 3), financial assets and financial liabilities measured at fair value as of December 31, 2021 and 2022. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement . Financial Assets At Fair Value as of December 31, 2021 Level 1 Level 2 Level 3 Total (HK$ in thousands) Short-term investments 1,169,741 — — 1,169,741 Other financial assets (1) — 598 — 598 Total financial assets, measured at fair value 1,169,741 598 — 1,170,339 Financial Assets At Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total (HK$ in thousands) Short-term investments 8,181 — — 8,181 Other financial assets (1) — 1,911 — 1,911 Total financial assets, measured at fair value 8,181 1,911 — 10,092 (1) The Group enters into currency futures contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. The currency futures contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. As of December 31, 2021 and 2022, the currency futures are included in other current assets. 3. FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued) Transfers Between Level 1 and Level 2 Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period. During the years ended December 31, 2021 and 2022, there were no transfers between levels for financial assets and liabilities, at fair value. Financial Assets and Liabilities Not Measured at Fair Value The following financial instruments are not measured at fair value in the Group’s consolidated balance sheets as of December 31, 2021 and 2022, but require disclosure of their fair values: cash and cash equivalents, cash held on behalf of clients, term deposit, restricted cash, treasury bills, securities purchased under agreements to resell, loans and advances, receivables, other financial assets, amounts due to related parties, payables, borrowings, securities sold under agreements to repurchase and other financial liabilities. The estimated fair value of such instruments at December 31, 2021 and 2022 approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, cash and cash equivalents, cash held on behalf of clients and term deposit would be classified as level 1, while other financial instruments would be classified as level 2. Netting of Financial Assets and Financial Liabilities The Group’s policy is to net the receivables from and payables to clearing organizations that meet the offsetting requirements prescribed in ASC Topic 210-20. The following tables represents the amounts of financial instruments that are offset in the consolidated balance sheets as of December 31, 2021 and 2022 . Effects of offsetting on the balance sheet Related amounts not offset Gross Amounts amounts Net amounts subject to set off in the Presented in master Financial Gross balance the balance netting instrument Net As of December 31, 2021 amount sheet sheet arrangements collateral amount HK$in thousands Financial Assets Amounts due from clearing organizations 7,596,090 (5,634,969) 1,961,121 — — 1,961,121 Financial liabilities Amounts due to clearing organizations 6,028,751 (5,634,969) 393,782 — — 393,782 Effects of offsetting on the balance sheet Related amounts not offset Gross Amounts amounts Net amounts subject to set off in the presented in master Financial Gross balance the balance netting instrument Net As of December 31, 2022 amount sheet sheet arrangements collateral amount HK$ in thousands Financial Assets Amounts due from clearing organizations 7,877,524 (4,810,571) 3,066,953 — — 3,066,953 Financial liabilities Amounts due to clearing organizations 4,862,438 (4,810,571) 51,867 — — 51,867 |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 4. SHORT-TERM INVESTMENTS The following is a summary of short-term investments: As of December 31, 2021 2022 (HK$ in thousands) Treasury bills — 666,883 Money market funds 1,169,741 7,911 Financial assets at fair value through profit or loss — 270 Total 1,169,741 675,064 For the years ended December 31, 2020, 2021 and 2022, the Group recorded realized gain of HK$ 665 thousand, nil and HK$ 23,059 thousand related to short-term investments in the consolidated statements of comprehensive income, respectively. |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2022 | |
LEASE | |
LEASE | 5. LEASE The following table presents balances reported in the consolidated balance sheets related to the Group’s leases: As of December 31, 2021 2022 (HK$ in thousands) Operating lease right-of-use assets 243,859 196,864 Operating lease liabilities 260,579 211,143 The following table presents operating lease expense reported in the consolidated statements of comprehensive income related to the Group’s leases: Year ended December 31, 2020 2021 2022 (HK$ in thousands) Operating lease cost 64,594 106,459 119,854 The following table reconciles the undiscounted cash flows of the Group’s leases as of December 31, 2022 to the present value of its operating lease payments: December 31, 2022 (HK$ in thousands) 2023 111,603 2024 55,478 2025 42,339 2026 12,073 2027 and thereafter 2,043 Total undiscounted operating lease payments 223,536 Less: imputed interest (12,393) Present value of operating lease liabilities 211,143 |
LOANS AND ADVANCES
LOANS AND ADVANCES | 12 Months Ended |
Dec. 31, 2022 | |
LOANS AND ADVANCES | |
LOANS AND ADVANCES | 6. LOANS AND ADVANCES As of December 31, 2021 2022 (HK$ in thousands) Margin loans 29,097,216 24,681,724 IPO loans 34,348 89,465 Other advances 468,000 1,969,774 Subtotal 29,599,564 26,740,963 Less: Allowance for credit losses (12,258) (27,840) Total 29,587,306 26,713,123 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 7. PROPERTY AND EQUIPMENT, NET As of December 31, 2021 2022 (HK$ in thousands) Gross carrying amount Computers and equipment 109,989 105,426 Furniture and fixtures 64,507 71,226 Office equipment 64,822 65,927 Office building 28,239 35,227 Vehicle 635 1,985 Total of gross carrying amount 268,192 279,791 Less: accumulated depreciation Computers and equipment (29,852) (47,641) Furniture and fixtures (23,828) (37,414) Office equipment (35,860) (44,907) Office building (2,291) (3,223) Vehicle (604) (769) Total of accumulated depreciation (92,435) (133,954) Property and equipment, net 175,757 145,837 Depreciation expenses on property and equipment which are included in research and development expenses, selling and marketing expenses and general and administrative expenses in the consolidated statements of comprehensive income for the years ended December 31, 2020, 2021 and 2022 were HK$ 25,792 thousand, HK$ 34,118 thousand and HK$ 48,014 thousand, respectively . |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 8. INTANGIBLE ASSETS, NET As of December 31, 2021 2022 (HK$ in thousands) Gross carrying amount Computer software 15,596 27,196 License 4,261 29,564 Others 3,638 10,087 Total of gross carrying amount 23,495 66,847 Less: accumulated amortization Computer software (5,172) (9,017) Licenses — (1,493) Others (1,105) (1,889) Total of accumulated amortization (6,277) (12,399) Intangible assets, net 17,218 54,448 Amortization expenses on intangible assets which are included in research and development expenses, selling and marketing expenses and general and administrative expenses in the consolidated statements of comprehensive income for the years ended December 31, 2020, 2021 and 2022 were HK$ 1,439 thousand, HK$ 2,317 thousand and HK$ 6,700 thousand, respectively . |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
LONG-TERM INVESTMENTS | |
LONG-TERM INVESTMENTS | 9. LONG-TERM INVESTMENTS The Group’s long-term investments primarily consist of equity method investments and equity investments without readily determinable fair values. As of December 31, 2021 2022 (HK$ in thousands) Equity method investments (1) 7,798 224,042 Equity investments without readily determinable fair values (2) 15,596 15,652 Total 23,394 239,694 (1) Equity method investments As of December 31, 2021 and 2022, the Group’s investments accounted for under the equity method totaled HK$ 7,798 thousand and HK $224,042 thousand, respectively. The Group applies the equity method of accounting to account for its equity method investments over which it has significant influence but does not own a majority equity interest or otherwise control. In January 2019, the Group invested in a private company by acquiring 20% ordinary equity interest with a total consideration of HK $6,709 thousand. The Group accounts for this as an equity method investment. Based on the Group’s assessment on the recoverable amounts of the equity method investment, as of December 31, 2021 and 2022, the impairment provision on the equity method investment was HK $5,888 thousand and HK $5,888 thousand. In December 2021, the Group invested in a private equity fund by acquiring approximately 10% ordinary equity interest with a total consideration of HK $7,798 thousand. The Group accounts for this as an equity method investment. Based on the Group’s assessment on the recoverable amounts of this equity method investment, as of December 31, 2021 and 2022, no impairment provision on the equity method investment was recognized. 9. LONG-TERM INVESTMENTS (Continued) In June 2022, the Group invested in a private equity fund by acquiring approximately 16% ordinary equity interest with a total consideration of HK $235,434 thousand. The Group accounts for this as an equity method investment. For the year ended December 31, 2022, loss on investment recognized were HK $17,752 thousand. Based on the Group’s assessment on the recoverable amounts of this equity method investment, as of December 31, 2022, no impairment provision on the equity method investment was recognized. (2) Equity investments without readily determinable fair values As of December 31, 2021 and 2022, the Group’s equity investments without readily determinable fair values totaled HK $15,596 thousand and HK $15,652 thousand, respectively. In December 2021, the Group invested in a private equity fund by acquiring 2.75% ordinary equity interest with a total consideration of HK $15,596 thousand. Equity securities without determinable fair values of the Group represent investments in privately held companies with no readily determinable fair value. The Group elected measurement alternative and recorded these investments at cost, less impairment, adjusted for subsequent observable price changes. As of December 31, 2021 and 2022, no impairment provision on the equity investments without readily determinable fair values was recognized. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS | |
OTHER ASSETS | 10. OTHER ASSETS As of December 31, 2021 2022 (HK$ in thousands) Current: Deposit 23,032 52,863 Staff advances 26,527 18,685 Others 32,035 30,710 Total 81,594 102,258 Non-current: Refundable deposit 337,513 680,356 Property and equipment, net (Note 7) 175,757 145,837 Deferred tax assets (Note 25) 38,317 84,564 Intangible assets, net (Note 8) 17,218 54,448 Total 568,805 965,205 |
BORROWINGS
BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
BORROWINGS | |
BORROWINGS | 11. BORROWINGS As of December 31, 2021 2022 (HK$ in thousands) Borrowings from banks (1) 6,357,405 2,480,532 The Group obtained borrowings mainly to support its margin financing business. Those borrowings bear weighted average interest rates of 1.15% and 3.86% as of December 31, 2021 and 2022, respectively . (1) The Group has unused borrowing facilities of HK$ 14,695,095 thousand and HK$ 19,989,078 thousand from banks as of December 31, 2021 and 2022, respectively, which are uncommitted. These bank borrowings were mainly pledged by margin clients’ shares as the primary source of credit risk mitigation of the lenders, and bore floating interest rates based on various benchmarks including Hong Kong Prime Rate, Hong Kong Interbank Offered Rate (“HIBOR”), CNH HIBOR, etc . |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
ACCRUED EXPENSES AND OTHER LIABILITIES | 12. ACCRUED EXPENSES AND OTHER LIABILITIES As of December 31, 2021 2022 (HK$ in thousands) Current: Accrued payroll and welfare expenses 531,409 868,646 Payables to corporate clients in relation to ESOP management services (1) 870,283 314,385 Tax payables 494,744 267,619 Accrued advertising and promotion fee 152,305 72,137 Accrued professional fee 22,066 31,083 Stamp duty, trading levy and trading fee payables 19,447 26,597 Payables in relation to acquisition — 19,196 Temporary payables in relation to fund distribution services 48,240 18,725 Accrued market information and data fee 12,832 13,445 Contract liabilities - current 3,058 1,225 Refund from depositary bank - current 2,773 2,773 Others 19,056 70,328 Total 2,176,213 1,706,159 Non-current: Contract liabilities - non-current 5,910 4,590 Refund from depositary bank - non-current 4,389 1,616 Deferred tax liabilities (Note 25) 636 7,414 Total 10,935 13,620 (1) Payables to corporate clients in relation to ESOP management services mainly consist of exercise payment of share options and related withholding tax. These payables are usually expected to be settled within one year. |
ORDINARY SHARES AND TREASURY ST
ORDINARY SHARES AND TREASURY STOCK | 12 Months Ended |
Dec. 31, 2022 | |
ORDINARY SHARES AND TREASURY STOCK | |
ORDINARY SHARES AND TREASURY STOCK | 13. ORDINARY SHARES AND TREASURY STOCK Ordinary shares The Company’s original Memorandum and articles of association authorized the Company to issue 807,500 ordinary shares with a par value of US$ 0.0050 per share. After a share split effective on September 22, 2016, the Company’s amended Memorandum and articles of association authorized the Company to issue 403,750,000 ordinary shares with a par value of US$ 0.00001 per share. Each ordinary share is entitled to one vote. Immediately prior to the completion of the initial public offering on March 8, 2019, the Company was approved by the board of directors of the Company to adopt a dual class share structure, consisting of 48,700,000,000 Class A ordinary shares with a par value of US $0.00001 each, 800,000,000 Class B ordinary shares with a par value of US $0.00001 each and 500,000,000 shares undesignated with a par value of US$ 0.00001 each. In respect of all matters subject to shareholders’ vote, each holder of Class A ordinary share is entitled to one and each holder of Class B ordinary share is entitled to twenty votes. On August 22, 2020, the Company completed a public offering, issued 76,000,000 Class A ordinary shares for a total consideration of US$ 301.8 million ( HK$ 2,339.7 million) after deducting the underwriting discounts and commissions and offering expenses. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. On August 16, 2022 and December 14, 2022, 64,000,000 and 50,000,000 shares of Class B ordinary shares were converted to the same number of Class A ordinary shares, respectively. 13. ORDINARY SHARES AND TREASURY STOCK (Continued) Ordinary shares (Continued) In December, 2020, the Company entered into a securities purchase agreement with a leading global investment firm for a private placement of pre-funded warrants (the “Offering” or the “Pre-Funded Warrants”). The net proceeds to the Company from the Offering were approximately US $262.5 million (HK$ 2,035 million). In the Offering, the Company issued pre-funded warrants to purchase 53,600,000 shares of Class A ordinary shares that were immediately exercisable and had a termination date in June 2022, at a price of US $4.89751 less a nominal exercise price of US $0.00001 per pre-funded warrant. The pre-funded Warrants were equity classified because they were immediately exercisable, did not embody an obligation for the Company to repurchase its shares, and permitted the holders to receive a fixed number of common shares upon exercise. In addition, such warrants did not provide any guarantee of value or return. On June 11, 2021, the investment firm exercised these pre-funded warrants which increased 53,599,890 shares of Class A ordinary shares, and 110 shares were retrieved as the consideration of share purchase. On April 24, 2021, the Company completed a public offering, issued 87,400,000 Class A ordinary shares for a total consideration of US$ 1,398 million (HK$ 10,857 million) after deducting the underwriting discounts and commissions and offering expenses. During the year ended December 31, 2020 2021 and 2022, 5,048,824 , 5,875,592 and 2,968,984 shares of Class A Ordinary Shares were issued upon exercise of outstanding stock options. During the year ended December 31, 2020, 2021 and 2022, nil , 929,672 and 3,138,104 shares of Class A Ordinary Shares were issued upon vest of outstanding restricted shares units under the Group’s share-based incentive plans (Note 15). Treasury stock On November 3, 2021, the Group’s Board of Directors approved a share repurchase program to repurchase up to US$ 300.0 million worth of its own American depositary shares (“ADSs”), representing its Class A ordinary shares, until December 31, 2022. On March 10, 2022, the Group’s Board of Directors approved another share repurchase program to repurchase up to US$ 500.0 million worth of its own ADSs, representing its Class A ordinary shares, until December 31, 2023. As of December 31, 2021 and 2022, the Group had repurchased an aggregate of 29,462,760 and 121,363,408 Class A ordinary shares under these share repurchase programs in the open market, at an average price of US$ 41.04 and US$ 36.48 per ADS, or US$ 5.13 and US$ 4.56 per share for a total consideration US$ 151.2 million (HK$ 1,178.8 million) and US$ 553.2 million (HK$ 4,324.6 million), respectively. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 14. RESTRICTED NET ASSETS In accordance with the PRC laws and regulations, the Group’s PRC subsidiaries and the consolidated VIEs are required to make appropriation to certain reserve funds, namely general reserve fund, enterprise expansion fund, and staff bonus and welfare fund, all of which are appropriated from the subsidiaries’ annual after-tax profits as reported under PRC GAAP. The appropriation must be at least 10% of the annual after-tax profits to the general reserve fund until such reserve fund has reached 50% of the subsidiaries’ registered capital. The domestic companies are also required to provide discretionary surplus fund, at the discretion of the Board of Directors, from its annual after-tax profits as reported under PRC accounting standards. The aforementioned reserve funds can only be used for specific purposes and are not distributable as cash dividends. 14. RESTRICTED NET ASSETS (Continued) Furthermore, cash transfers from the Group’s PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currency conversion. Shortages in the availability of foreign currency at the time of requesting such conversion may temporarily delay the ability of the PRC subsidiaries and consolidated affiliated entities to remit sufficient foreign currency to pay dividends or other payments to the Group, or otherwise satisfy their foreign currency denominated obligations. As a result of the PRC laws and regulations and the requirement that distributions by the PRC entity can only be paid out of distributable profits computed in accordance with PRC accounting standards, the PRC entity is restricted from transferring a portion of its net assets to the Group. Amounts restricted include paid-in capital and statutory reserves of the Group’s PRC subsidiaries and the VIEs. As of December 31, 2021 and 2022, the restricted net assets of the Group’s relevant PRC entities amounted to HK$ 304,377 thousand and HK$ 304,377 thousand, respectively. For the year ended December 31, 2022, the Group performed a test on the restricted net assets of subsidiaries and VIEs in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that the restricted net assets do not exceed 25% of the consolidated net assets of the Group as of December 31, 2022 and the condensed financial information of the Group are not required to be presented. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 15. SHARE-BASED COMPENSATION Share-based compensation was recognized in operating expenses for the years ended December 31, 2020, 2021 and 2022 as follows : Year ended December 31, 2020 2021 2022 (HK$ in thousands) Research and development expenses 20,579 75,755 145,226 General and administrative expenses 10,354 14,020 44,099 Selling and marketing expenses 1,640 9,138 15,204 Total share-based compensation expenses 32,573 98,913 204,529 Share Options In October 2014, the Board of Directors of the Company approved the establishment of 2014 Share Incentive Plan, the purpose of which is to provide an incentive for employees contributing to the Group. The 2014 Share Incentive Plan shall be valid and effective until October 30, 2024. The maximum number of shares that may be issued pursuant to all awards (including incentive share options) under 2014 Share Incentive Plan shall be 135,032,132 shares. Option awards are granted with an exercise price determined by the Board of Directors. Those option awards generally vest over a period of four or five years and expire in ten years . In December 2018, the Board of Directors of the Company approved the 2019 Share Incentive Plan, pursuant to which the maximum number of shares of the Company available for issuance shall be a number of up to 2% of the total number of shares issued and outstanding on September 29, 2019 as determined by the Board, plus an annual increase on each September 30 during the term of this 2019 Share Incentive Plan commencing on September 30, 2020, by an amount determined by the Board; provided, however, that (i) the number of shares increased in each year shall not be more than 2% of the total number of shares issued and outstanding on September 29 of the same year and (ii) the aggregate number of shares initially reserved and subsequently increased during the term of this 2019 Share Incentive Plan shall not be more than 8% of the total number of shares issued and outstanding on September 29, 2019 immediately preceding the most recent increase . 15. SHARE-BASED COMPENSATION (Continued) Share Options (continued) On December 30, 2019, the Company modified the exercise price of 8,113,145 stock options granted under 2014 Share Incentive Plan to US$ 0.60 . The incremental compensation expenses of HK$ 3,008 thousand (US$ 386 thousand) was equal to the excess of the fair value of the modified award immediately after the modification over the fair value of the original award immediately before the modification . For the years ended December 31, 2020, 2021 and 2022, the Group granted 2,489,832 , 1,080,000 and nil stock options to employees pursuant to the 2014 Share Incentive Plan and 2019 Share Incentive Plan . A summary of the stock option activity under the 2014 and 2019 Share Incentive Plan for the years ended December 31, 2020, 2021 and 2022 is included in the table below. Options granted Weighted average share number exercise price per option (US$) Outstanding at January 1, 2020 23,718,626 0.5161 Exercised (5,048,824) 0.4293 Granted 2,489,832 0.6810 Forfeited (2,117,298) 0.5588 Outstanding at December 31, 2020 19,042,336 0.5628 Exercised (5,875,592) 0.4365 Granted 1,080,000 0.0444 Forfeited (905,278) 0.6539 Outstanding at December 31, 2021 13,341,466 0.5703 Exercised (2,968,984) 0.6110 Forfeited (386,336) 0.6381 Outstanding at December 31, 2022 9,986,146 0.5556 The following table summarizes information regarding the share options outstanding as of December 31, 2022 and exercise prices and aggregate intrinsic value have been adjusted according to the modification of exercise price in December 2019: As of December 31, 2022 Weighted- average Weighted- remaining average exercise Options exercise price contractual life Aggregate number per option (years) intrinsic value US$ US$ in thousand Options Outstanding 9,986,146 0.5556 2.59 45,882 Exercisable 3,568,221 0.5505 2.05 16,413 Expected to vest 6,417,925 0.5584 2.89 29,470 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the underlying stock at December 31, 2022. 15. SHARE-BASED COMPENSATION (Continued) Share Options (Continued) The weighted average grant date fair value of options granted for the years ended December 31, 2020, 2021 and 2022 were US$ 1.5239 , US$ 18.9219 and nil per option, respectively . Options exercised for the years ended December 31, 2020, 2021 and 2022 were 5,048,824 , 5,875,592 and 2,968,984 , respectively. The total intrinsic value of options exercised during year ended December 31, 2022 was approximately HK $130,580 thousand (US $16,673 thousand) . The fair value of each option granted during 2020, 2021 and 2022 was estimated on the date of each grant using the binomial option pricing model with the assumptions (or ranges thereof) in the following table : 2020 2021 2022 Risk-free interest rate 0.27% - 0.36 % 0.09% - 0.89 % NA Expected term (in years) 5.00 5.00 NA Expected dividend yield 0 % 0 % NA Expected volatility 40 % 40 % NA Expected forfeiture rate (post-vesting) 15 % 15 % NA Risk-free interest rate is estimated based on the yield curve of US Sovereign Bond as of the option valuation date. The expected volatility at the grant date and each option valuation date is estimated based on annualized standard deviation of daily stock price return of comparable companies with a time horizon close to the expected expiry of the term of the options. The Company has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options. As of December 31, 2022, there was HK $144,783 thousand (US $18,570 thousand) of unrecognized compensation expenses related to the options, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of 3.10 years, and may be adjusted for future changes in estimated forfeitures. Restricted Shares Units Plan In December 2018, the Board of Directors of the Company approved the 2019 Share Incentive Plan. The fair value of restricted share units granted with service conditions is estimated based on the fair market value of the underlying ordinary shares of the Company on the date of grant. 15. SHARE-BASED COMPENSATION (Continued) Restricted Shares Units Plan (Continued) The following table summarizes activities of the Company’s restricted share units granted to employees under the plan for the years ended December 31, 2020, 2021 and 2022: Weighted - average grant date Shares awarded number fair value per share(US$) Outstanding at January 1, 2020 — — Granted 6,067,400 4.6827 Outstanding at December 31, 2020 6,067,400 4.6827 Vested (929,672) 4.6827 Granted 12,105,712 5.7371 Forfeited (281,576) 5.4426 Outstanding at December 31, 2021 16,961,864 5.6793 Vested (3,138,104) 5.7371 Granted 14,357,520 5.0877 Forfeited (1,489,032) 5.5209 Outstanding at December 31, 2022 26,692,248 5.3631 For the years ended December 31, 2020, 2021 and 2022, the Group granted 6,067,400 , 12,105,712 and 14,357,520 restricted shares units to employees pursuant to the 2019 Share Incentive Plan, respectively. As of December 31, 2022, there was HK 1,051,157 thousand (US $134,821 thousand) of unrecognized compensation expenses related to the restricted shares units, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of 4.33 years and may be adjusted for future changes in estimated forfeitures . |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
NET INCOME PER SHARE | |
NET INCOME PER SHARE | 16. NET INCOME PER SHARE For the year ended December 31, 2020 , the Company issued pre-funded warrants to purchase 53,600,000 shares of Class A ordinary shares with an exercise price of US$ 0.00001 that are included in our computation of basic earnings per share. For the year ended December 31, 2021, the investment firm exercised these pre-funded warrants which increased 53,599,890 shares of Class A ordinary shares, and 110 shares were retrieved as the consideration of share purchase . Basic net income per share and diluted net income per share have been calculated in accordance with ASC 260 on computation of earnings per share for the years ended December 31, 2020 , 2021 and 2022 as follows : Year ended December 31, 2020 2021 2022 (HK$ in thousands, except for share and per share data) Basic net income per share calculation: Numerator: Net income attributable to ordinary shareholders of the Company 1,325,523 2,810,210 2,926,944 Denominator: Weighted average number of ordinary shares outstanding - basic 1,036,865,727 1,200,912,670 1,139,377,763 Net income per share attributable to ordinary shareholders of the Company - basic 1.28 2.34 2.57 Diluted net income per share calculation: Numerator: Net income attributable to ordinary Shareholders of the Company 1,325,523 2,810,210 2,926,944 Denominator: Weighted average number of ordinary shares outstanding - basic 1,036,865,727 1,200,912,670 1,139,377,763 Dilutive effect of share options and restricted share units 13,277,287 18,759,838 11,643,934 Weighted average number of ordinary shares outstanding - diluted 1,050,143,014 1,219,672,508 1,151,021,697 Net income per share attributable to ordinary shareholders of the Company - diluted 1.26 2.30 2.54 For the years ended December 31, 2020, 2021 and 2022 , options to purchase ordinary shares and restricted share units that were anti-dilutive and excluded from the calculation of diluted net income per share were 4,800,584 , 357,978 and 3,773,963 shares on a weighted average basis, respectively . |
COLLATERALIZED TRANSACTIONS
COLLATERALIZED TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
COLLATERALIZED TRANSACTIONS | |
COLLATERALIZED TRANSACTIONS | 17. COLLATERALIZED TRANSACTIONS The Group engages in margin financing transactions with its clients. Margin loans generated from margin lending activity are collateralized by cash and/or client-owned securities held by the Group. The Group monitors the required margin and collateral level on a daily basis in compliance with regulatory and internal guidelines and controls its risk exposure through risk management system. Under applicable agreements, clients are required to deposit additional collateral or reduce holding positions, when necessary to avoid forced liquidation of their positions. Pursuant to the authorization obtained from margin clients, the Group further repledges the collaterals to commercial banks or other financial institutions to obtain the funding for the margin or other businesses. The following table summarizes the amounts of margin loans and clients’ collaterals received and repledged by the Group as of December 31, 2021 and 2022: As of December 31, 2021 2022 (HK$ in thousands) Margin loan extended to margin clients (net) 29,084,958 24,653,884 Securities purchased under agreements to resell transactions 106,203 32,000 Collateral received from margin clients 119,745,500 109,296,132 Collateral received from brokers 144,156 48,349 Collateral repledged to commercial banks and other financial institutions 20,953,603 12,326,953 The Group also engaged in securities borrowing and lending transactions which require it to deposit cash collateral with the securities lenders and receive the cash collateral from the borrowers. The cash collateral is generally in excess of the market value of the securities borrowed and loaned. The Group monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. The following table summarizes the amounts of market value of securities borrowed and loaned and cash collateral received and deposited as of December 31, 2021 and 2022: As of December 31, 2021 2022 (HK$ in thousands) Securities borrowed and loaned (1) 8,436,638 12,786,899 Cash collateral received from borrowers 9,737,786 14,874,210 Cash collateral deposited with lenders 3,120,123 1,889,795 (1) Borrowed securities include securities borrowed from margin clients under authorization, in this case no cash collateral is required. |
BROKERAGE COMMISSION AND HANDLI
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | 12 Months Ended |
Dec. 31, 2022 | |
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | |
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | 18. BROKERAGE COMMISSION AND HANDLING CHARGE INCOME Year ended December 31, 2020 2021 2022 (HK$ in thousands) Brokerage commission income 1,531,048 3,147,610 3,244,255 Handling charge income 459,090 765,417 763,387 Total 1,990,138 3,913,027 4,007,642 |
INTEREST INCOME
INTEREST INCOME | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST INCOME | |
INTEREST INCOME | 19. INTEREST INCOME Year ended December 31, 2020 2021 2022 (HK$ in thousands) Interest income from: Margin financing 497,975 1,720,473 1,588,569 Bank deposits 208,556 197,390 986,387 Bridge loan 1,078 1,872 135,733 Securities lending 73,792 397,505 499,745 IPO financing 184,226 200,567 2,341 Other financing — 391 1,552 Total 965,627 2,518,198 3,214,327 |
OTHER INCOME
OTHER INCOME | 12 Months Ended |
Dec. 31, 2022 | |
OTHER INCOME. | |
OTHER INCOME | 20. OTHER INCOME Year ended December 31, 2020 2021 2022 (HK$ in thousands) Currency exchange service income 67,000 201,030 141,322 Funds distribution service income 42,658 68,856 96,676 Enterprise public relations service charge income 29,988 96,327 44,033 Market information and data income 18,463 43,921 41,498 Underwriting fee income 30,797 86,880 25,350 IPO subscription service charge income 159,682 169,336 6,513 Others 6,469 17,745 36,666 Total 355,057 684,095 392,058 |
BROKERAGE COMMISSION AND HAND_2
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES. | |
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES | 21. BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES Year ended December 31, 2020 2021 2022 (HK$ in thousands) Commission, handling and settlement expenses 302,800 524,470 329,225 IPO subscription service charge expenses 58,686 47,689 564 Total 361,486 572,159 329,789 |
INTEREST EXPENSES
INTEREST EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST EXPENSES | |
INTEREST EXPENSES | 22. INTEREST EXPENSES Year ended December 31, 2020 2021 2022 (HK$ in thousands) Interest expenses for margin financing Due to banks 45,545 125,002 74,397 Due to other licensed financial institutions 38,246 51,179 8,318 Interest expenses for securities borrowed Due to clients 7,984 132,034 26,650 Due to brokers 13,853 18,624 183,138 Interest expenses for IPO financing Due to banks 79,337 50,063 — Due to other parties 125 — — Total 185,090 376,902 292,503 |
PROCESSING AND SERVICING COSTS
PROCESSING AND SERVICING COSTS | 12 Months Ended |
Dec. 31, 2022 | |
PROCESSING AND SERVICING COSTS. | |
PROCESSING AND SERVICING COSTS | 23. PROCESSING AND SERVICING COSTS Year ended December 31, 2020 2021 2022 (HK$ in thousands) Cloud service fee 48,940 122,269 216,140 Market information and data fee 68,274 70,387 79,439 Data transmission fee 23,072 46,289 41,775 System cost 4,476 12,160 28,324 SMS service fee 2,511 1,197 1,018 Others 2,105 4,701 7,144 Total 149,378 257,003 373,840 |
NON-INTEREST COST AND EXPENSES
NON-INTEREST COST AND EXPENSES BY NATURE | 12 Months Ended |
Dec. 31, 2022 | |
NON-INTEREST COST AND EXPENSES BY NATURE | |
NON-INTEREST COST AND EXPENSES BY NATURE | 24. NON-INTEREST COST AND EXPENSES BY NATURE Year ended December 31, 2020 2021 2022 (HK$ in thousands) Employee compensation and benefits 682,068 1,248,682 2,067,204 Marketing and branding 297,170 1,163,495 548,348 Processing and servicing costs (Note 23) 149,378 257,003 373,840 Brokerage commission and handling charge expenses (Note 21) 361,486 572,159 329,789 Professional services 32,988 59,697 135,167 Rental and other related expenses 64,594 106,459 119,854 Depreciation and amortization 27,231 36,435 54,714 Others 42,956 111,675 123,706 Total 1,657,871 3,555,605 3,752,622 |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2022 | |
TAXATION | |
TAXATION | 25. TAXATION Income Tax 1) Cayman Islands The Group was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to tax on either income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. 2) The United States (“US”) The Company’s subsidiaries, incorporated in the United States are subject to statutory income tax at a rate up to 35% for taxable income earned in the United States. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly revising the U.S corporate income tax law. Changes include a reduction in the federal corporate tax, changes to operating loss carry-forwards and carrybacks, and a repeal of the corporate alternative minimum tax. This legislation resulted in a reduction of the U.S. federal corporate income tax rates from a maximum of 35% to 21% , to which the subsidiaries incorporated in the United States are subject. 3) Hong Kong Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime took effect, under which the tax rate is 8.25% for assessable profits on the first HK$2 million and 16.5% for any assessable profits in excess of HK$2 million. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. 4) Singapore The Company’s subsidiaries incorporated in Singapore are subject to an income tax rate of 17% for taxable income earned in Singapore. Singapore does not impose a withholding tax on dividends for resident companies. In the years ended December 31, 2020, 2021 and 2022, we did not incur any income tax as there was no estimated assessable profit that was subject to Singapore income tax. 5) China The Company’s subsidiaries, the consolidated VIEs and subsidiaries of the VIEs established in the PRC are subject to statutory income tax at a rate of 25% , unless preferential tax rates were applicable. The Enterprise Income Tax (“EIT”) Law and its implementing rules permit High and New Technology Enterprise (“HNTE”) to enjoy a reduced 15% EIT rate. Futu Network Technology (Shenzhen) Co., Ltd., one of the Company’s subsidiary, and Shenzhen Futu, the consolidated VIE, obtained the qualification certificate of HNTE under the EIT Law, subject to the tax rate of 15% with a valid period of three years starting from 2022 and 2020, respectively. According to the relevant EIT Laws jointly promulgated by the Ministry of Finance of the PRC, State Tax Bureau of the PRC, and Ministry of Science of the PRC that became effective from 2018 onwards, enterprises engaging in research and development activities are entitled to claim 175% of their research and development expenses so incurred as tax deductible expenses when determining their assessable profits for that year (“Super Deduction”). For enterprises that currently enjoy pre-tax deduction for R&D expenses at the ratio of 75 %, the pre-tax deduction ratio will be increased to 100 % during the period between October 1, 2022 and December 31,2022. 25. TAXATION (Continued) Income Tax (Continued) 5) China (Continued) Under the EIT Law enacted by the National People’s Congress of PRC on March 16, 2007 and its implementation rules which became effective on January 1, 2008, dividends generated after January 1, 2008 and payable by FIEs in the PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. Under the taxation arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which is the “beneficial owner” and directly holds 25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5% . The Cayman Islands, where the Company was incorporated, does not have a tax treaty with PRC. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered resident enterprises for the PRC income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered as PRC resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the Group’s entities organized outside of the PRC should be treated as resident enterprises for the PRC income tax purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiary registered outside the PRC should be deemed resident enterprises, the Company and its subsidiary registered outside the PRC will be subject to the PRC income tax, at a rate of 25% . Dividends paid by the Group’s wholly foreign-owned subsidiaries in China to non-PRC-resident enterprises which do not have an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, will be subject to a withholding tax rate of 10% , unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and receives approval from the relevant tax authority. The undistributed earnings that are subject to dividend tax are expected to be indefinitely reinvested for the foreseeable future. The Group did not record any withholding tax for its PRC earnings and considered determination of such withholding tax amount not practicable. Composition of income tax expenses The following table sets forth current and deferred portion of income tax expenses: Year ended December 31, 2020 2021 2022 (HK$ in thousands) Current income tax expenses 137,939 396,512 466,074 Deferred income tax benefit (13,146) (21,431) (52,112) Income tax expenses 124,793 375,081 413,962 25. TAXATION (Continued) Tax Reconciliation Reconciliation between the income tax expenses computed by applying the Hong Kong enterprise tax rate to income before income taxes and actual provision were as follows: Year ended December 31, 2020 2021 2022 (HK$ in thousands) Income before income tax expenses and share of loss from equity method investments 1,450,623 3,185,291 3,358,607 Tax expenses at Hong Kong profit tax rate of 16.5% 239,353 524,907 554,005 Changes in valuation allowance 14,348 101,653 (46,798) Tax effect of permanence differences 9,029 22,047 41,181 Effect of income tax jurisdictions other than Hong Kong (4,386) (32,182) 50,807 Super deduction of research and development expenses (29,081) (62,966) (86,419) Final settlement differences — (602) (3,614) Income not subject to tax (1) (104,470) (177,776) (95,200) Income tax expenses 124,793 375,081 413,962 (1) This amount mainly represents tax exemption relating to the offshore income of Futu Securities. The brokerage commission income derived from executing the clients’ orders of US listed securities was treated as offshore-sourced and non-taxable on the basis that these transactions were executed outside Hong Kong. Deferred Tax Assets and Liabilities Deferred income tax expenses reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the deferred tax assets and liabilities are as follows: As of December 31, 2021 2022 (HK$ in thousands) Deferred tax assets Net operating loss carryforwards 158,826 129,248 Accrued expenses and others 50,408 79,098 Less: valuation allowance (169,422) (122,624) Total deferred tax assets 39,812 85,722 Set-off of deferred tax liabilities pursuant to set-off provisions (1,495) (1,158) Net deferred tax assets 38,317 84,564 Total deferred tax liabilities 2,131 8,572 Set-off of deferred tax assets pursuant to set-off provisions (1,495) (1,158) Net deferred tax liabilities 636 7,414 25. TAXATION (Continued) Movement of Valuation Allowance Year ended December 31, 2020 2021 2022 (HK$ in thousands) Balance at beginning of the year 53,421 67,769 169,422 Additions 30,935 108,347 97,727 Reversals (16,587) (6,694) (144,525) Balance at end of the year 67,769 169,422 122,624 Valuation allowance is provided against deferred tax assets when the Group determines that it is more-likely-than-not that the deferred tax assets will not be utilized in the future. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more-likely-than-not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses. The statutory rate depending on which entity was applied when calculating deferred tax assets. As of December 31, 2021 and 2022, the Group had net operating loss carryforwards of approximately HK$ 764,251 thousand and HK$ 671,237 thousand, respectively, which arose from the subsidiaries, the VIEs and the VIEs’ subsidiaries established in Hong Kong, the U.S, Singapore and PRC. As of December 31, 2021 and 2022, of the net operating loss carryforwards, HK$ 761,417 thousand and HK$ 625,688 thousand was provided for valuation allowance against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets of accrued expenses and others will not be realized. While the remaining HK$ 2,834 thousand and HK $ 45,549 thousand is expected to be utilized prior to expiration considering future taxable income for respective entities. Uncertain Tax Position The Group evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. The Group continues to assess the uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts and circumstances. The Group is subject to routine examinations by the applicable local jurisdictions' taxing authorities. In general, the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, tax filings of the Company's PRC subsidiaries and the VIEs for tax years 2017 through 2021 remain open to examination by the respective tax authorities. The Group is also subject to the examination of the tax filings in other jurisdictions, most of significant jurisdictions are no longer subject to examinations for tax years before 2016. |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2022 | |
DEFINED CONTRIBUTION PLAN | |
DEFINED CONTRIBUTION PLAN | 26. DEFINED CONTRIBUTION PLAN Full-time employees of the Group in the PRC are entitled to welfare benefits including pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan. Chinese labor regulations require that the Group makes contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions. Total contributions by the Group for such employee benefits were RMB 49,778 thousand, RMB 110,997 thousand and RMB 170,012 thousand for the years ended December 31, 2020, 2021 and 2022, respectively. For the employees in Hong Kong, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Included in employee compensation and benefits expenses in the consolidated statements of comprehensive income were HK$ 1,414 thousand, HK$ 2,197 thousand and HK $2,568 thousand of plan contributions for the years ended December 31, 2020, 2021 and 2022, respectively. |
REGULATORY REQUIREMENTS
REGULATORY REQUIREMENTS | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY REQUIREMENTS | |
REGULATORY REQUIREMENTS | 27. REGULATORY REQUIREMENTS The Company’s principle broker-dealer and insurance-broker subsidiaries, Futu Securities, Moomoo Financial Inc., Futu Clearing Inc., Moomoo Financial Singapore pte Ltd., Futu Insurance Brokers (Hong Kong) Limited and Futu Securities (Australia) Ltd. are subject to capital requirements determined by its respective regulators. Futu Securities, the Company’s subsidiary located in Hong Kong, was subject to the Securities and Futures (Financial Resources) Rules and the Securities and Futures Ordinance, Futu Securities is required to maintain minimum paid-up share capital and liquid capital. Moomoo Financial Inc. and Futu Clearing Inc., the Company’s subsidiaries located in the United States, were subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Exchange Act, which requires the maintenance of minimum net capital. Moomoo Financial Singapore Pte. Ltd., the Company’s subsidiary located in Singapore, was subject to the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services licences) Regulations, which requires the maintenance of financial resource over its total risk requirement. Futu Insurance Brokers (Hong Kong) Limited, was subject to Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules, which requires minimum net assets. Futu Securities (Australia) Ltd., the Company’s subsidiary located in Australia, was subject to Regulatory Guide 166 Licensing: Financial requirements, which requires the maintenance of net tangible assets. 27. REGULATORY REQUIREMENTS (Continued) The tables below summaries the net capital, the requirement and the excess capital for the Group’s broker-dealer subsidiaries as of December 31, 2022: As of December 31, 2022 Net Capital/ Eligible Equity Requirement Excess (HK$ in thousands) Futu Securities 7,021,471 1,427,687 5,593,784 Moomoo Financial Inc. 132,413 20,222 112,191 Futu Clearing Inc. 4,183,966 311,304 3,872,662 Moomoo Financial Singapore Pte. Ltd. 881,028 213,683 667,345 Futu Insurance Brokers (Hong Kong) Limited 1,304 500 804 Futu Securities (Australia) Ltd. 48,180 2,299 45,881 Regulatory capital requirements could restrict the operating subsidiaries from expanding their business and declaring dividends if their net capital does not meet regulatory requirements. As of December 31, 2022, all of the regulated operating subsidiaries were in compliance with their respective regulatory capital requirements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 28. COMMITMENTS AND CONTINGENCIES Commitments The Group’s commitments primarily related to capital contribution obligation for certain investment funds. Total commitments contracted but not yet reflected in the consolidated financial statements amounted to US $104 million and US $74 million as of December 31, 2021 and 2022, respectively. Contingencies The financial services industry is highly regulated. From time to time, the licensed companies in the financial industry may be required to assist in and/or are subject to inquiries and/or examination by the regulatory authorities of the jurisdiction in where they operate. The Group reviews its regulatory inquiries and other legal proceedings on an ongoing basis and evaluates whether potential regulatory fines are probable, estimable and material and for updating its contingency reserves and disclosures accordingly. As of the date of issuance of the consolidated financial statements, the Group is involved in inquiries initiated by the China Securities Regulatory Commission (the “CSRC”) concerning matters including, among others, providing cross-border securities services for domestic investors. The Group has taken and may continue to take rectification measures based on communication with the CSRC and in accordance with such inquiries from the CSRC. However, there can be no assurance that the measures they have taken or will take in the future will be effective or fully satisfy the CSRC's requirements. As of the date of this report, the Group has limited information to accurately predict if any disciplinary action or punishment will be taken against the Group and/or their responsible officers after the conclusion of such inquiries, and if so, the nature and extent of any such action. Any such disciplinary actions taken against the Group and/or their responsible officers may have a material and adverse impact on their operations and financial results. According to ASC 450-20-25-2, an estimated loss from a loss contingency shall be accrued when information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements, and the amount of loss can be reasonably estimated. The management has concluded that the conditions in paragraph 450-20-25-2 have not been met. As of December 31, 2021 and 2022, no provision has been made by the Group for the aforementioned potential loss contingency. |
RELATED PARTY BALANCES AND TRAN
RELATED PARTY BALANCES AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
RELATED PARTY BALANCES AND TRANSACTIONS | 29. RELATED PARTY BALANCES AND TRANSACTIONS The table below sets forth major related parties of the Group and their relationships with the Group: Name of Entity or Individual Relationship with the Group Mr. Leaf Hua Li and his spouse Principal shareholder and member of his immediate families Tencent Holdings Limited and its subsidiaries(“Tencent Group”) Principal shareholder Individual directors and officers and their spouses Directors or officers of the Group and members of their immediate families (a) Cash and cash equivalent As of December 31, 2021 2022 (HK$ in thousands) Cash and cash equivalent 372 349 The balance represents the cash deposited by the Group in various payment channels of Tencent Group for funding marketing campaigns, of which could be withdrawn on demand. (b) Amounts Due to Related Parties As of December 31, 2021 2022 (HK$ in thousands) Payables in relation to cloud equipment and services from Tencent Group 85,887 48,672 Payables to Tencent Group in relation to ESOP management services 1,307 3,822 SMS channel services from Tencent Group 265 231 87,459 52,725 (c) Transactions with Related Parties Year ended December 31, 2020 2021 2022 (HK$ in thousands) Cloud service fee 48,940 114,386 171,692 Softwares purchased 508 3,869 1,997 SMS channel service fee 2,511 1,197 1,018 ESOP management service income 595 640 675 Other services — 135 335 Equipment purchased 4,496 45,658 — Advertising expenses 159 — — 57,209 165,885 175,717 The Group utilizes the cloud services, equipment and software provided by Tencent Group to process large amount of complicated data in-house, which reduces the risks involved in data storage and transmission. SMS channel services is provided by Tencent Group, including verification code, notification and marketing message services for the Group to reach its end users. Tencent Group provides advertising services to the Group via Tencent Group’s social media. The Group also earns revenue from Tencent Group by providing ESOP management service. 29. RELATED PARTY BALANCES AND TRANSACTIONS (Continued) (d) Trade related transactions with Related Parties Included in payables to clients in the consolidated balance sheets as of December 31, 2021 and 2022, were payables to directors and officers of HK$ 44,480 thousand and HK$ 29,705 thousand, respectively. Revenue earned by providing brokerage services to directors and officers and their spouses amounts to HK$ 1,642 thousand, HK$ 1,430 thousand and HK$ 624 thousand for the years ended December 31, 2020, 2021 and 2022, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 30. SUBSEQUENT EVENTS The Group evaluated events subsequent to the balance sheet date of December 31, 2022 through the date of issuance of the consolidated financial statements. No material recordable or disclosable events or transactions occurred. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and subsidiaries of the VIEs for which the Company or its subsidiary is the primary beneficiary . A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to appoint or remove the majority of the members of the Board of Directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the ability to direct the activities that most significantly impact the entity’s economic performance and receive the economic benefits from the VIEs that could be significant to the VIEs , and therefore the Company or its subsidiary is considered the primary beneficiary of the VIEs for accounting purposes, and has consolidated the VIEs’ financial results of operations, assets and liabilities in the Company’s consolidated financial statements in accordance with U.S. GAAP. All transactions and balances among the Company, its subsidiaries, the VIEs and subsidiaries of the VIEs have been eliminated upon consolidation . |
VIE Companies | VIE Companies 1) Contractual Agreements with VIEs The following is a summary of the contractual agreements (collectively, “Contractual Agreements”) between the Company’s PRC subsidiary, Shen Si, and the VIEs. Through the Contractual Agreements, the VIEs are effectively controlled by the Company . Shareholders’ Voting Rights Proxy Agreements. Pursuant to the Shareholders’ Voting Rights Proxy Agreements, each shareholder of VIEs irrevocably authorized Shen Si or any person(s) designated by Shen Si to exercise such shareholder’s rights in VIEs, including without limitation, the power to participate in and vote at shareholder’s meetings, the power to nominate and appoint the directors, senior management, and other shareholders’ voting right permitted by the articles of association of VIEs. The shareholders’ voting rights proxy agreements remain irrevocable and continuously valid from the date of execution until the expiration of the business term of Shen Si and can be renewed upon request by Shen Si . Business Operation Agreements . Pursuant to the Business Operation Agreements, VIEs and their shareholders undertake that without Shen Si’s prior written consent, VIEs shall not enter into any transactions that may have a material effect on VIEs’ assets, business, personnel, obligations, rights or business operations. VIEs and their shareholders shall elect directors nominated by Shen Si and such directors shall nominate officers designated by Shen Si. The business operation agreements will remain effective until the end of Shen Si’s business term, which will be extended if Shen Si’s business term is extended or as required by Shen Si . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 1) Contractual Agreements with VIEs (Continued) Equity Interest Pledge Agreements. Pursuant to the Equity Interest Pledge Agreements, each shareholder of VIEs agrees that, during the term of the Equity Interest Pledge Agreements, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Shen Si. The Equity Interest Pledge Agreements remain effective until the latter of the full payment of all secured debt under the equity interest pledge agreements and VIEs and their shareholders discharge all their obligations under the contractual arrangements . Exclusive Technology Consulting and Services Agreements. Under the Exclusive Technology Consulting and Services Agreements between Shen Si and the VIEs, Shen Si has the exclusive right to provide VIEs with technology consulting and services related to, among other things, technology research and development, technology application and implementation, maintenance of software and hardware. Without Shen Si’s written consent, VIEs shall not accept any technology consulting and services covered by these agreements from any third party. VIEs agree to pay a service fee at an amount equivalent to all of its net profit to Shen Si. Unless otherwise terminated in accordance with the terms of these agreements or otherwise agreed with Shen Si, these agreements will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended . Exclusive Option Agreements. Pursuant to the Exclusive Option Agreements, each shareholder of VIEs has irrevocably granted Shen Si an exclusive option, to the extent permitted by PRC laws, to purchase, or have its designated person or persons to purchase, at its discretion, all or part of the shareholder’s equity interests in VIEs. Unless PRC laws and/or regulations require valuation of the equity interests, the purchase price shall be RMB 1.00 or the lowest price permitted by the applicable PRC laws, whoever is higher. Each shareholder of VIEs undertakes that, without the prior written consent of Shen Si, he or she will not, among other things, (i) create any pledge or encumbrance on his or her equity interests in VIEs, (ii) transfer or otherwise dispose of his or her equity interests in VIEs, (iii) change VIEs’ registered capital, (iv) amend VIEs’ articles of association, (v) liquidate or dissolve VIEs, or (vi) distribute dividends to the shareholders of VIEs. In addition, VIEs undertake that, without the prior written consent of Shen Si, they will not, among other things, dispose of VIEs’ material assets, provide any loans to any third parties, enter into any material contract with a value of more than RMB 500,000 , or create any pledge or encumbrance on any of their assets, or transfer or otherwise dispose of their material assets. Unless otherwise terminated by Shen Si, these agreements will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure The following table sets forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs and their subsidiary taken as a whole, which were included in the Group’s consolidated financial statements with intercompany balances and transactions eliminated between the VIEs and their subsidiaries : As of December 31, 2021 2022 (HK$ in thousands) Total assets 254,602 309,708 Total liabilities 176,204 191,263 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Total operating revenue 103,433 210,161 226,468 Net income 20,727 52,741 39,542 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Net cash (used in)/generated from operating activities (14,847) 2,340 34,727 Net cash generated from/(used in) investing activities 17,104 (3,327) (3,201) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — (1,476) Net increase/(decrease) in cash, cash equivalents and restricted cash 2,257 (987) 30,050 Cash, cash equivalents and restricted cash at beginning of the year 1,481 3,738 2,751 Cash, cash equivalents and restricted cash at end of the year 3,738 2,751 32,801 Transactions between the VIE and other entities in the consolidated group Total assets for 2021 and 2022 include amounts due from internal companies in the consolidated group in the amount of HK $ 190,424 thousand and HK$ 222,446 thousand, respectively. Total liabilities include amounts due to the internal companies in the amount of HK$ 80,435 thousand and HK$ 88,487 thousand, respectively. During 2020, 2021 and 2022, the VIEs earned inter-company revenues in the amounts of HK$ 94,500 thousand, HK$ 187,774 thousand and HK$ 202,834 thousand, respectively. In addition, advances from Group companies to the VIEs in 2020, 2021 and 2022 are in the amount of nil , nil and HK $8,120 thousand, respectively, the repayment of advances to Group companies by the VIEs in 2020, 2021 and 2022 are in the amount of nil , nil , and HK $8,120 thousand, respectively. All of these balances and transactions have been eliminated in consolidation. A series of contractual agreements have been entered into by and among the WFOE, the VIEs and their respective shareholders. The Company depends on these contractual arrangements to provide the subsidiary with a “controlling financial interest” in the VIEs, as defined in FASB ASC 810, making it the primary beneficiary of the VIEs. Terms contained in each set of contractual arrangements with the VIEs and their respective shareholders are substantially similar, which enable the Company to (1) have power to direct activities that most significantly impact the entity’s economic performance, and (2) receive the economic benefits from the VIEs that could be significant to the VIEs. Therefore, the Company is considered the primary beneficiary of the VIEs and there is no asset of the VIEs that can only be used to settle obligations of the VIEs and VIEs’ subsidiaries, except for registered capital of the VIEs and their subsidiaries amounting to RMB 10 million as of December 31, 2021 and 2022, respectively. Since the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company. There is currently no contractual arrangement that would require the Company to provide additional financial support to the VIEs. However, as the Company is conducting certain businesses through the VIEs and VIEs’ subsidiaries, the Company may provide such support on a discretionary basis in the future, which could expose the Company to a loss . 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure (Continued) In the opinion of the Company’s management, the contractual arrangements among its subsidiary, the VIEs and their respective Nominee Shareholders are in compliance with current PRC laws and are legally binding and enforceable. However, uncertainties in the interpretation and enforcement of the PRC laws, regulations and policies could limit the Company’s ability to enforce these contractual arrangements. As a result, the Company may be unable to consolidate the VIEs and VIEs’ subsidiaries in the consolidated financial statements . On March 15, 2019, the Foreign Investment Law was formally passed by the thirteenth National People’s Congress and it was taken effect on January 1, 2020. The Foreign Investment Law replaces the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Cooperative Joint Ventures and the Law on Foreign-Capital Enterprises to become the legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates certain forms of foreign investment. However, the Foreign Investment Law does not explicitly stipulate contractual arrangements such as those we rely on as a form of foreign investment. Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment includes “foreign investors investing through any other methods under laws, administrative regulations or provisions prescribed by the State Council.” Future laws, administrative regulations or provisions prescribed by the State Council may possibly regard Contractual Arrangements as a form of foreign investment. In the event that the State Council in the future promulgates laws and regulations that deem investments made by foreign investors through contractual arrangements as “foreign investment”, the Group’s ability to use the contractual arrangements with its VIEs and the Group’s ability to conduct business through the VIEs could be severely limited . The Company’s ability to direct the activities of the VIEs also depends on the power of attorney Shen Si has to vote on all matters requiring shareholders’ approvals in the VIEs. As noted above, the Company believes these power of attorney are legally binding and enforceable but may not be as effective as direct equity ownership. In addition, if the Group’s corporate structure or the contractual arrangements with the VIEs were found to be in violation of any existing PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions : ● revoke the Group’s business and operating licenses; ● require the Group to discontinue or restrict its operations; ● restrict the Group’s right to collect revenues; ● block the Group’s websites; ● require the Group to restructure its operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets; ● impose additional conditions or requirements with which the Group may not be able to comply; or ● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) VIE Companies (Continued) 2) Risks in relation to the VIE structure (Continued) The imposition of any of these restrictions or actions may result in a material adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these restrictions causes the Group to lose the right to direct the activities of the VIEs or the right to receive their economic benefits, the Group would no longer be able to consolidate the financial statements of the VIEs. In the opinion of management, the likelihood of losing the benefits in respect of the Group’s current ownership structure or the contractual arrangements with its VIEs is remote . |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues, costs and expenses during the reported period in the consolidated financial statements and accompanying notes. These accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to, the estimation of the expected usage and the estimated relative standalone selling price of the incentive points and coupons, the valuation and recognition of share-based compensation arrangements, depreciable lives of property and equipment, useful life of intangible assets, expected credit losses on financial instruments, assessment for impairment of long-term investments and other non-current assets, purchase price allocation for business acquisition, present value for expected future leasing payment, contingency reserve, provision of income tax and valuation allowance for deferred tax asset, and valuation of financial instruments measured at fair value. Actual results could differ from those estimates . |
Comprehensive Income and Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Group’s operating results are reported in the consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Group’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of entities, of which functional currency is other than Hong Kong dollar which is the presentational currency of the Group, net of related income taxes, where applicable. Such subsidiaries’ assets and liabilities are translated into Hong Kong dollars at period-end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the Hong Kong dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the consolidated balance sheets . |
Convenience Translation | Convenience Translation Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from HK$ into US$ as of and for the year ended December 31, 2022 are solely for the convenience of the readers and were calculated at the rate of U S$1.00=HK$ 7.8015 , representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 30, 2022. No representation is made that the HK$ amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 30, 2022, or at any other rate. |
Current Expected Credit Losses | 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Current Expected Credit Losses On January 1, 2020, the Group adopted FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology. The guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. The Group’s in-scope assets are primarily loans and advances that are collateralized by client securities and the collateral is required to be maintained at specified minimum levels at all times. The Group monitors margin levels and requires clients to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. The Group applies the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for the loans and advances. In accordance with the practical expedient, when the Group reasonably expects that borrowers (or counterparties, as applicable) will replenish the collateral as required, there is no expectation of credit losses when the collateral’s fair value is greater than the amortized cost of the financial assets. If the amortized cost exceeds the fair value of collateral, then credit losses are estimated only on the unsecured portion. For the year ended December 31, 2020, 2021 and 2022, expected credit loss expenses of HK$ 9,075 thousand, HK$ 3,200 thousand and HK $15,619 thousand resulting from the assessment of credit losses for the loans and advances under ASC Topic 326 at period-end were recognized in “Others, net” in the consolidated statements of comprehensive income respectively. An allowance for credit losses on other financial assets, including receivables from clients, brokers, clearing organizations and fund management companies and fund distributors, is estimated based on the aging of these financial assets. Receivables from clients are due within the settlement period commonly adopted in the relevant market practices, which is usually within a few days from the trade date. Because these receivables involve customers who have no recent history of default, and the settlement periods are usually short, the credit risk arising from receivables from clients is considered low. In respect of the receivables from brokers, clearing organizations and fund management companies and fund distributors, the management considers that these receivables have a low risk of default and the counterparties have a strong capacity to meet their contractual obligation. As a result, the allowance for credit losses for other financial assets were immaterial for all periods presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents represent cash on hand, demand deposits and time deposits placed with banks or other financial institutions, which are unrestricted to withdrawal or use, and which have original maturities of three months or less. |
Cash Held on Behalf of Clients | Cash Held on Behalf of Clients The Group has classified the clients’ monies as cash held on behalf of clients under the assets section in the consolidated balance sheets and recognized the corresponding accounts payables to the respective clients under the liabilities section. |
Term Deposit | Term Deposit Term deposit consists of bank deposits with an original maturity of greater than three months. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Restricted Cash | Restricted Cash The Group is required to maintain restricted cash deposits for certain property leases. These funds are restricted and have been classified as such on our consolidated balance sheets due to the nature of restriction. |
Short-term Investments | Short-term Investments The Group classifies certain financial assets with highly liquidity and original maturities less than twelve months as short-term investments. The Group’s short-term investments consist of investments in money market funds, treasury bills and financial assets at fair value through profit or loss. Treasury bills are carried at amortized cost. Besides, the Group values its money market funds and financial assets at fair value through profit or loss using quoted prices in active markets for these investments, and accordingly, the Group classifies the valuation techniques that use these quoted prices as Level 1. |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Transactions involving purchases of securities under agreements to resell (resell agreements) and transactions involving sales of securities under agreements to repurchase (repurchase agreements) are treated as collateralized financing transactions. Under resell agreements, the Group pays cash to counterparties and receives securities as collateral. These agreements are carried at amounts at which the securities will subsequently be resold, and the interest income incurred by the Group is recorded as interest income in the consolidated statements of comprehensive income. Under repurchase agreements, the Group receives cash from counterparties and provides securities as collateral. These agreements are carried at amounts at which the securities will subsequently be repurchased, and the interest expense incurred by the Group is recorded as interest expenses in the consolidated statements of comprehensive income. |
Loans and advances | Loans and advances Loans and advances include margin loans, IPO loans extended to clients and other advances, mainly collateralized by securities and are carried at the amortized cost, net of an allowance for credit losses. Revenues earned from the loans and advances are included in interest income. Margin loans are extended to clients on a demand basis and are not committed facilities. Securities owned by the customers, which are not recorded in the consolidated balance sheets, are held as collateral for amounts due on the margin loans. IPO loans for subscription of new shares are normally settled within one week from the drawdown date. Once IPO stocks are allotted, the Group requires clients to repay the IPO loans. Force liquidation action would be taken if the clients fail to settle their shortfall after the IPO allotment result is announced. Other advances mainly consist of bridge loans to enterprises which mainly pledged unlisted or listed shares they hold as collateral. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Loans and advances (Continued) Loans and advances are initially recorded net of directly attributable transaction costs and are measured at subsequent reporting dates at amortized cost. Finance charges, premiums payable on settlement or redemption and direct costs are accounted for on an accrual basis to the surplus or deficit using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. The balances will be written off to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. |
Trading Receivables from and Payables to Clients | Trading Receivables from and Payables to Clients Trading receivables from clients include amounts due on brokerage transactions on a trade-date basis. Trading payables to clients represent the closing cash balance to the customers, which mainly include cash deposits and amounts due on brokerage transactions on a trade date basis. |
Receivables from and Payables to Brokers, Clearing Organizations and Fund Management Companies and Fund Distributors | Receivables from and Payables to Brokers, Clearing Organizations and Fund Management Companies and Fund Distributors Receivables from and payables to brokers, clearing organizations and fund management companies and fund distributors include receivables and payables from unsettled trades on a trade-date basis, including amounts receivable for securities, derivatives or funds trades not delivered by the Group to the purchaser by the settlement date cash deposits, and cash collateral deposited for securities borrowing transactions and amounts payable for securities, derivatives or funds trades not received by the Group from a seller by the settlement date, and cash collateral received for securities lending transactions. Clearing settlement fund deposited in the clearing organizations for the clearing purpose is recognized in receivables from clearing organizations. The Group borrowed margin loans from executing brokers, with the benchmark interest rate plus premium differentiated depending on the amount borrowed, and immediately lent to margin financing clients. Margin loans borrowed is recognized in the payables to brokers . The Group’s policy is to net the receivables from and payables to clearing organizations according to ASC Topic 210-20, when all of the following conditions are met: a) Each of two parties owes the other determinable amounts. b) The reporting party has the right to set off the amount owed with the amount owed by the other party. c) The reporting party intends to set off. d) The right of setoff is enforceable at law. |
Interest Receivable and Payable | Interest Receivable and Payable Interest receivable which is included in receivables is calculated based on the contractual interest rate of bank deposit, securities purchased under agreements to resell, loans and advances, securities loaned and receivables on an accrual basis, and is recorded as interest income as earned. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Securities Borrowed and Securities Loaned Interest payable which is included in payables is calculated based on the contractual interest rates of payables, borrowings, securities borrowed and securities sold under agreements to repurchase on an accrual basis, and is recorded as interest expense when incurred. |
Securities Borrowed and Securities Loaned | Securities borrowed transactions require the Group to provide counterparties with collateral, which may be in the form of cash, or other securities. With respect to securities loaned, the Group receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Group monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Receivables and payables related to securities borrowed and securities loaned are included at receivables from and payables to brokers or clients in the consolidated balance sheets. Securities lending fees received and securities borrowing fees paid by the Group are included in interest income and interest expense, respectively, in the consolidated statements of comprehensive income . |
Leases | Leases In an operating lease, a lessee obtains control of only the use of the underlying asset, but not the underlying asset itself. An operating lease is recognized as a right-of-use asset with a corresponding liability at the date which the leased asset is available for use by the Group. The Group’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company makes an accounting policy election not to separate non-lease components to measure the lease liability and lease asset. The lease liability is initially measured at the present value of the future lease payments over the lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. The lease payments are discounted using the rate implicit in the lease or, if not readily determinable, the Group’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of debt issued with a similar risk profile as the Group and a duration similar to the lease term. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent. After commencement of the operating lease, the Group recognizes lease expenses on a straight-line basis over the lease term. The subsequent measurement of the lease liability is based on the present value of the remaining lease payments using the discount rate determined at lease commencement. The right-of-use asset is subsequently measured at cost less accumulated amortization and any impairment provision. The amortization of the right-of-use asset represents the difference between the straight-line lease expense and the accretion of interest on the lease liability each period. The interest amount is used to accrete the lease liability and to amortize the right-of-use asset. There is no amount recorded as interest expense. All of the Group’s leases are classified as operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities. As of December 31, 2021 and 2022 , the weighted-average remaining lease term on these leases is approximately four years a nd three years , respectively, and the weighted-average discount rate used to measure the lease liabilities was approximately 4.71 % and 4.68% , respectively. For the years ended December 31, 2020, 2021 and 2022, right-of-use assets obtained under operating leases was HK$ 85,827 thousand, HK$ 108,949 thousand and HK $76,249 thousand, respectively. The Group’s lease agreements do not contain any residual value guarantees, restrictions or covenants . |
Refundable Deposit | 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Refundable Deposit Refundable deposit is included in other assets in the consolidated balance sheets. As a clearing member firm of securities and derivatives clearing organizations in Hong Kong, Singapore and the U.S., the Group is also exposed to clearing member credit risk. These clearing organizations require member firms to deposit cash to a clearing fund. If a clearing member defaults in its obligations to the clearing organizations in an amount larger than its own margin and clearing fund deposits, the shortfall is absorbed pro rata from the deposits of the other clearing members. Many clearing organizations of which the Group is member have the authority to assess their members for additional funds if the clearing fund is depleted. A large clearing member default could result in a substantial cost if the Group is required to pay such additional funds. |
Property and Equipment, net | Property and Equipment, net Property and equipment, which are included in other assets in the consolidated balance sheets are stated at historical cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Residual rate is determined based on the economic value of the property and equipment at the end of the estimated useful lives as a percentage of the original cost. Category Estimated useful lives Residual rate Computers equipment 3 - 5 years 5 % Furniture and fixtures 3 - 5 years 5 % Office equipment 3 - 5 years 5 % Office building 30 years 5 % Vehicle 5 years 5 % Expenditures for maintenance and repairs are expensed as incurred. |
Intangible Assets | Intangible Assets Intangible assets which are included in other assets in the consolidated balance sheets mainly consist of computer software, licenses and other intangible assets. Finite-lived intangible assets are carried at historical cost less accumulated amortization and accumulated impairment losses, if any. Amortization of finite-lived intangible assets is calculated using the straight-line method to allocate costs over the estimated useful lives. Pursuant to topic ASC 350 Intangibles—Goodwill and Other, the useful life of an intangible asset to an entity is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of that entity. If an income approach is used to measure the fair value of the license, in determining the useful life of the intangible asset for amortization purposes, the period of expected cash flows used to measure the fair value of the license should be considered. The following is a summary of estimated useful lives: Category Estimated useful lives Computer software 5 years Licenses 10 years The other licenses recognised as indefinite-lived intangible assets consist of an insurance broker license and a financial services license. The Group obtained an insurance broker license through acquiring a member of the Hong Kong Professional Insurance Brokers Association. The Group obtained some financial securities licenses via acquisition of subsidiaries. Such intangible assets were recognised as indefinite-lived as the cash flows were expected to continue indefinitely on the brokerage and financial service business in above regions. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Intangible Assets(Continued) The Group had held a futures trading right as a clearing member firm of HKEx in order to trade futures through the trading facilities of the Stock Exchange, and has recognized it as intangible assets. As trading right has an indefinite useful life and have no foreseeable limit to the period over which the Group can use to generate net cash flows, it will not be amortised until their useful lives are determined to be finite. The aforementioned indefinite-lived intangible assets are carried at cost less accumulated impairment losses. The Group evaluates the remaining useful life of an indefinite-lived intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful lives. The Group will not amortize the indefinite-lived intangible assets until their useful lives are determined to be finite. An intangible asset that is not subject to amortization will be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. |
Long-term investments | Long-term investments The Group’s long-term investments primarily consist of equity method investments and equity investments without readily determinable fair values. 1) Equity method investments In accordance with ASC 323 Investment—Equity Method and Joint Ventures, the Group accounts for equity method investments over which the Group has significant influence but does not own a majority of the equity interest or otherwise controls and the investments are either common stock or in substance common stock using the equity method. For the investments in limited partnerships, the equity method of accounting for investments is generally appropriate for accounting by limited partners. According to ASC 323-30-S99-1, the investments in all limited partnerships should be accounted for pursuant to paragraph 970-323-25-6. That guidance requires the use of the equity method unless the investor’s interest “is so minor that the limited partner may have virtually no influence over partnership operating and financial policies.” Investments of more than 3 to 5 percent are generally viewed to be more than minor. The Group’s share of the investee’s profit and loss is recognized in the consolidated statements of comprehensive income of the period. The Group continually reviews its investments in equity method investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Group considers in its determination include the severity and the length of time that the fair value of the investment is below its carrying value; the financial condition, the operating performance and the prospects of the equity method investee; the geographic region, market and industry in which the equity method investee operates; and other specific information. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the investment in the equity method investee is written down to its fair value. Impairment charge recognized for the years ended December 31, 2020, 2021 and 2022 was HK $5,888 thousand, nil and nil , respectively. 2) Equity investments without readily determinable fair values In accordance with ASC 321 Investment—Equity Securities, for those equity investments without readily determinable fair values, the Group elects to record these investments at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. Under this measurement alternative, changes in the carrying value of the equity investment are required to be made whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Long-term investments (Continued) Pursuant to ASC 321, for those equity investments that the Group elects to use the measurement alternative, the Group makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Group estimates the investment’s fair value in accordance with the principles of ASC 820. If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss equal to the difference between the carrying value and fair value. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. |
Treasury stock | Treasury stock The Group accounted for those shares repurchased as treasury stock at cost of purchase, treasury stock, and is shown separately in the shareholders’ equity as the Group has not yet decided on the ultimate disposition of those shares acquired. When the Group decides to cancel the treasury stock, the difference between the original issuance price and the repurchase price is debited into additional paid-in capital. Refer to Note 13 for details. |
Fair Value Measurements | Fair Value Measurements Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: Level 1 — Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Measurements (Continued) The carrying amount of cash and cash equivalents, cash held on behalf of clients, restricted cash, receivables from and payables to clients, brokers, clearing organizations and fund management companies and fund distributors, accrued interest receivable, accrued interest payable, amounts due to related parties, other financial assets and liabilities approximates fair value because of their short-term nature. Term deposit, loans and advances, borrowings, securities purchased under agreements to resell, securities sold under agreements to repurchase and operating lease liabilities are carried at amortized cost. The carrying amount of term deposit, loans and advances, borrowings and operating lease liabilities approximate their respective fair value as the interest rates applied reflect the current quoted market yield for comparable financial instruments. Short-term investments except for treasury bills are measured at fair value. The Group’s non-financial assets, such as operating lease right-of-use assets, long-term investments, property and equipment and intangible assets, would be measured at fair value only if they were determined to be impaired. |
Revenue Recognition | Revenue Recognition 1) Brokerage commission and handling charge income Brokerage commission income earned for executing transactions is accrued on a trade-date basis. Handling charge income arise from the services such as clearing and settlement services, subscription and dividend collection handling services, etc., are accrued on a trade-date basis. Brokerage commission and handling charge income are recognised at a point in time when the service has been passed to the customer. 2) Interest income The Group earns interest income primarily in connection with its margin financing and securities lending services, IPO financing, bridge loan and deposits with banks, which are recorded on an accrual basis and are included in interest income in the consolidated statements of comprehensive income. Interest income is recognized as it is accrued over time using the effective interest method. 3) Other income Other income consists of enterprise public relations service charge income provided to corporate clients, underwriting fee income, IPO subscription service charge income, currency exchange service income from clients, income from market data service and funds distribution service income from fund management companies, etc. Enterprise public relations service charge income is charged to corporate clients by providing platform to post their detailed stock information and latest news in Futubull app, as well as providing a lively, interactive community among their potential investors to exchange investment views, share trading experience and socialize with each other. Unearned enterprise public relations service income of which the Group had received the consideration is recorded as contract liabilities (deferred revenue). Underwriting fee income is generated from investment banking business primarily by providing equity sub-underwriting to corporate issuers. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition (Continued) 3) Other income (Continued) IPO subscription service charge income is derived from provision of new share subscription services in relation to IPOs in the Hong Kong capital market. Currency exchange service income is charged to the Group’s paying clients for providing currency exchange service. Income from market data service is charged to Futubull and Moomoo app users for market data service. Funds distribution service income is charged to fund management companies for providing fund products distribution service to Futu’s individual clients.The Group, as an intermediary would receive subscription fees from fund management companies as agreed in the service contracts. For enterprise public relations service charge income, funds distribution service income, market information and data income and ESOP management service income, the service revenues are recognized ratably over the term of the service contracts. For IPO subscription service charge income, underwriting fee income and currency exchange service income, the Group recognizes the revenues upon the time when the services are rendered to customers. |
Customer Loyalty Program | Customer Loyalty Program The Group operates a customer loyalty program to its customers that offer various incentives in the form of incentive points and coupons for redemption of free or discounted goods or services. For the incentives generated from current sales transaction, the Group defers a portion of commission income with corresponding liability reflected as contract liability attributable to the incentives. The contract liability is determined by management based on the expected usage of the incentive points and coupons, and their estimated relative standalone selling price based on the related goods and services. Significant judgment was made by management in determining the expected usage and estimated relative standalone selling price of the incentive points and coupons, derived from historical trading volume, commission rates and redemption patterns, and an evaluation as to whether historical activities are representative of the expected future activities. For the incentives offered for future sales transaction, the Group nets a portion of brokerage commission income attributable to the incentives when points or coupons are actually redeemed. For the incentives not offered for future sales transaction, the Group considers them as a payment of other distinct goods that would be granted to clients. Such incentives are accounted for as selling and marketing expense with corresponding liability reflected as other liability in the consolidated balance sheet. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Customer Loyalty Program (continued) The table below presents the deferred or netted brokerage commission income related to the customer loyalty program for the years ended December 31, 2020, 2021 and 2022. Year ended December 31, 2020 2021 2022 (HK$ in thousands) Brokerage commission income, gross 1,807,203 3,640,845 3,567,264 Less: revenue netted or deferred (276,155) (493,235) (323,009) Brokerage commission income, net 1,531,048 3,147,610 3,244,255 As of December 31, 2021 and 2022, contract liabilities recorded related to the customer loyalty program were HK $ 8,968 thousand and HK $ 5,815 thousand, respectively. |
Brokerage Commission and Handling Charge Expenses | Brokerage Commission and Handling Charge Expenses Commission expenses for executing and/or clearing transactions are accrued on a trade-date basis. The commission expenses are charged by executing brokers for securities and derivative trades in stock and derivative markets as the Group makes securities and derivative trades with these brokers as principal. Handling and settlement fee is charged by clearing organization or executing brokers for clearing and settlement services, are accrued on a trade-date basis. IPO subscription service charge expenses are charged by commercial banks in connection with new share subscription services in relation to IPOs in the Hong Kong capital market. |
Interest Expenses | Interest Expenses Interest expenses primarily consist of interest expenses of borrowings from banks, other licensed financial institutions and other parties paid to fund the Group’s margin financing business, securities borrowing business and IPO financing business. |
Processing and Servicing Costs | Processing and Servicing Costs Processing and servicing costs consist of market information and data fee, data transmission fee, cloud service fee, system cost, and SMS service fee, etc. The nature of market information and data fee mainly represents for information and data fee paid to stock exchanges like HKEx, NASDAQ, and New York stock exchange, etc. Data transmission fee is the fee of data transmission among cloud server and data centers located in the regions of subsidiaries. Cloud service fee and SMS service fee mainly represent the data storage and computing service and the SMS channel service fee. The nature of system cost mainly represents for the fee to access and use the systems paid to software providers. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of expenses related to developing transaction platform and website like Futubull app and other products, including payroll and welfare, rental expenses and other related expenses for personnel engaged in research and development activities. All research and development costs have been expensed as incurred as the costs qualifying for capitalization have been insignificant. |
Selling and Marketing Expenses | 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) Selling and Marketing Expenses Selling and marketing expenses consist primarily of advertising and promotion costs, payroll, rental and related expenses for personnel engaged in marketing and business development activities. Advertising and promotion costs are expensed as incurred and are included within selling and marketing expenses in the consolidated statements of comprehensive income. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses consist of payroll, rental, related expenses for employees involved in general corporate functions, including finance, legal and human resources, costs associated with use of facilities and equipment, such as depreciation expenses, professional service expenses, rental and other general corporate related expenses. |
Others, net | Others, net Others, net, mainly consist of non-operating income and expenses, foreign currency gains or losses, expected credit loss expenses, gain or loss from investments and impairment from long-term investments and other non-current assets for all periods presented. |
Foreign Currency Gains and Losses | Foreign Currency Gains and Losses Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are remeasured at the applicable rates of exchange in effect at that date. Foreign currency gain or loss resulting from the settlement of such transactions and from remeasurement at period-end is recognized in “Others, net” in the consolidated statements of comprehensive income. |
Share-Based Compensation | Share-Based Compensation The Company follows ASC 718 to determine whether a share option and a restricted share units should be classified and accounted for as a liability award or equity award. All share-based awards to employees and directors classified as equity awards , such as stock options and restricted share units, are measured at the grant date based on the fair value of the awards. Share-based compensation, net of estimated forfeitures, is recognized as expenses on a straight-line method over the requisite service period, which is the vesting period. Options granted generally vest over four or five years . The modification of the terms or conditions of the existing shared-based award is treated as an exchange of the original award for a new award. The incremental compensation expenses are equal to the excess of the fair value of the modified award immediately after the modification over the fair value of the original award immediately before the modification. For stock options already vested as of the modification date, the Group immediately recognized the incremental value as compensation expenses. For stock options still unvested as of the modification date, the incremental compensation expenses are recognized over the remaining service period of these stock options. The Company determined the fair value of the restricted share units with reference to the fair value of the underlying shares as of the grant date. The Company utilizes the binomial option pricing model to estimate the fair value of stock options granted, with the assistance of an independent valuation firm. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Group uses historical data to estimate pre-vesting options and records share-based compensation expenses only for those awards that are expected to vest. See Note 15 for further discussion on share-based compensation. |
Taxation | Taxation 1) Income tax Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. 2) Uncertain tax positions The Group did no t recognize any interest and penalties associated with uncertain tax positions for the years ended December 31, 2020, 2021 and 2022. The Group continues to assess the uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts and circumstances. |
Net income per share | Net income per share Basic net income per share is computed by dividing net income attributable to ordinary shareholder by the weighted average number of shares outstanding for that period. Diluted net income per share is calculated by dividing net income attributable to ordinary shareholder, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the redeemable convertible preferred shares, using the if-converted method, and shares issuable upon the exercise of share options and vesting of restricted share units using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted net income per share calculation when inclusion of such share would be anti-dilutive. |
Segment Reporting | Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Chief Executive Officer who allocates resources to and assesses the performance of the operating segments of an entity. The Group’s reporting segments are decided based on its operating segments while taking full consideration of various factors such as products and services, geographic location and regulatory environment related to administration of the management. Operating segments meeting the same qualifications are allocated as one reporting segment, providing independent disclosures. The Group engages primarily in online brokerage services and margin financing services. The Group does not distinguish between markets or segments for the purpose of internal reports. The Group does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole. Hence, the Group has only one reportable segment. 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Significant Risks and Uncertainties | 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income taxes (Topic 740)-Simplifying the accounting for income taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Group adopted the ASU on January 1, 2021, which did not have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance is effective immediately and the amendments may be applied prospectively through December 31, 2022. The adoption did not have a material accounting impact on the Group’s consolidated financial position or results of operations. |
GENERAL INFORMATION, ORGANIZA_2
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Schedule of principal subsidiaries and the consolidated VIE | Place of Percentage of Date of Incorporation/ Incorporation/ Direct or Indirect Subsidiaries Establishment/ Establishment Economic Interest Principal Activities Futu Securities International (Hong Kong) Limited (“Futu Securities”) April 17, 2012 Hong Kong 100 % Financial services Moomoo Financial Inc (1) (previous name: Futu Inc.) December 17, 2015 Delaware, USA 100 % Financial services Futu Clearing Inc. August 13, 2018 Delaware, USA 100 % Financial services Moomoo Financial Singapore Pte. Ltd (1) (previous name: Futu Singapore Pte. Ltd) December 17, 2019 Singapore 100 % Financial services Futu Securities (Australia) Ltd. February 15, 2001 New South Wales, AUS 100 % Financial services Moomoo Securities Japan Co., Ltd. (1) (previous name:Hibiki Securities Inc) April 5, 1920 Tokyo, Japan 100 % Financial services Futu Securities (Hong Kong) Limited May 2, 2014 Hong Kong 100 % Investment holding Futu Network Technology Limited May 17, 2015 Hong Kong 100 % Research and development and technology services Futu Network Technology (Shenzhen) Co., Ltd. October 14, 2015 Shenzhen, PRC 100 % Research and development and technology services Shen Si Network Technology (Beijing) Co., Ltd. (“Shen Si”) September 15, 2014 Beijing, PRC 100 % No substantial business VIE Shenzhen Futu Network Technology Co., Ltd. (2) (“Shenzhen Futu”) December 18, 2007 Shenzhen, PRC 100 % Research and development and technology services Note: (1) These subsidiaries changed company names in June and September 2022. (2) Mr. Leaf Hua Li and Ms. Lei Li are beneficiary owners of the Company and held 85% and 15% equity interest in Shenzhen Futu, respectively. Mr. Leaf Hua Li is the founder, chairman and chief executive officer of the Company, and Ms. Lei Li is Mr. Leaf Hua Li’s spouse. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of consolidated financial statements with intercompany balances and transactions eliminated between the VIE and its subsidiaries | As of December 31, 2021 2022 (HK$ in thousands) Total assets 254,602 309,708 Total liabilities 176,204 191,263 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Total operating revenue 103,433 210,161 226,468 Net income 20,727 52,741 39,542 Year ended December 31, 2020 2021 2022 (HK$ in thousands) Net cash (used in)/generated from operating activities (14,847) 2,340 34,727 Net cash generated from/(used in) investing activities 17,104 (3,327) (3,201) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — (1,476) Net increase/(decrease) in cash, cash equivalents and restricted cash 2,257 (987) 30,050 Cash, cash equivalents and restricted cash at beginning of the year 1,481 3,738 2,751 Cash, cash equivalents and restricted cash at end of the year 3,738 2,751 32,801 |
Schedule of property and equipment at the end of the estimated useful lives | Category Estimated useful lives Residual rate Computers equipment 3 - 5 years 5 % Furniture and fixtures 3 - 5 years 5 % Office equipment 3 - 5 years 5 % Office building 30 years 5 % Vehicle 5 years 5 % |
Summary of estimated useful lives | Category Estimated useful lives Computer software 5 years Licenses 10 years |
Schedule of brokerage commission income related to the customer loyalty program | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Brokerage commission income, gross 1,807,203 3,640,845 3,567,264 Less: revenue netted or deferred (276,155) (493,235) (323,009) Brokerage commission income, net 1,531,048 3,147,610 3,244,255 |
FINANCIAL ASSETS AND FINANCIA_2
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FINANCIAL ASSETS AND FINANCIAL LIABILITIES | |
Schedule of financial assets and liabilities measured at fair value | Financial Assets At Fair Value as of December 31, 2021 Level 1 Level 2 Level 3 Total (HK$ in thousands) Short-term investments 1,169,741 — — 1,169,741 Other financial assets (1) — 598 — 598 Total financial assets, measured at fair value 1,169,741 598 — 1,170,339 Financial Assets At Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total (HK$ in thousands) Short-term investments 8,181 — — 8,181 Other financial assets (1) — 1,911 — 1,911 Total financial assets, measured at fair value 8,181 1,911 — 10,092 (1) The Group enters into currency futures contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. The currency futures contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. As of December 31, 2021 and 2022, the currency futures are included in other current assets. |
Schedule of amounts of financial instruments that are not offset in the consolidated balance sheets, but could be netted against cash or financial instruments with specific counterparties under master netting agreements | Effects of offsetting on the balance sheet Related amounts not offset Gross Amounts amounts Net amounts subject to set off in the Presented in master Financial Gross balance the balance netting instrument Net As of December 31, 2021 amount sheet sheet arrangements collateral amount HK$in thousands Financial Assets Amounts due from clearing organizations 7,596,090 (5,634,969) 1,961,121 — — 1,961,121 Financial liabilities Amounts due to clearing organizations 6,028,751 (5,634,969) 393,782 — — 393,782 Effects of offsetting on the balance sheet Related amounts not offset Gross Amounts amounts Net amounts subject to set off in the presented in master Financial Gross balance the balance netting instrument Net As of December 31, 2022 amount sheet sheet arrangements collateral amount HK$ in thousands Financial Assets Amounts due from clearing organizations 7,877,524 (4,810,571) 3,066,953 — — 3,066,953 Financial liabilities Amounts due to clearing organizations 4,862,438 (4,810,571) 51,867 — — 51,867 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM INVESTMENTS | |
Summary of short-term investments | As of December 31, 2021 2022 (HK$ in thousands) Treasury bills — 666,883 Money market funds 1,169,741 7,911 Financial assets at fair value through profit or loss — 270 Total 1,169,741 675,064 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASE | |
Summary of balances reported in the consolidated balance sheet related to the leases | As of December 31, 2021 2022 (HK$ in thousands) Operating lease right-of-use assets 243,859 196,864 Operating lease liabilities 260,579 211,143 |
Summary of operating lease cost reported in the consolidated statements of comprehensive (loss)/income | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Operating lease cost 64,594 106,459 119,854 |
Summary of undiscounted cash flows of leases to present value of operating lease payments | December 31, 2022 (HK$ in thousands) 2023 111,603 2024 55,478 2025 42,339 2026 12,073 2027 and thereafter 2,043 Total undiscounted operating lease payments 223,536 Less: imputed interest (12,393) Present value of operating lease liabilities 211,143 |
LOANS AND ADVANCES (Tables)
LOANS AND ADVANCES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LOANS AND ADVANCES | |
Schedule of loans and advances | As of December 31, 2021 2022 (HK$ in thousands) Margin loans 29,097,216 24,681,724 IPO loans 34,348 89,465 Other advances 468,000 1,969,774 Subtotal 29,599,564 26,740,963 Less: Allowance for credit losses (12,258) (27,840) Total 29,587,306 26,713,123 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | As of December 31, 2021 2022 (HK$ in thousands) Gross carrying amount Computers and equipment 109,989 105,426 Furniture and fixtures 64,507 71,226 Office equipment 64,822 65,927 Office building 28,239 35,227 Vehicle 635 1,985 Total of gross carrying amount 268,192 279,791 Less: accumulated depreciation Computers and equipment (29,852) (47,641) Furniture and fixtures (23,828) (37,414) Office equipment (35,860) (44,907) Office building (2,291) (3,223) Vehicle (604) (769) Total of accumulated depreciation (92,435) (133,954) Property and equipment, net 175,757 145,837 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
Schedule of Intangible assets | As of December 31, 2021 2022 (HK$ in thousands) Gross carrying amount Computer software 15,596 27,196 License 4,261 29,564 Others 3,638 10,087 Total of gross carrying amount 23,495 66,847 Less: accumulated amortization Computer software (5,172) (9,017) Licenses — (1,493) Others (1,105) (1,889) Total of accumulated amortization (6,277) (12,399) Intangible assets, net 17,218 54,448 |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LONG-TERM INVESTMENTS | |
Schedule of Long term Investments | As of December 31, 2021 2022 (HK$ in thousands) Equity method investments (1) 7,798 224,042 Equity investments without readily determinable fair values (2) 15,596 15,652 Total 23,394 239,694 (1) Equity method investments As of December 31, 2021 and 2022, the Group’s investments accounted for under the equity method totaled HK$ 7,798 thousand and HK $224,042 thousand, respectively. The Group applies the equity method of accounting to account for its equity method investments over which it has significant influence but does not own a majority equity interest or otherwise control. In January 2019, the Group invested in a private company by acquiring 20% ordinary equity interest with a total consideration of HK $6,709 thousand. The Group accounts for this as an equity method investment. Based on the Group’s assessment on the recoverable amounts of the equity method investment, as of December 31, 2021 and 2022, the impairment provision on the equity method investment was HK $5,888 thousand and HK $5,888 thousand. In December 2021, the Group invested in a private equity fund by acquiring approximately 10% ordinary equity interest with a total consideration of HK $7,798 thousand. The Group accounts for this as an equity method investment. Based on the Group’s assessment on the recoverable amounts of this equity method investment, as of December 31, 2021 and 2022, no impairment provision on the equity method investment was recognized. 9. LONG-TERM INVESTMENTS (Continued) In June 2022, the Group invested in a private equity fund by acquiring approximately 16% ordinary equity interest with a total consideration of HK $235,434 thousand. The Group accounts for this as an equity method investment. For the year ended December 31, 2022, loss on investment recognized were HK $17,752 thousand. Based on the Group’s assessment on the recoverable amounts of this equity method investment, as of December 31, 2022, no impairment provision on the equity method investment was recognized. (2) Equity investments without readily determinable fair values As of December 31, 2021 and 2022, the Group’s equity investments without readily determinable fair values totaled HK $15,596 thousand and HK $15,652 thousand, respectively. In December 2021, the Group invested in a private equity fund by acquiring 2.75% ordinary equity interest with a total consideration of HK $15,596 thousand. Equity securities without determinable fair values of the Group represent investments in privately held companies with no readily determinable fair value. The Group elected measurement alternative and recorded these investments at cost, less impairment, adjusted for subsequent observable price changes. As of December 31, 2021 and 2022, no impairment provision on the equity investments without readily determinable fair values was recognized. |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS | |
Schedule of other assets | As of December 31, 2021 2022 (HK$ in thousands) Current: Deposit 23,032 52,863 Staff advances 26,527 18,685 Others 32,035 30,710 Total 81,594 102,258 Non-current: Refundable deposit 337,513 680,356 Property and equipment, net (Note 7) 175,757 145,837 Deferred tax assets (Note 25) 38,317 84,564 Intangible assets, net (Note 8) 17,218 54,448 Total 568,805 965,205 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BORROWINGS | |
Schedule of borrowings | As of December 31, 2021 2022 (HK$ in thousands) Borrowings from banks (1) 6,357,405 2,480,532 The Group obtained borrowings mainly to support its margin financing business. Those borrowings bear weighted average interest rates of 1.15% and 3.86% as of December 31, 2021 and 2022, respectively . (1) The Group has unused borrowing facilities of HK$ 14,695,095 thousand and HK$ 19,989,078 thousand from banks as of December 31, 2021 and 2022, respectively, which are uncommitted. These bank borrowings were mainly pledged by margin clients’ shares as the primary source of credit risk mitigation of the lenders, and bore floating interest rates based on various benchmarks including Hong Kong Prime Rate, Hong Kong Interbank Offered Rate (“HIBOR”), CNH HIBOR, etc . |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
Schedule of accrued expenses and other liabilities | As of December 31, 2021 2022 (HK$ in thousands) Current: Accrued payroll and welfare expenses 531,409 868,646 Payables to corporate clients in relation to ESOP management services (1) 870,283 314,385 Tax payables 494,744 267,619 Accrued advertising and promotion fee 152,305 72,137 Accrued professional fee 22,066 31,083 Stamp duty, trading levy and trading fee payables 19,447 26,597 Payables in relation to acquisition — 19,196 Temporary payables in relation to fund distribution services 48,240 18,725 Accrued market information and data fee 12,832 13,445 Contract liabilities - current 3,058 1,225 Refund from depositary bank - current 2,773 2,773 Others 19,056 70,328 Total 2,176,213 1,706,159 Non-current: Contract liabilities - non-current 5,910 4,590 Refund from depositary bank - non-current 4,389 1,616 Deferred tax liabilities (Note 25) 636 7,414 Total 10,935 13,620 (1) Payables to corporate clients in relation to ESOP management services mainly consist of exercise payment of share options and related withholding tax. These payables are usually expected to be settled within one year. |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
Schedule of Share-based compensation recognized in operating expenses | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Research and development expenses 20,579 75,755 145,226 General and administrative expenses 10,354 14,020 44,099 Selling and marketing expenses 1,640 9,138 15,204 Total share-based compensation expenses 32,573 98,913 204,529 |
Schedule of the stock option activity under the 2014 and 2019 Share Incentive Plan | Options granted Weighted average share number exercise price per option (US$) Outstanding at January 1, 2020 23,718,626 0.5161 Exercised (5,048,824) 0.4293 Granted 2,489,832 0.6810 Forfeited (2,117,298) 0.5588 Outstanding at December 31, 2020 19,042,336 0.5628 Exercised (5,875,592) 0.4365 Granted 1,080,000 0.0444 Forfeited (905,278) 0.6539 Outstanding at December 31, 2021 13,341,466 0.5703 Exercised (2,968,984) 0.6110 Forfeited (386,336) 0.6381 Outstanding at December 31, 2022 9,986,146 0.5556 |
Schedule of share options outstanding | As of December 31, 2022 Weighted- average Weighted- remaining average exercise Options exercise price contractual life Aggregate number per option (years) intrinsic value US$ US$ in thousand Options Outstanding 9,986,146 0.5556 2.59 45,882 Exercisable 3,568,221 0.5505 2.05 16,413 Expected to vest 6,417,925 0.5584 2.89 29,470 |
Schedule of fair value of options granted using the binomial option pricing model | 2020 2021 2022 Risk-free interest rate 0.27% - 0.36 % 0.09% - 0.89 % NA Expected term (in years) 5.00 5.00 NA Expected dividend yield 0 % 0 % NA Expected volatility 40 % 40 % NA Expected forfeiture rate (post-vesting) 15 % 15 % NA |
Schedule of activities of the restricted share units granted to employees under the plan | Weighted - average grant date Shares awarded number fair value per share(US$) Outstanding at January 1, 2020 — — Granted 6,067,400 4.6827 Outstanding at December 31, 2020 6,067,400 4.6827 Vested (929,672) 4.6827 Granted 12,105,712 5.7371 Forfeited (281,576) 5.4426 Outstanding at December 31, 2021 16,961,864 5.6793 Vested (3,138,104) 5.7371 Granted 14,357,520 5.0877 Forfeited (1,489,032) 5.5209 Outstanding at December 31, 2022 26,692,248 5.3631 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NET INCOME PER SHARE | |
Schedule of earnings per share, basic and diluted | Year ended December 31, 2020 2021 2022 (HK$ in thousands, except for share and per share data) Basic net income per share calculation: Numerator: Net income attributable to ordinary shareholders of the Company 1,325,523 2,810,210 2,926,944 Denominator: Weighted average number of ordinary shares outstanding - basic 1,036,865,727 1,200,912,670 1,139,377,763 Net income per share attributable to ordinary shareholders of the Company - basic 1.28 2.34 2.57 Diluted net income per share calculation: Numerator: Net income attributable to ordinary Shareholders of the Company 1,325,523 2,810,210 2,926,944 Denominator: Weighted average number of ordinary shares outstanding - basic 1,036,865,727 1,200,912,670 1,139,377,763 Dilutive effect of share options and restricted share units 13,277,287 18,759,838 11,643,934 Weighted average number of ordinary shares outstanding - diluted 1,050,143,014 1,219,672,508 1,151,021,697 Net income per share attributable to ordinary shareholders of the Company - diluted 1.26 2.30 2.54 |
COLLATERALIZED TRANSACTIONS (Ta
COLLATERALIZED TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
COLLATERALIZED TRANSACTIONS | |
Schedule of margin loans and client's collateral received and repledged | As of December 31, 2021 2022 (HK$ in thousands) Margin loan extended to margin clients (net) 29,084,958 24,653,884 Securities purchased under agreements to resell transactions 106,203 32,000 Collateral received from margin clients 119,745,500 109,296,132 Collateral received from brokers 144,156 48,349 Collateral repledged to commercial banks and other financial institutions 20,953,603 12,326,953 |
Schedule of market value of securities borrowed and lent and cash collateral received and deposited | As of December 31, 2021 2022 (HK$ in thousands) Securities borrowed and loaned (1) 8,436,638 12,786,899 Cash collateral received from borrowers 9,737,786 14,874,210 Cash collateral deposited with lenders 3,120,123 1,889,795 (1) Borrowed securities include securities borrowed from margin clients under authorization, in this case no cash collateral is required. |
BROKERAGE COMMISSION AND HAND_3
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | |
Schedule of brokerage commission and handling charge income | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Brokerage commission income 1,531,048 3,147,610 3,244,255 Handling charge income 459,090 765,417 763,387 Total 1,990,138 3,913,027 4,007,642 |
INTEREST INCOME (Tables)
INTEREST INCOME (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST INCOME | |
Schedule of interest income | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Interest income from: Margin financing 497,975 1,720,473 1,588,569 Bank deposits 208,556 197,390 986,387 Bridge loan 1,078 1,872 135,733 Securities lending 73,792 397,505 499,745 IPO financing 184,226 200,567 2,341 Other financing — 391 1,552 Total 965,627 2,518,198 3,214,327 |
OTHER INCOME (Tables)
OTHER INCOME (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER INCOME. | |
Schedule of other income | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Currency exchange service income 67,000 201,030 141,322 Funds distribution service income 42,658 68,856 96,676 Enterprise public relations service charge income 29,988 96,327 44,033 Market information and data income 18,463 43,921 41,498 Underwriting fee income 30,797 86,880 25,350 IPO subscription service charge income 159,682 169,336 6,513 Others 6,469 17,745 36,666 Total 355,057 684,095 392,058 |
BROKERAGE COMMISSION AND HAND_4
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES. | |
Schedule of brokerage commission and handling charge expenses | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Commission, handling and settlement expenses 302,800 524,470 329,225 IPO subscription service charge expenses 58,686 47,689 564 Total 361,486 572,159 329,789 |
INTEREST EXPENSES (Tables)
INTEREST EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST EXPENSES | |
Schedule of interest expenses | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Interest expenses for margin financing Due to banks 45,545 125,002 74,397 Due to other licensed financial institutions 38,246 51,179 8,318 Interest expenses for securities borrowed Due to clients 7,984 132,034 26,650 Due to brokers 13,853 18,624 183,138 Interest expenses for IPO financing Due to banks 79,337 50,063 — Due to other parties 125 — — Total 185,090 376,902 292,503 |
PROCESSING AND SERVICING COSTS
PROCESSING AND SERVICING COSTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROCESSING AND SERVICING COSTS. | |
Schedule of processing and servicing costs | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Cloud service fee 48,940 122,269 216,140 Market information and data fee 68,274 70,387 79,439 Data transmission fee 23,072 46,289 41,775 System cost 4,476 12,160 28,324 SMS service fee 2,511 1,197 1,018 Others 2,105 4,701 7,144 Total 149,378 257,003 373,840 |
NON-INTEREST COST AND EXPENSE_2
NON-INTEREST COST AND EXPENSES BY NATURE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NON-INTEREST COST AND EXPENSES BY NATURE | |
Schedule of non-interest cost and expenses by nature | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Employee compensation and benefits 682,068 1,248,682 2,067,204 Marketing and branding 297,170 1,163,495 548,348 Processing and servicing costs (Note 23) 149,378 257,003 373,840 Brokerage commission and handling charge expenses (Note 21) 361,486 572,159 329,789 Professional services 32,988 59,697 135,167 Rental and other related expenses 64,594 106,459 119,854 Depreciation and amortization 27,231 36,435 54,714 Others 42,956 111,675 123,706 Total 1,657,871 3,555,605 3,752,622 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
TAXATION | |
Schedule of current and deferred portion of income tax expenses | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Current income tax expenses 137,939 396,512 466,074 Deferred income tax benefit (13,146) (21,431) (52,112) Income tax expenses 124,793 375,081 413,962 |
Schedule of reconciliation between the income tax expenses computed by applying the Hong Kong enterprise tax rate to income before income taxes and actual provision | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Income before income tax expenses and share of loss from equity method investments 1,450,623 3,185,291 3,358,607 Tax expenses at Hong Kong profit tax rate of 16.5% 239,353 524,907 554,005 Changes in valuation allowance 14,348 101,653 (46,798) Tax effect of permanence differences 9,029 22,047 41,181 Effect of income tax jurisdictions other than Hong Kong (4,386) (32,182) 50,807 Super deduction of research and development expenses (29,081) (62,966) (86,419) Final settlement differences — (602) (3,614) Income not subject to tax (1) (104,470) (177,776) (95,200) Income tax expenses 124,793 375,081 413,962 (1) This amount mainly represents tax exemption relating to the offshore income of Futu Securities. The brokerage commission income derived from executing the clients’ orders of US listed securities was treated as offshore-sourced and non-taxable on the basis that these transactions were executed outside Hong Kong. |
Schedule of components of the deferred tax assets and liabilities | As of December 31, 2021 2022 (HK$ in thousands) Deferred tax assets Net operating loss carryforwards 158,826 129,248 Accrued expenses and others 50,408 79,098 Less: valuation allowance (169,422) (122,624) Total deferred tax assets 39,812 85,722 Set-off of deferred tax liabilities pursuant to set-off provisions (1,495) (1,158) Net deferred tax assets 38,317 84,564 Total deferred tax liabilities 2,131 8,572 Set-off of deferred tax assets pursuant to set-off provisions (1,495) (1,158) Net deferred tax liabilities 636 7,414 |
Schedule of movement of valuation allowance | Year ended December 31, 2020 2021 2022 (HK$ in thousands) Balance at beginning of the year 53,421 67,769 169,422 Additions 30,935 108,347 97,727 Reversals (16,587) (6,694) (144,525) Balance at end of the year 67,769 169,422 122,624 |
REGULATORY REQUIREMENTS (Tables
REGULATORY REQUIREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY REQUIREMENTS | |
Schedule of the net capital, the requirement and the excess capital for the Group's broker-dealer subsidiaries | As of December 31, 2022 Net Capital/ Eligible Equity Requirement Excess (HK$ in thousands) Futu Securities 7,021,471 1,427,687 5,593,784 Moomoo Financial Inc. 132,413 20,222 112,191 Futu Clearing Inc. 4,183,966 311,304 3,872,662 Moomoo Financial Singapore Pte. Ltd. 881,028 213,683 667,345 Futu Insurance Brokers (Hong Kong) Limited 1,304 500 804 Futu Securities (Australia) Ltd. 48,180 2,299 45,881 |
RELATED PARTY BALANCES AND TR_2
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
Schedule of related party balances and transactions | Name of Entity or Individual Relationship with the Group Mr. Leaf Hua Li and his spouse Principal shareholder and member of his immediate families Tencent Holdings Limited and its subsidiaries(“Tencent Group”) Principal shareholder Individual directors and officers and their spouses Directors or officers of the Group and members of their immediate families (a) Cash and cash equivalent As of December 31, 2021 2022 (HK$ in thousands) Cash and cash equivalent 372 349 The balance represents the cash deposited by the Group in various payment channels of Tencent Group for funding marketing campaigns, of which could be withdrawn on demand. (b) Amounts Due to Related Parties As of December 31, 2021 2022 (HK$ in thousands) Payables in relation to cloud equipment and services from Tencent Group 85,887 48,672 Payables to Tencent Group in relation to ESOP management services 1,307 3,822 SMS channel services from Tencent Group 265 231 87,459 52,725 (c) Transactions with Related Parties Year ended December 31, 2020 2021 2022 (HK$ in thousands) Cloud service fee 48,940 114,386 171,692 Softwares purchased 508 3,869 1,997 SMS channel service fee 2,511 1,197 1,018 ESOP management service income 595 640 675 Other services — 135 335 Equipment purchased 4,496 45,658 — Advertising expenses 159 — — 57,209 165,885 175,717 |
GENERAL INFORMATION, ORGANIZA_3
GENERAL INFORMATION, ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) | Dec. 18, 2007 | Dec. 31, 2022 |
"Futu Securities" or the "Operating Company" | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Securities (Hong Kong) Limited | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Network Technology Limited | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Network Technology (Shenzhen) Co., Ltd | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Shen Si | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Inc | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Shenzhen Futu | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Clearing Inc. [Member] | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Singapore Pte. Ltd | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Futu Securities (Australia) Ltd. | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Moomoo Securities Japan Co., Ltd.(Previous name: Hibiki Securities Inc) | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of Direct or Indirect Economic Interest, Subsidiaries | 100% | |
Mr. Leaf Hua Li | Shenzhen Futu | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of equity interest (as a percent) | 85% | |
Ms. Lei Li | Shenzhen Futu | ||
ORGANIZATION AND PRINCIPAL ACTIVITIES | ||
Percentage of equity interest (as a percent) | 15% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Exclusive Option Agreement (Details) | 12 Months Ended |
Dec. 31, 2022 CNY (¥) ¥ / shares | |
SIGNIFICANT ACCOUNTING POLICIES | |
Purchase price for equity interests in shenzhen futu under exclusive option agreement | ¥ / shares | ¥ 1 |
Threshold of shenzhen futu disposes of shenzhen futu's material assets without prior written consent of shen si | ¥ | ¥ 500,000 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - VIE Companies (Details) $ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | Dec. 31, 2022 USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |||||
Total assets | $ 94,502,830 | $ 101,538,514 | $ 12,113,418 | ||
Total liabilities | 73,641,051 | 80,552,955 | $ 9,439,345 | ||
Total operating revenue | 7,614,027 | $ 975,969 | 7,115,320 | $ 3,310,822 | |
Ordinary shareholders of the Company | 2,926,944 | 375,178 | 2,810,210 | 1,325,523 | |
Net cash generated from operating activities | 3,474,931 | 445,417 | 6,011,971 | 20,456,717 | |
Net cash generated from/(used in) investing activities | 93,859 | 12,030 | (963,565) | (244,175) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (135,196) | (17,329) | 167,130 | (1,117) | |
Net increase/(decrease) in cash, cash equivalents and restricted cash | (3,575,927) | (458,363) | 15,769,754 | 28,618,321 | |
Cash, cash equivalents and restricted cash at beginning of the year | 59,291,512 | 7,600,014 | 43,521,758 | 14,903,437 | |
Cash, cash equivalents and restricted cash at end of the year | 55,715,585 | $ 7,141,651 | 59,291,512 | 43,521,758 | |
VIEs and its subsidiaries | |||||
SIGNIFICANT ACCOUNTING POLICIES | |||||
Total assets | 309,708 | 254,602 | |||
Total liabilities | 191,263 | 176,204 | |||
Total operating revenue | 226,468 | 210,161 | 103,433 | ||
Ordinary shareholders of the Company | 39,542 | 52,741 | 20,727 | ||
Net cash generated from operating activities | 34,727 | 2,340 | (14,847) | ||
Net cash generated from/(used in) investing activities | (3,201) | (3,327) | 17,104 | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,476) | ||||
Net increase/(decrease) in cash, cash equivalents and restricted cash | 30,050 | (987) | 2,257 | ||
Cash, cash equivalents and restricted cash at beginning of the year | 2,751 | 3,738 | 1,481 | ||
Cash, cash equivalents and restricted cash at end of the year | $ 32,801 | $ 2,751 | $ 3,738 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Transactions between the VIE and other entities in the consolidated group (Details) - VIEs and its subsidiaries $ in Thousands, ¥ in Millions | 12 Months Ended | ||||
Dec. 31, 2022 HKD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SIGNIFICANT ACCOUNTING POLICIES | |||||
Due from internal companies | $ 222,446 | $ 190,424 | |||
Due to internal companies | 88,487 | 80,435 | |||
Revenues earned | 202,834 | 187,774 | $ 94,500 | ||
Advances from Group companies | 8,120 | 0 | 0 | ||
Repayment of advances | $ 8,120 | $ 0 | $ 0 | ||
Registered capital | ¥ | ¥ 10 | ¥ 10 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Convenience Translation (Details) | Dec. 31, 2022 $ / $ |
Convenience Translation | |
Exchange rate of HK$ per US$1.00 | 7.8015 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Current Expected Credit Losses (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | ||||
Expected credit loss expenses | $ 15,619 | $ 2,002 | $ 3,200 | $ 9,075 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Weighted-average remaining lease term | 3 years | 4 years | |
Weighted-average discount rate | 4.68% | 4.71% | |
Right-of-use assets obtained under operating leases | $ 76,249 | $ 108,949 | $ 85,827 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computers equipment | |
SIGNIFICANT ACCOUNTING POLICIES | |
Residual rate (as a percent) | 5% |
Computers equipment | Minimum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | 3 |
Computers equipment | Maximum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | P5Y |
Furniture and fixtures | |
SIGNIFICANT ACCOUNTING POLICIES | |
Residual rate (as a percent) | 5% |
Furniture and fixtures | Minimum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | 3 |
Furniture and fixtures | Maximum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | P5Y |
Office equipment | |
SIGNIFICANT ACCOUNTING POLICIES | |
Residual rate (as a percent) | 5% |
Office equipment | Minimum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | 3 |
Office equipment | Maximum | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | P5Y |
Office building | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | P30Y |
Residual rate (as a percent) | 5% |
Vehicle | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | P5Y |
Residual rate (as a percent) | 5% |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - Equity method investments (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Impairment charges on long-term investment using equity method | $ 0 | $ 0 | $ 5,888 |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computer software | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | 5 years |
License | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives | 10 years |
SIGNIFICANT ACCOUNTING POLIC_13
SIGNIFICANT ACCOUNTING POLICIES - Customer loyalty program (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Brokerage commission income, gross | $ 3,567,264 | $ 3,640,845 | $ 1,807,203 |
Less: revenue netted or deferred | (323,009) | (493,235) | (276,155) |
Brokerage commission income, net | 3,244,255 | 3,147,610 | $ 1,531,048 |
Customers loyalty program | |||
SIGNIFICANT ACCOUNTING POLICIES | |||
Contract liabilities | $ 5,815 | $ 8,968 |
SIGNIFICANT ACCOUNTING POLIC_14
SIGNIFICANT ACCOUNTING POLICIES - Share-Based Compensation (Details) - Share-Based Payment Arrangement, Option | 1 Months Ended | 12 Months Ended |
Oct. 31, 2014 | Dec. 31, 2022 | |
Minimum | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Options vesting period | 4 years | 4 years |
Maximum | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Options vesting period | 5 years | 5 years |
SIGNIFICANT ACCOUNTING POLIC_15
SIGNIFICANT ACCOUNTING POLICIES - Taxation (Details) | 36 Months Ended |
Dec. 31, 2022 HKD ($) | |
Uncertain tax positions | |
Interest and penalties associated with uncertain tax positions | $ 0 |
SIGNIFICANT ACCOUNTING POLIC_16
SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Segment Reporting | |
Number of reportable segments | 1 |
SIGNIFICANT ACCOUNTING POLIC_17
SIGNIFICANT ACCOUNTING POLICIES - Significant Risks and Uncertainties (Details) $ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 HKD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | ||||
Increase in basis points | 1% | |||
Pre-tax income | $ 321.9 | $ 41.3 | ||
China, Yuan Renminbi | ||||
SIGNIFICANT ACCOUNTING POLICIES | ||||
Net assets | $ (1,727.2) | $ (2,374.8) | ||
Estimated depreciation of renminbi against the U.S. dollar (as a percent) | 10% | 10% | ||
Appreciation in pre tax income | $ 22.2 | $ 30.5 | ||
Estimated appreciation of renminbi against the U.S. dollar (as a percent) | 10% | 10% | ||
Depreciation in pre tax income | $ 22.2 | $ 30.5 |
FINANCIAL ASSETS AND FINANCIA_3
FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Financial Assets and Liabilities Measured at value (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | $ 8,181 | $ 1,169,741 |
Other financial assets | 1,911 | 598 |
Total financial assets, measured at fair value | 10,092 | 1,170,339 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | 8,181 | 1,169,741 |
Total financial assets, measured at fair value | 8,181 | 1,169,741 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Other financial assets | 1,911 | 598 |
Total financial assets, measured at fair value | $ 1,911 | $ 598 |
FINANCIAL ASSETS AND FINANCIA_4
FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Transfers Between Level 1 and Level 2 (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
FINANCIAL ASSETS AND FINANCIAL LIABILITIES | ||
Fair value asset transferred from level 1 to level 2 | $ 0 | $ 0 |
FINANCIAL ASSETS AND FINANCIA_5
FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Netting of Financial Assets (Details) - Amounts due from clearing organizations - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Effects of offsetting on the balance sheet | ||
Gross amounts | $ 7,877,524 | $ 7,596,090 |
Gross amounts set off in the balance sheet | (4,810,571) | (5,634,969) |
Net amounts presented in the balance sheet | 3,066,953 | 1,961,121 |
Related amounts not offset | ||
Net amount | $ 3,066,953 | $ 1,961,121 |
FINANCIAL ASSETS AND FINANCIA_6
FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Netting of Financial Liabilities (Details) - Amounts due to clearing organizations - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Effects of offsetting on the balance sheet | ||
Gross amounts | $ 4,862,438 | $ 6,028,751 |
Gross amounts set off in the balance sheet | (4,810,571) | (5,634,969) |
Net amounts presented in the balance sheet | 51,867 | 393,782 |
Related amounts not offset | ||
Net amount | $ 51,867 | $ 393,782 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
SHORT-TERM INVESTMENTS | |||
Short-term investments | $ 675,064 | $ 86,530 | $ 1,169,741 |
Treasury bills | |||
SHORT-TERM INVESTMENTS | |||
Short-term investments | 666,883 | ||
Money market funds | |||
SHORT-TERM INVESTMENTS | |||
Short-term investments | 7,911 | $ 1,169,741 | |
Financial assets at fair value through profit or loss | |||
SHORT-TERM INVESTMENTS | |||
Short-term investments | $ 270 |
SHORT-TERM INVESTMENTS - Additi
SHORT-TERM INVESTMENTS - Additional information (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHORT-TERM INVESTMENTS | |||
Investment income | $ 23,059 | $ 0 | $ 665 |
LEASE - Balances reported in th
LEASE - Balances reported in the consolidated balance sheets (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
Balances reported in the consolidated balance sheets related to the leases | |||
Operating lease right-of-use assets | $ 196,864 | $ 25,234 | $ 243,859 |
Operating lease liabilities | $ 211,143 | $ 260,579 |
LEASE - Operating lease expense
LEASE - Operating lease expense reported in the consolidated statements (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating lease cost | |||
Operating lease cost | $ 119,854 | $ 106,459 | $ 64,594 |
LEASE - Undiscounted cash flows
LEASE - Undiscounted cash flows of the Group's leases (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Undiscounted cash flows of the leases to the present value of its operating lease payments | ||
2023 | $ 111,603 | |
2024 | 55,478 | |
2025 | 42,339 | |
2026 | 12,073 | |
2027 and thereafter | 2,043 | |
Total undiscounted operating lease payments | 223,536 | |
Less: imputed interest | (12,393) | |
Present value of operating lease liabilities | $ 211,143 | $ 260,579 |
LOANS AND ADVANCES (Details)
LOANS AND ADVANCES (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans And Advances | ||
Subtotal | $ 26,740,963 | $ 29,599,564 |
Less: Allowance for credit losses | (27,840) | (12,258) |
Total | 26,713,123 | 29,587,306 |
Margin loans | ||
Loans And Advances | ||
Subtotal | 24,681,724 | 29,097,216 |
IPO loans | ||
Loans And Advances | ||
Subtotal | 89,465 | 34,348 |
Other advances | ||
Loans And Advances | ||
Subtotal | $ 1,969,774 | $ 468,000 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
OTHER ASSETS | |||
Total of gross carrying amount | $ 279,791 | $ 268,192 | |
Total of accumulated depreciation | (133,954) | (92,435) | |
Property and equipment, net | 145,837 | 175,757 | |
Depreciation expenses on property and equipment | 48,014 | 34,118 | $ 25,792 |
Computers and equipment | |||
OTHER ASSETS | |||
Total of gross carrying amount | 105,426 | 109,989 | |
Total of accumulated depreciation | (47,641) | (29,852) | |
Furniture and fixtures | |||
OTHER ASSETS | |||
Total of gross carrying amount | 71,226 | 64,507 | |
Total of accumulated depreciation | (37,414) | (23,828) | |
Office equipment | |||
OTHER ASSETS | |||
Total of gross carrying amount | 65,927 | 64,822 | |
Total of accumulated depreciation | (44,907) | (35,860) | |
Office building | |||
OTHER ASSETS | |||
Total of gross carrying amount | 35,227 | 28,239 | |
Total of accumulated depreciation | (3,223) | (2,291) | |
Vehicle | |||
OTHER ASSETS | |||
Total of gross carrying amount | 1,985 | 635 | |
Total of accumulated depreciation | $ (769) | $ (604) |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
OTHER ASSETS | |||
Total of gross carrying amount | $ 66,847 | $ 23,495 | |
Total of accumulated amortization | (12,399) | (6,277) | |
Intangible assets, net | 54,448 | 17,218 | |
Amortization expense on intangible assets | 6,700 | 2,317 | $ 1,439 |
Computer software | |||
OTHER ASSETS | |||
Total of gross carrying amount | 27,196 | 15,596 | |
Total of accumulated amortization | (9,017) | (5,172) | |
License | |||
OTHER ASSETS | |||
Total of gross carrying amount | 29,564 | 4,261 | |
Total of accumulated amortization | (1,493) | ||
Other Intangible Assets [Member] | |||
OTHER ASSETS | |||
Total of gross carrying amount | 10,087 | 3,638 | |
Total of accumulated amortization | $ (1,889) | $ (1,105) |
LONG-TERM INVESTMENTS - Equity
LONG-TERM INVESTMENTS - Equity method investments and equity investments (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 HKD ($) | Dec. 31, 2021 HKD ($) | Jan. 31, 2019 HKD ($) |
LONG-TERM INVESTMENTS | |||||
Equity method investments | $ 224,042 | $ 235,434 | $ 7,798 | $ 6,709 | |
Equity investments without readily determinable fair values | 15,652 | 15,596 | |||
Total | $ 239,694 | $ 30,724 | $ 23,394 |
LONG-TERM INVESTMENTS - Additio
LONG-TERM INVESTMENTS - Additional Information (Details) $ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2022 HKD ($) | Dec. 31, 2021 HKD ($) | Jan. 31, 2019 HKD ($) | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2020 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
LONG-TERM INVESTMENTS | ||||||||
Equity method investments | $ 235,434 | $ 7,798 | $ 6,709 | $ 224,042 | ||||
Loss on investment | 17,752 | $ 2,275 | $ 307 | |||||
Impairment provision of equity method investments | 5,888 | 5,888 | $ 0 | $ 0 | ||||
Equity investments without readily determinable fair values | 15,596 | 15,652 | ||||||
Impairment provision of equity investments without readily determinable fair values | $ 0 | $ 0 | ||||||
TH Fund LP | ||||||||
LONG-TERM INVESTMENTS | ||||||||
Percentage of equity interest (as a percent) | 16% | 10% | 20% | |||||
Newflow Amity Fund I, LP | ||||||||
LONG-TERM INVESTMENTS | ||||||||
Percentage of equity interest (as a percent) | 2.75% |
OTHER ASSETS (Details)
OTHER ASSETS (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
Current: | |||
Deposit | $ 52,863 | $ 23,032 | |
Staff advances | 18,685 | 26,527 | |
Others | 30,710 | 32,035 | |
Total | 102,258 | $ 13,107 | 81,594 |
Non-current: | |||
Refundable deposit | 680,356 | 337,513 | |
Property and equipment, net (Note 7) | 145,837 | 175,757 | |
Deferred tax assets (Note 25) | 84,564 | 38,317 | |
Intangible assets, net (Note 8) | 54,448 | 17,218 | |
Total | $ 965,205 | $ 123,720 | $ 568,805 |
BORROWINGS (Details)
BORROWINGS (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
BORROWINGS | |||
Borrowings from banks | $ 2,480,532 | $ 317,956 | $ 6,357,405 |
Banks | |||
BORROWINGS | |||
Borrowings from banks | $ 2,480,532 | $ 6,357,405 |
BORROWINGS - Additional Informa
BORROWINGS - Additional Information (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
BORROWINGS | ||
Borrowings weighted average interest rate | 3.86% | 1.15% |
Banks | ||
BORROWINGS | ||
Unused borrowing facilities | $ 19,989,078 | $ 14,695,095 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
Current: | |||
Accrued payroll and welfare expenses | $ 868,646 | $ 531,409 | |
Payables to corporate clients in relation to ESOP management services | 314,385 | 870,283 | |
Tax payables | 267,619 | 494,744 | |
Accrued advertising and promotion fee | 72,137 | 152,305 | |
Accrued professional fee | 31,083 | 22,066 | |
Stamp duty, trading levy and trading fee payables | 26,597 | 19,447 | |
Payables in relation to acquisition | 19,196 | ||
Temporary payables in relation to fund distribution services | 18,725 | 48,240 | |
Accrued market information and data fee | 13,445 | 12,832 | |
Contract liabilities - current | 1,225 | 3,058 | |
Refund from depositary bank - current | 2,773 | 2,773 | |
Others | 70,328 | 19,056 | |
Total | 1,706,159 | $ 218,696 | 2,176,213 |
Non-current: | |||
Contract liabilities - non-current | 4,590 | 5,910 | |
Refund from depositary bank - non-current | 1,616 | 4,389 | |
Deferred tax liabilities | 7,414 | 636 | |
Total | $ 13,620 | $ 1,746 | $ 10,935 |
ORDINARY SHARES AND TREASURY _2
ORDINARY SHARES AND TREASURY STOCK (Details) $ / shares in Units, $ in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 14, 2022 shares | Aug. 16, 2022 shares | Apr. 24, 2021 HKD ($) shares | Apr. 24, 2021 USD ($) shares | Aug. 22, 2020 HKD ($) shares | Aug. 22, 2020 USD ($) shares | Mar. 08, 2019 Vote $ / shares shares | Sep. 22, 2016 Vote $ / shares shares | Dec. 31, 2020 HKD ($) | Dec. 31, 2020 USD ($) $ / shares shares | Dec. 31, 2022 HKD ($) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 HKD ($) shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 HKD ($) shares | Mar. 10, 2022 shares | Nov. 03, 2021 shares | Jun. 11, 2021 shares | Sep. 21, 2016 $ / shares shares | |
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Ordinary shares, shares authorized | 403,750,000 | 807,500 | |||||||||||||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.0050 | ||||||||||||||||
Number of vote | Vote | 1 | ||||||||||||||||||
Net proceeds after deducting commissions and offering expenses | $ | $ 10,856,524 | $ 2,339,718 | |||||||||||||||||
Average price of share repurchase | $ / shares | $ 4.56 | $ 5.13 | |||||||||||||||||
Total consideration | $ | $ 3,145,810 | $ 1,178,755 | |||||||||||||||||
ADS | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Average price of share repurchase | $ / shares | $ 36.48 | $ 41.04 | |||||||||||||||||
ADS | Maximum | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Number of shares authorized to repurchase | 500,000,000 | ||||||||||||||||||
ADS | Minimum | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Number of shares authorized to repurchase | 300,000,000 | ||||||||||||||||||
Class A ordinary shares | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Ordinary shares, shares authorized | 48,700,000,000 | 48,700,000,000 | 48,700,000,000 | ||||||||||||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||||||||||
Number of vote | Vote | 1 | ||||||||||||||||||
Issuance of ordinary shares (in shares) | 87,400,000 | 87,400,000 | 76,000,000 | 76,000,000 | |||||||||||||||
Net proceeds after deducting commissions and offering expenses | $ 1,398,000 | $ 10,857 | $ 2,339,700 | $ 301.8 | |||||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") (in shares) | 2,968,984 | 2,968,984 | 5,875,592 | 5,875,592 | 5,048,824 | ||||||||||||||
Shares issued upon vest of outstanding restricted shares units | 3,138,104 | 3,138,104 | 929,672 | 929,672 | 0 | ||||||||||||||
Number of shares repurchased | 121,363,408 | 121,363,408 | 29,462,760 | 29,462,760 | |||||||||||||||
Total consideration | $ 4,324,600 | $ 553.2 | $ 1,178,800 | $ 151.2 | |||||||||||||||
Redesignation of ordinary shares into Class B ordinary shares | 64,000,000 | ||||||||||||||||||
Class A ordinary shares | Ordinary shares | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Issuance of ordinary shares (in shares) | 87,400,000 | 87,400,000 | |||||||||||||||||
Shares issued upon exercise of employee share options/ restricted share units ("RSUs") (in shares) | 6,107,088 | 6,107,088 | 6,805,264 | 6,805,264 | 5,048,824 | ||||||||||||||
Class A ordinary shares | Private placement | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Aggregate gross proceeds from private placement | $ 2,035,000 | $ 262.5 | |||||||||||||||||
Price per share | $ / shares | $ 4.89751 | ||||||||||||||||||
Class B ordinary shares | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Ordinary shares, shares authorized | 800,000,000 | 800,000,000 | 800,000,000 | ||||||||||||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||||||||||||||
Number of vote | Vote | 20 | ||||||||||||||||||
Ordinary shares, number of shares undesignated with par value | 500,000,000 | ||||||||||||||||||
Redesignation of ordinary shares into Class B ordinary shares | 50,000,000 | ||||||||||||||||||
Pre-Funded Warrants | Class A ordinary shares | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Warrants to purchase shares of ordinary shares | 53,600,000 | 53,599,890 | |||||||||||||||||
Shares cancelled | 110 | ||||||||||||||||||
Warrants exercise price | $ / shares | $ 0.00001 | ||||||||||||||||||
Pre-Funded Warrants | Class A ordinary shares | Private placement | |||||||||||||||||||
ORDINARY SHARES AND TREASURY STOCK | |||||||||||||||||||
Warrants to purchase shares of ordinary shares | 53,600,000 | 53,599,890 | |||||||||||||||||
Shares cancelled | 110 | ||||||||||||||||||
Warrants exercise price | $ / shares | $ 0.00001 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - HKD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
RESTRICTED NET ASSETS | ||
Required percentage of after-tax-profit under PRC GAAP to be set aside as a general reserve fund | 10% | |
Required registered capital ratio to de-force compulsory net profit allocation to general reserve fund | 50% | |
Restricted net assets | $ 304,377 | $ 304,377 |
Restricted Investments, Percent of Net Assets | 25% |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share-based compensation expenses (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
SHARE-BASED COMPENSATION | ||||
Total share-based compensation expenses | $ 204,529 | $ 26,217 | $ 98,913 | $ 32,573 |
Research and development expenses | ||||
SHARE-BASED COMPENSATION | ||||
Total share-based compensation expenses | 145,226 | 75,755 | 20,579 | |
General and administrative expenses | ||||
SHARE-BASED COMPENSATION | ||||
Total share-based compensation expenses | 44,099 | 14,020 | 10,354 | |
Selling and marketing expenses | ||||
SHARE-BASED COMPENSATION | ||||
Total share-based compensation expenses | $ 15,204 | $ 9,138 | $ 1,640 |
SHARE-BASED COMPENSATION - Sh_2
SHARE-BASED COMPENSATION - Share Options (Details) $ / shares in Units, $ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Dec. 30, 2019 $ / shares shares | Dec. 31, 2018 | Oct. 31, 2014 shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares | Dec. 31, 2019 HKD ($) shares | Dec. 31, 2019 USD ($) $ / shares shares | |
Summary of the stock option activity, Options granted share Number: | ||||||||
Outstanding at end of year (in shares) | 9,986,146 | |||||||
Summary of the stock option activity, Weighted average exercise price per option: | ||||||||
Outstanding at end of year (in dollars per share) | $ / shares | $ 0.5556 | |||||||
Share Options | ||||||||
Summary of the stock option activity, Options granted share Number: | ||||||||
Exercised (in shares) | (2,968,984) | (5,875,592) | (5,048,824) | |||||
Share Options | Minimum | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting period (in years) | 4 years | 4 years | ||||||
Share Options | Maximum | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Vesting period (in years) | 5 years | 5 years | ||||||
2014 Share Incentive Plan | Share Options | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Maximum number of shares under the plan | 135,032,132 | |||||||
Expire period | 10 years | |||||||
Modification of exercise price of number of stock options granted | 8,113,145 | |||||||
Modified of exercise price of stock options granted | $ / shares | $ 0.60 | |||||||
Incremental compensation expenses | $ 3,008 | $ 386 | ||||||
2019 Share Incentive Plan | Share Options | Maximum | ||||||||
SHARE-BASED COMPENSATION | ||||||||
Maximum percentage of shares available for issuance, based on total number of shares issued and outstanding on September 29, 2019 | 2% | |||||||
Maximum percentage of number of shares increased in each year | 2% | |||||||
Maximum percentage of aggregate number of shares initially reserved and subsequently increased during the term of the total number of shares issued and outstanding on September 29 | 8% | |||||||
2014 Share Incentive Plan and 2019 Share Incentive Plan | Share Options | ||||||||
Summary of the stock option activity, Options granted share Number: | ||||||||
Outstanding at beginning of year (in shares) | 13,341,466 | 19,042,336 | 23,718,626 | |||||
Exercised (in shares) | (2,968,984) | (5,875,592) | (5,048,824) | |||||
Granted (in shares) | 0 | 1,080,000 | 2,489,832 | |||||
Cancelled/Forfeited (in shares) | (386,336) | (905,278) | (2,117,298) | |||||
Outstanding at end of year (in shares) | 9,986,146 | 13,341,466 | 19,042,336 | 23,718,626 | 23,718,626 | |||
Summary of the stock option activity, Weighted average exercise price per option: | ||||||||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 0.5703 | $ 0.5628 | $ 0.5161 | |||||
Exercised (in dollars per share) | $ / shares | 0.6110 | 0.4365 | 0.4293 | |||||
Granted (in dollars per share) | $ / shares | 0.0444 | 0.6810 | ||||||
Cancelled/forfeited (in dollars per shares) | $ / shares | 0.6381 | 0.6539 | 0.5588 | |||||
Outstanding at end of year (in dollars per share) | $ / shares | $ 0.5556 | $ 0.5703 | $ 0.5628 | $ 0.5161 |
SHARE-BASED COMPENSATION - Sh_3
SHARE-BASED COMPENSATION - Share Options Granted (Details) $ / shares in Units, $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2022 HKD ($) shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares | |
SHARE-BASED COMPENSATION | ||||
Outstanding (in shares) | shares | 9,986,146 | |||
Exercisable (in shares) | shares | 3,568,221 | |||
Expected to vest (in shares) | shares | 6,417,925 | |||
Outstanding (in dollars per share) | $ / shares | $ 0.5556 | |||
Exercisable (in dollars per share) | $ / shares | 0.5505 | |||
Expected to vest (in dollars per share) | $ / shares | $ 0.5584 | |||
Outstanding (in years) | 2 years 7 months 2 days | 2 years 7 months 2 days | ||
Exercisable (in years) | 2 years 18 days | 2 years 18 days | ||
Expected to vest (in years) | 2 years 10 months 20 days | 2 years 10 months 20 days | ||
Outstanding (in dollars) | $ | $ 45,882 | |||
Exercisable (in dollars) | $ | 16,413 | |||
Expected to vest (in dollars) | $ | $ 29,470 | |||
Share Options | ||||
SHARE-BASED COMPENSATION | ||||
Weighted average grant date fair value | $ / shares | $ 0 | $ 18.9219 | $ 1.5239 | |
Options exercised (in shares) | shares | 2,968,984 | 2,968,984 | 5,875,592 | 5,048,824 |
Intrinsic value of options exercised | $ 16,673 | $ 130,580 |
SHARE-BASED COMPENSATION - Fair
SHARE-BASED COMPENSATION - Fair value of options granted and compensation expenses (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 USD ($) | |
Fair value of options granted estimation: | ||||
Expected term (in years) | 5 years | 5 years | ||
Expected dividend yield (as a percent) | 0% | 0% | ||
Expected volatility (as a percent) | 40% | 40% | ||
Expected forfeiture rate (post-vesting) (as a percent) | 15% | 15% | ||
Minimum | ||||
Fair value of options granted estimation: | ||||
Risk-free interest rate (as a percent) | 0.09% | 0.27% | ||
Maximum | ||||
Fair value of options granted estimation: | ||||
Risk-free interest rate (as a percent) | 0.89% | 0.36% | ||
Share Options | ||||
Fair value of options granted estimation: | ||||
Unrecognized compensation expenses | $ 144,783 | $ 18,570 | ||
Weighted-average period expected to be recognized for unrecognized compensation expense (in years) | 3 years 1 month 6 days |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Shares Plan (Details) - Restricted shares $ / shares in Units, $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) $ / shares shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares | Dec. 31, 2022 USD ($) | |
Shares awarded number | ||||
Outstanding at beginning | 16,961,864 | 6,067,400 | ||
Granted | 14,357,520 | 12,105,712 | 6,067,400 | |
Vested | (3,138,104) | (929,672) | ||
Forfeited | (1,489,032) | (281,576) | ||
Outstanding at end | 26,692,248 | 16,961,864 | 6,067,400 | |
Weighted-average grant date fair value per share | ||||
Outstanding at beginning | $ / shares | $ 5.6793 | $ 4.6827 | ||
Granted | $ / shares | 5.0877 | 5.7371 | $ 4.6827 | |
Vested | $ / shares | 5.7371 | 4.6827 | ||
Forfeited | $ / shares | 5.5209 | 5.4426 | ||
Outstanding at end | $ / shares | $ 5.3631 | $ 5.6793 | $ 4.6827 | |
Unrecognized compensation expenses related to the restricted shares | $ 1,051,157 | $ 134,821 | ||
Unrecognized compensation expenses related to the restricted shares expected to be recognized over a weighted-average period | 4 years 3 months 29 days | |||
2019 Share Incentive Plan | ||||
Shares awarded number | ||||
Granted | 14,357,520 | 12,105,712 | 6,067,400 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - Pre Funded Warrants [Member] - Class A Ordinary Shares [Member] - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
NET INCOME PER SHARE | ||
Warrants to purchase shares of ordinary shares | 53,599,890 | 53,600,000 |
Warrants exercise price | $ 0.00001 | |
Shares cancelled | 110 |
NET INCOME PER SHARE - Computat
NET INCOME PER SHARE - Computation of earnings per share (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 $ / shares | Dec. 31, 2022 HKD ($) $ / shares shares | Dec. 31, 2021 HKD ($) $ / shares shares | Dec. 31, 2020 HKD ($) $ / shares shares | |
Numerator: | ||||
Net income attributable to ordinary shareholders of the Company | $ | $ 2,926,944 | $ 2,810,210 | $ 1,325,523 | |
Denominator: | ||||
Weighted average number of ordinary shares outstanding - basic | 1,139,377,763 | 1,200,912,670 | 1,036,865,727 | |
Net income per share attributable to ordinary shareholders of the Company - basic | (per share) | $ 0.33 | $ 2.57 | $ 2.34 | $ 1.28 |
Numerator: | ||||
Net income attributable to ordinary Shareholders of the Company | $ | $ 2,926,944 | $ 2,810,210 | $ 1,325,523 | |
Denominator: | ||||
Weighted average number of ordinary shares outstanding - basic | 1,139,377,763 | 1,200,912,670 | 1,036,865,727 | |
Dilutive effect of share options and restricted share units | 1,151,021,697 | 1,219,672,508 | 1,050,143,014 | |
Weighted average number of ordinary shares outstanding - diluted | 1,151,021,697 | 1,219,672,508 | 1,050,143,014 | |
Net income per share attributable to ordinary shareholders of the Company - diluted | (per share) | $ 0.33 | $ 2.54 | $ 2.30 | $ 1.26 |
Share Options | ||||
Denominator: | ||||
Weighted average number of ordinary shares outstanding - basic | 11,643,934 | 18,759,838 | 13,277,287 | |
Denominator: | ||||
Weighted average number of ordinary shares outstanding - basic | 11,643,934 | 18,759,838 | 13,277,287 |
NET INCOME PER SHARE - Antidilu
NET INCOME PER SHARE - Antidilutive securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
NET INCOME PER SHARE | |||
Anti-dilutive shares excluded from the calculation of diluted net income per share | 3,773,963 | ||
Share-Based Payment Arrangement, Option [Member] | |||
NET INCOME PER SHARE | |||
Anti-dilutive shares excluded from the calculation of diluted net income per share | 357,978 | 4,800,584 |
COLLATERALIZED TRANSACTIONS (De
COLLATERALIZED TRANSACTIONS (Details) $ in Thousands, $ in Thousands | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) |
COLLATERALIZED TRANSACTIONS | |||
Securities purchased under agreements to resell transactions | $ 32,000 | $ 4,102 | $ 106,203 |
Collateral received from margin clients | 12,326,953 | 20,953,603 | |
Collateral received from brokers | 48,349 | 144,156 | |
Collateral repledged to commercial banks and other financial institutions | 109,296,132 | 119,745,500 | |
Securities borrowed and lent | 12,786,899 | 8,436,638 | |
Cash collateral deposited with lenders | 1,889,795 | 3,120,123 | |
Cash collateral received from borrowers | 14,874,210 | 9,737,786 | |
Margin loans | |||
COLLATERALIZED TRANSACTIONS | |||
Margin loan extended to margin clients (net) | $ 24,653,884 | $ 29,084,958 |
BROKERAGE COMMISSION AND HAND_5
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | ||||
Total | $ 4,007,642 | $ 513,701 | $ 3,913,027 | $ 1,990,138 |
Brokerage commission income | ||||
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | ||||
Total | 3,244,255 | 3,147,610 | 1,531,048 | |
Handling charge income | ||||
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME | ||||
Total | $ 763,387 | $ 765,417 | $ 459,090 |
INTEREST INCOME (Details)
INTEREST INCOME (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
INTEREST INCOME | ||||
Margin financing | $ 1,588,569 | $ 1,720,473 | $ 497,975 | |
Bank deposits | 986,387 | 197,390 | 208,556 | |
Bridge loan | 135,733 | 1,872 | 1,078 | |
Securities lending | 499,745 | 397,505 | 73,792 | |
IPO financing | 2,341 | 200,567 | 184,226 | |
Other financing | 1,552 | 391 | ||
Total | $ 3,214,327 | $ 412,014 | $ 2,518,198 | $ 965,627 |
OTHER INCOME (Details)
OTHER INCOME (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
OTHER INCOME. | ||||
Currency exchange service income | $ 141,322 | $ 201,030 | $ 67,000 | |
Funds distribution service income | 96,676 | 68,856 | 42,658 | |
Enterprise public relations service charge income | 44,033 | 96,327 | 29,988 | |
Market information and data income | 41,498 | 43,921 | 18,463 | |
Underwriting fee income | 25,350 | 86,880 | 30,797 | |
IPO subscription service charge income | 6,513 | 169,336 | 159,682 | |
Others | 36,666 | 17,745 | 6,469 | |
Total | $ 392,058 | $ 50,254 | $ 684,095 | $ 355,057 |
BROKERAGE COMMISSION AND HAND_6
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES | ||||
Total | $ 329,789 | $ 42,273 | $ 572,159 | $ 361,486 |
Commission, handling and settlement expenses | ||||
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES | ||||
Total | 329,225 | 524,470 | 302,800 | |
IPO subscription service charge expenses | ||||
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES | ||||
Total | $ 564 | $ 47,689 | $ 58,686 |
INTEREST EXPENSES (Details)
INTEREST EXPENSES (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INTEREST EXPENSES | |||
Interest expenses for margin financing - Due to banks | $ 74,397 | $ 125,002 | $ 45,545 |
Interest expenses for margin financing - Due to other licensed financial institutions | 8,318 | 51,179 | 38,246 |
Interest expenses for securities borrowed - Due to clients | 26,650 | 132,034 | 7,984 |
Interest expenses for securities borrowed - Due to brokers | 183,138 | 18,624 | 13,853 |
Interest expenses for IPO financing - Due to banks | 50,063 | 79,337 | |
Interest expenses for IPO financing - Due to other parties | 125 | ||
Total | $ 292,503 | $ 376,902 | $ 185,090 |
PROCESSING AND SERVICING COST_2
PROCESSING AND SERVICING COSTS (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
PROCESSING AND SERVICING COSTS. | ||||
Cloud service fee | $ 216,140 | $ 122,269 | $ 48,940 | |
Market information and data fee | 79,439 | 70,387 | 68,274 | |
Data transmission fee | 41,775 | 46,289 | 23,072 | |
System cost | 28,324 | 12,160 | 4,476 | |
SMS service fee | 1,018 | 1,197 | 2,511 | |
Others | 7,144 | 4,701 | 2,105 | |
Total | $ 373,840 | $ 47,919 | $ 257,003 | $ 149,378 |
NON-INTEREST COST AND EXPENSE_3
NON-INTEREST COST AND EXPENSES BY NATURE (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
NON-INTEREST COST AND EXPENSES BY NATURE | ||||
Employee compensation and benefits | $ 2,067,204 | $ 1,248,682 | $ 682,068 | |
Marketing and branding | 548,348 | 1,163,495 | 297,170 | |
Processing and servicing costs | 373,840 | $ 47,919 | 257,003 | 149,378 |
Brokerage commission and handling charge expenses | 329,789 | $ 42,273 | 572,159 | 361,486 |
Professional services | 135,167 | 59,697 | 32,988 | |
Rental and other related expenses | 119,854 | 106,459 | 64,594 | |
Depreciation and amortization | 54,714 | 36,435 | 27,231 | |
Others | 123,706 | 111,675 | 42,956 | |
Total | $ 3,752,622 | $ 3,555,605 | $ 1,657,871 |
TAXATION - Income Tax - Applica
TAXATION - Income Tax - Applicable Tax Rates (Details) | 3 Months Ended | 12 Months Ended | 36 Months Ended | ||||
Apr. 01, 2018 | Dec. 22, 2017 | Dec. 21, 2017 | Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2022 | |
TAXATION | |||||||
Withholding tax rate (as a percent) | 10% | ||||||
Withholding tax rate applicable to beneficial owner ( as a percent) | 5% | ||||||
United States | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 21% | 35% | 35% | ||||
Hong Kong | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 16.50% | ||||||
Hong Kong | Assessable profits on the first HK$2 million | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 8.25% | ||||||
Hong Kong | Assessable profits in excess of HK$2 million | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 16.50% | ||||||
China | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 25% | ||||||
Preferential tax rate (as a percent) | 15% | ||||||
Super deduction of research and development expenses (as a percent) | 175% | ||||||
Pre-tax deduction ratio for R&D expenses | 100% | 75% | |||||
China | Futu Network Technology (Shenzhen) Co., Ltd | |||||||
TAXATION | |||||||
Preferential tax rate (as a percent) | 15% | ||||||
Preferential tax rate, valid period | 3 years | 3 years | |||||
Singapore | |||||||
TAXATION | |||||||
Applicable tax rate (as a percent) | 17% |
TAXATION - Composition of incom
TAXATION - Composition of income tax expenses (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
TAXATION | ||||
Current income tax expenses | $ 466,074 | $ 396,512 | $ 137,939 | |
Deferred income tax benefit | (52,112) | (21,431) | (13,146) | |
Income tax expenses | $ 413,962 | $ 53,062 | $ 375,081 | $ 124,793 |
TAXATION - Tax Reconciliation (
TAXATION - Tax Reconciliation (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | |
TAXATION | ||||
Income before income tax expenses and share of loss from equity method investments | $ 3,358,607 | $ 3,185,291 | $ 1,450,623 | |
Tax expenses at Hong Kong profit tax rate of 16.5% | 554,005 | 524,907 | 239,353 | |
Changes in valuation allowance | (46,798) | 101,653 | 14,348 | |
Tax effect of permanence differences | 41,181 | 22,047 | 9,029 | |
Effect of income tax jurisdictions other than Hong Kong | 50,807 | (32,182) | (4,386) | |
Super deduction of research and development expenses | (86,419) | (62,966) | (29,081) | |
Final settlement differences | (3,614) | (602) | ||
Income not subject to tax | (95,200) | (177,776) | (104,470) | |
Income tax expenses | $ 413,962 | $ 53,062 | $ 375,081 | $ 124,793 |
Hong Kong | ||||
TAXATION | ||||
Hong Kong profit tax rate (as a percent) | 16.50% | 16.50% |
TAXATION - Components of the de
TAXATION - Components of the deferred tax assets (Details) - HKD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||||
Net operating loss carryforwards | $ 129,248 | $ 158,826 | ||
Accrued expenses and others | 79,098 | 50,408 | ||
Less: valuation allowance | (122,624) | (169,422) | $ (67,769) | $ (53,421) |
Total deferred tax assets | 85,722 | 39,812 | ||
Set-off of deferred tax liabilities pursuant to set-off provisions | (1,158) | (1,495) | ||
Net deferred tax assets | 84,564 | 38,317 | ||
Total deferred tax liabilities | 8,572 | 2,131 | ||
Set-off of deferred tax assets pursuant to set-off provisions | (1,158) | (1,495) | ||
Net deferred tax liabilities | $ 7,414 | $ 636 |
TAXATION - Movement of Valuatio
TAXATION - Movement of Valuation Allowance (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement of Valuation Allowance | |||
Balance at beginning of the year | $ 169,422 | $ 67,769 | $ 53,421 |
Additions | 97,727 | 108,347 | 30,935 |
Reversals | (144,525) | (6,694) | (16,587) |
Balance at end of the year | $ 122,624 | $ 169,422 | $ 67,769 |
TAXATION - Net operating loss c
TAXATION - Net operating loss carry forwards (Details) - HKD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
TAXATION | ||
Net operating loss carryforwards | $ 671,237 | $ 764,251 |
Net operating loss carryforwards, provided for valuation allowance | 625,688 | 761,417 |
Net operating loss carryforwards, expected to be utilized prior to expiration | $ 45,549 | $ 2,834 |
China | ||
TAXATION | ||
Preferential tax rate (as a percent) | 15% |
DEFINED CONTRIBUTION PLAN (Deta
DEFINED CONTRIBUTION PLAN (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2022 HKD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 HKD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 HKD ($) | Dec. 31, 2020 CNY (¥) | |
DEFINED CONTRIBUTION PLAN | ||||||
Employee compensation and benefits expenses | $ 2,067,204 | $ 1,248,682 | $ 682,068 | |||
China | ||||||
DEFINED CONTRIBUTION PLAN | ||||||
Total contributions | ¥ | ¥ 170,012 | ¥ 110,997 | ¥ 49,778 | |||
Hong Kong | ||||||
DEFINED CONTRIBUTION PLAN | ||||||
Employee compensation and benefits expenses | $ 2,568 | $ 2,197 | $ 1,414 |
REGULATORY REQUIREMENTS (Detail
REGULATORY REQUIREMENTS (Details) $ in Thousands | Dec. 31, 2022 HKD ($) |
Futu Securities | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | $ 7,021,471 |
Requirement | 1,427,687 |
Excess | 5,593,784 |
Moomoo Financial Inc. | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | 132,413 |
Requirement | 20,222 |
Excess | 112,191 |
Futu Clearing Inc. | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | 4,183,966 |
Requirement | 311,304 |
Excess | 3,872,662 |
Moomoo Financial Singapore pte. Ltd. | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | 881,028 |
Requirement | 213,683 |
Excess | 667,345 |
Futu Insurance Brokers (Hong Kong) Limited | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | 1,304 |
Requirement | 500 |
Excess | 804 |
Futu Securities (Australia) Ltd. | |
REGULATORY REQUIREMENTS | |
Net Capital/ Eligible Equity | 48,180 |
Requirement | 2,299 |
Excess | $ 45,881 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||
Total commitments contracted | $ 74 | $ 104 |
RELATED PARTY BALANCES AND TR_3
RELATED PARTY BALANCES AND TRANSACTIONS (Details) $ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 HKD ($) | Dec. 31, 2021 HKD ($) | Dec. 31, 2020 HKD ($) | Dec. 31, 2022 USD ($) | |
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Cash and cash equivalent | $ 5,028,898 | $ 4,555,096 | $ 1,034,668 | $ 644,607 |
Amounts Due to Related Parties | 52,725 | 87,459 | $ 6,758 | |
Tencent Group | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Cash and cash equivalent | 349 | 372 | ||
Amounts Due to Related Parties | 52,725 | 87,459 | ||
Transactions with Related Parties | 175,717 | 165,885 | 57,209 | |
Tencent Group | Cloud service fee | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Services provided by related parties | 171,692 | 114,386 | 48,940 | |
Tencent Group | Software purchased | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Services provided by related parties | 1,997 | 3,869 | 508 | |
Tencent Group | SMS channel service fee | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Amounts Due to Related Parties | 231 | 265 | ||
Services provided by related parties | 1,018 | 1,197 | 2,511 | |
Tencent Group | ESOP management service income | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Amounts Due to Related Parties | 3,822 | 1,307 | ||
Income from related parties | 675 | 640 | 595 | |
Tencent Group | Other services | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Services provided by related parties | 335 | 135 | ||
Tencent Group | Equipment purchased | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Services provided by related parties | 45,658 | 4,496 | ||
Tencent Group | Cloud equipment and services | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Amounts Due to Related Parties | $ 48,672 | $ 85,887 | ||
Tencent Group | Advertising expenses | ||||
RELATED PARTY BALANCES AND TRANSACTIONS | ||||
Services provided by related parties | $ 159 |
RELATED PARTY BALANCES AND TR_4
RELATED PARTY BALANCES AND TRANSACTIONS - Additional Information (Details) - HKD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Payables to clients | |||
RELATED PARTY BALANCES AND TRANSACTIONS | |||
Payables to directors and officers | $ 29,705 | $ 44,480 | |
Directors and officers and their spouses | Brokerage Services and Margin Loans | |||
RELATED PARTY BALANCES AND TRANSACTIONS | |||
Revenues earned | $ 624 | $ 1,430 | $ 1,642 |