Earnings call transcript Q1 2023

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Melo Xi

Good morning, everyone, and welcome to Noah's 2023 First Quarter Earnings Call. I'm Melo Xi, Director of Investor Relations at Noah Group. Presenters joining us today are Ms. Wang Jingbo, our Co-Founder, Chair Lady and CEO; and Mr. Grant Pan, our CFO. inform Noah we're Hongqiao, Wealth to our live Shanghai. like headquarters, new Center also you currently that from I'd located at

We that from that our that statements. actual current not Before kindly duty of and the do may would uncertainties we keep expectation these are forward-looking during in results to subject Please you risks mind make on we Noah's we statements any today's to may these based like statements statements. cause business. differ call, these start, undertake remind update to to

For results, discussions of some section of harbor the risks that please could the of affect filing. see our X-K statement safe

of and constitutes offer an material or products. solicitation to that in non-GAAP This made the call an report call on Noah's any without also and to you'll purchase website. Noah, section not this on or certain Also, to copyrighted please Noah offer Investor interest our in refer nothing consent. Relations note X-K Noah-affiliated may find reconciliations of available is We'll Reports be measures, duplicated Financial sell any of

With that, to I Lady our Wang Ms. would and CEO, Chair like Jingbo. welcome

Wang Jingbo

Language] [Foreign

Melo Xi

agenda call, talk the progress first our the CFO, as well for quarter. environment, segments. Grant a conference like to business Then about performance expansion on Q&A will of end Pan, information with and group first Noah's the global the session. And report financial as quarter today's macroeconomic then present overall I'd the For lastly, of we'll our the various

limited U.S., recovery impact interest rate but credit a still stability in in the also of financial challenges heightened systems. economic in complex the the environment not persist activities, XXXX. tight extremely invent We European and After only XXXX, macro in the the significantly an and levels macro

and significant and these and of small- causing banks The banks drafts, an into withdraw bank losses. in of banks medium-sized regional suffering savings accelerated spell depositor also confidence loss of shareholders

deposit in of these the protection was for confidence U.S. in markets provided regulators client capital investor restoration banks, again. the While timely the delayed inevitably

after Chinese years pandemic restrictions market, growth get Chinese borders the as of the back we believe and control, lifted will In opened. were X to trajectory COVID for economy

However, time are are economy future that to big indirectly up; still in items sales which sectors see tourism, consumption while growth and cautious take as consumers recover, we it such towards weak, for and picking real automobiles, as of attitude expectations. tickets the appliances home will restaurants reflects the of estate, income such

Markets challenges wealth of held asset will assets industry industry We Capital as management will encounter bank to believe management by bank dominance. that and great deposit the management wealth And China's China's might products is back portion longer. be dominated which shift financial consumers'

we products future, bright opportunities distinguished like the wealth the believe managers us. provides side, independent On diverse in rising rates the also growth investment for savings benefiting

and have a overseas increase rates demand As substantial inflation allocation. asset dollar U.S. in seen interest remain for high, Chinese we global overseas

a have more overseas products. attractive As offices Chinese high-net-worth Hong of offer they management as to wealth an Singapore U.S. clients overseas substantially diversified wealth manager, the and more Noah's independent Kong, can become range global in

operations. provide relatively after XXXX, of and reforms, Each international these formed independent organizational services. units, other Asset Management, domestic Gopher business value-add From XXXX BUs X to and Glory, established Fund X years Noah product has Noah internally namely which product and family had of Smile trust insurance,

actually capabilities overseas client Starting begun build Chinese investors. direct better and has interfaces to to Noah serve also global online service XXXX, sales

Wang Jingbo

[Foreign language]

Melo Xi

comparable down million, accounting overall for of recorded RMB period net total company contributed the the year-on-year increase XXXX, revenues year-on-year the contributed Domestic XXX to revenue business and up of year-on-year from quarter XX.X% million, year. quarter-on-quarter, XX% while XX.X% quarter-on-quarter; RMB and XX% down XX.X% last X.X% first business X% the XXX up XX.X%, and of RMB the segment an overseas During from quarter-on-quarter. million, XXX XX.X%

the the revenue the thanks hope better the X overseas we quarter-on-quarter. profit setup, RMB X of operating contribution years. and whole Noah's the overseas the in million, quarter XX.X% next group management, of can to gradual to XX% an operating margin cost reach improvement first And was of XXX With that for of more the was XX.X%, than increase

while of year-on-year XXX million, portion XX.X% RMB overseas million and contributed contributed down segment year-on-year management XXX wealth XX.X% million, the and RMB The The transaction value X.X% down contributed XX.X% domestic product XXX and distributions. up insurance and the RMB up year-on-year quarter-on-quarter, growth portion to X.X% quarter-on-quarter, XX.X% quarter-on-quarter. overseas thanks

X.X% segment year-on-year management down XX.X% and X.X% XXX up contributed quarter-on-quarter, portion domestic million, asset quarter-on-quarter. contributed RMB The XX.X% respectively. and down RMB The million, year-on-year and XXX

portion While and in the XX in first million, the overseas year-on-year quarter. RMB mainly the XXX up overseas -- the AUM contributed This exits quarter-on-quarter. was carrying private -- due overseas the equity from in of and X.X% XX.X% growth scale increase to

demand side, and allocation high-net-worth individuals On high. the the insurance preservation for protection remain product from

During the business the insurance XXX% more of clients revenue, year-over-year. growth in active number domestic than and generated first increased Xx quarter, brokerage year-on-year

For quarter, XXX.X% overseas services, quarter-on-quarter. our revenue the also clients quarter-on-quarter. overseas XXX.X% during and insurance brokerage insurance active the first increased of year-on-year business X.X% and increased overseas family number And year-on-year trust and XX.X%

increase environment yet of volatility where in the has world. around and an the from provided demand of as quarter, in of of lot end a family Chinese team XXX end overseas the the compared has still unmet X.X% to for trust market capital total asset allocation security family subside, uncertainty overseas a Chinese to services continues of there's to an clients environment XXXX. of the families Evidently, Our trust macro

Wang Jingbo

language] [Foreign

Melo Xi

Our management business. domestic wealth

focus options is and X talent Tier better as and have on environment strategy better hub to cities cities. strengthening more resources well core for upsizing central Our as children. innovation education

to cities efficiency the cities. X reducing cost further satellite in cities, of Tier investments Tier As domestic while individuals reduce is and Noah high-net-worth X migrate number to also increase increasing

number was the increase the quarter, relationship first of domestic previous X.X% a the X,XXX, of As managers quarter. from

empowerment and investment we and strategy of channel, client interactive the online increase CCI array By transaction systems informative well upgrading tools billion, strengthening allocation of shelf, domestic of more mutual a year-on-year. XX.X% product funds of portfolio reports, on providing as and online asset XX experience. reached RMB for as a an value interface, technology wider focus terms In

and In the terms of XXXX, Platform clients. institutional Smile Treasury X,XXX corporate institutional clients, nearly corporate launched attracted in successfully

the number AUA billion. During clients active Smile X Platform of overall and first RMB the by XXX.X% quarter, us the year-on-year, reached of increased with Treasury

management and On of wealth the we expanded and branch further offices the quality international our private bankers. side, number

goal private Kong bankers managers first and by end and the private Kong quarter, bankers As in reaching Hong of in wealth had of with management of XX the XXX Hong the end Singapore team Noah's the year. XX of Singapore the relationship

number investment in USD XX.X% of million, and Hong the first Kong basis XX.X% a the XX.X% achieved clients growth, XXX Clients' respectively. on up XX.X% of XXXX, Singapore up quarter year-on-year. year-on-year. and reached of As Noah the discretionary AUM year-on-year number XXX, cumulative clients of And with reached

And clients the international number reached year-on-year the clients to during overseas active XX.X% XX,XXX. grew Noah's of the overall year-on-year. in quarter, XX.X% quarter up X,XXX

to an year-on-year. of a an value Transaction online first The of increase of on XXX.X% transactions terms in overseas for The clients focus able reached we wealth fully year-on-year. in X,XXX their be services reached and XXXX, clients' AUA portfolio bankers increase million, provide XX.X% international helping more and private management, reached In overseas of XXX.X% a top wealth efficiently. mutual number year-on-year USD significant overall funds significant quarter, increase their to XXX XXX advice increase. online to on active the overseas will execute more USD mainly mutual quarter-on-quarter of -- of fund clients million,

show The the Smile business XX quarter International of transaction than value for and so progress first reached also Treasury successfully USD clients. significant more far an began attracted and corporate institutional overseas million, XXX increase to XX.Xx. has

among RMB asset Gopher's the disciplined pullback strategy AUM which execute was overall up side, billion, Gopher's management managed products, year. On risk limited XXX.X target during the year-on-year, actively management past and X.X%

we the volatility this quarter. active investment judgments sharp return, timely XX.X% and ratio team X.X% annualized of investment and During the quarter, achieved during X.X investment products, made of annualized

achieved products shop of return, balanced As volatility annualized annualized X.X. X.X% investment XX.X% ratio and

annualized quarter. during Lastly, stable annualized volatility products sharp X.X% of the return, the X.X% X.Xx and investment reached ratio

technology to international buyouts, managed opportunities XX.X% Overseas VC interest see the X.X excellent In AUM thesis total the of private cycle, well AUM. actively and investment funds, special of entry year-on-year billion as equity USD PE for for current product accounting products and investments. credit, increase XX.X% and achieved early-stage we rate Gopher's secondary in as and economic the opportunities

also first quarter. overseas X.X in achieved X.X% a the billion USD to AUM PE increase year-on-year Gopher's

our to to overseas Chinese to plan partners' network, our KYP of also alternative our and top our expand system global coverage improve upgrading well provide better clients. as product as investment managers solutions technology to We continue global

Wang Jingbo

[Foreign language]

Melo Xi

Sustainability clients, ESG Noah's a every in concepts. the clients' advocacy Report towards played XX%. role increase education non of of to of In terms year new continuous for card ESG recognition was to Noah diamond awareness ESG investor us a greater to In black the willingness to big the showcase and investing and and XX% track of developments ESG in ninth years, ESG, XXXX X from among saw the achievements also ESG and negligible publish past Noah of progress started the year.

addition have improvements level. in the and made corporate we continuous to environmental sustainability aspects, governance In

Committee, level, Operation including committees the leadership and Committee Technology by collective Committee. We Reform Strategy at Committee, have built major Committee, establishing Talent group X

We building individual SD AT is and managing and thus business to talent have for established framework the making leadership transformation in well organizational respectively, region, from and business and unit which capability. motivating completing responsible objectives also as the each as key

the be In although the decision-making slower, this greatly of seem has quality improved. and process, decision-making been but to management efficiencies awareness

Wealth in Finally, has officially of XX complex area hub Shanghai. total year. central XX,XXX of is headquarter our this meters. about The at the Noah on square Hongqiao May whole core transportation we located the brand-new located a opened axis have of Center area

transportation Triangle advantage clients geographical country can service and Hongqiao With conveniently. other as more world hub, the the Noah as the well whole even the from of

a headquarters, center, a with client interface. making a made client-centric our stand-alone Noah's have unique of private a bank building We for clients global experience new Noah truly

like ask Next, you. to our financials to I in Grant detail. Thank the CFO, Pan, present would

Grant Pan

Thank you, analysts. Chairlady, and good morning, and investors

As mentioned moderate China. the by Indicated recovery XXXX in in year-over-year of by growth a quarter X.X% Chairlady, economic the GDP. entails a first

in increase to the in by issuance mild a lean of the away Market X.X% sentiment rate fund demand to started turning savings, rebound mutual quarter-over-quarter evidenced from value investment, for a products. slightly

sentiment active became up, activities more profile and private equity transaction products prudent. risk the markets have remain in investors' values gone towards relatively still higher Although like products

from the to X.X% from been the X%, sticking the XXXX. perspective, raising of U.S. to meanwhile, throughout a international hawkish accumulatively rate largely a an which the reserves theme quarter, continuation from twice monetary interest the In federal policy have federal indicate

in SVB in market tightening crisis global volatilities credit effect U.S. caused financial of collapse conditions. and about on March of investors rates concerns hiking In banking which sudden had addition, on spillover the industry top and brought even sector to

we true clients' to the improvement generate expansion to preservation domestic in our these with cross opportunities international strategies, Staying dedicated and uncertainties market. and client-centric transform wealth. our capabilities constant to Coupled growth for our cycle in into ongoing

In complex financial engagement macro terms environment. hindered client concurrent and the when by our performance

quarterly Noah's quarter to value the year-over-year XX.X% Reflecting XX% revenue. business contributed up taking total group's billion, by million, this RMB financials, of overseas XX% increased XX.X increased for transaction of RMB our quarter-on-quarter by overseas products. to revenues XXX from XX% which XX.X% and year-over-year

XX.X%. million, Noah cost implying in XXX Combined strategy, achieved increase quarter-over-quarter with XX.X% of RMB efficiency income operating operating margin the to

a As with at non-GAAP million, XX.X%. net a RMB quarter-over-quarter up income margin result, net standing was XXX XX.X%

products down risk please XXX with But RMB of for quarter-over-quarter. XX.X% notably, results financial share were to XXX our RMB X.X% million, commission recorded up quarter. the a Now detailed lower net quarterly quick sentiments insurance me in fees profiles as regarding investor X% the We million but such products. indicating you year-over-year, revenue recovery up year-over-year let onetime first with

grow. distribution the increasing expansion abroad up As investors ample of insurance our to strategy have products share residing and progresses, we revenue took distribution global offshore products room expansion quarter, believe our will of of offshore the to an this

XX products. XXX to recurring XX.X% total up from stream, XX% which first market million, performance, type year-over-year steady million XXXX previous last flat was security went revenue on especially service Performance-based income stabilizing takes of quarter quarter. from the fees and remains The in weaker RMB RMB the quarter down was relatively due revenues but of

XXX% X.X% quarter-over-quarter Quarterly operating RMB XX.X% Interest from implying precise U.S. strategy year-over-year XX.X% operating quarter resulted and margin quarter-over-quarter, of income in due up quarter-over-quarter our dollar G&A XXX decrease and was XXX.X% this efficiency selling which million, as down year-over-year deposits. quarter-over-quarter, mainly up cost cost in of operating XX result in expenses. but million, total income a expenses, a XX% RMB increase was in has to

net XXX million, XX.X% in decreased income non-GAAP change of the net year-over-year quarter XX.X% structure, from the which last XX.X% XX.X% was year-over-year, especially quarter but Consequently, but from RMB due down performance to non-GAAP last margin revenue of fee. X.X% indicating up the increased

value billion transaction products XX year-over-year, continuous including our thanks of year-over-year clients, Transaction billion institutional quarter the mutual year-over-year to both fund secondary to to value XX.X last value individual down products RMB The the transaction X.X% XX% effort and for billion. up quarter-over-quarter XX% the X.X% RMB was from from our but onshore XX% decreased client increased offshore. enlarge X.X Notably, increased to and base RMB previous and quarter. private but XX.X% of quarter,

went X.X billion, teams of from York team also X% well real enlarged Thanks quarter-over-quarter. New Silicon global top-tier Investment Gopher estate coverage U.S. which to in of Valley transaction the team, RMB investment products, the mainly Besides, products. private of and [IP] proprietary was products capital investment selection venture up as equity and value as

dozens attracted clients in investment the the latest fund Since and traveling, domestic investing both international of Summit provide clients. and loosening up of than seminars invited investment back Hangzhou to restriction high-net-worth in managers heavily Client and industry. Noah's XXXX famous our more individuals, the during the been bring have to The on hold strategies. economy to views on we the COVID of first quarter X,XXX we their We're reputational

Investment global overseas like Noah's held client clients Summit XXX activities promising in in also the progress expansion underpin plan was Hong with for over Kong Additionally, attendance.

of channels up wealth up in overseas portion went the business. also quarter-over-quarter, Moreover, X.X% up AUM. and demonstrating X.X% value Overseas in transaction XX% XX% establishment clients X.X% of progress increased XX% AUM year-over-year our taking overseas XX% to billion, A overseas XX.X%, reached client year-over-year and and RMB about quarter-over-quarter the quarter-over-quarter. active total year-over-year XX.X of management

revenues. billion, by our up for making XX% million up taking to management total revenues of offerings. revenues this primarily from securities the up quarter, last million, sitting AUM RMB XXX.X XX.X% XXX segmented about taking public wealth revenues our of total RMB million asset XXX.X cash revenues. management results, from XXX increased Net As Total thanks Overseas at net XXX total due products, AUM from net million, net by RMB management was dollar to in AUM RMB to AUM. increased RMB the of increase quarter, U.S. XX.X% of

liquidity remain Moving debt-to-asset debt. we're other on terms plan. at a X.X cash, dividend in have as interest-bearing billion in no our and healthy as well as The we to very of payouts, was the balance with in RMB globalization ratio X.Xx. sheet, Currently, the XX.X% executing we current stand preparing position ratio

final to returns forward to of of approval in and share, mentioned will business. X.X providing USD equivalent [yuan] growth XX, we as look a RMB final previous of X.XX addition, to on the June per We stable our shareholders ADS the In XXXX. the subject with share HKD per sustainable to AGM or the quarter, dividend declare per X.X upcoming

years. of Wrapping seize on stable to to dual will in delivered up, our strategy. We performance expand and a a circulation uncertainties positive the underlying results coming our the domestic, outlook first able the quarter international believe with through tread that be opportunities Noah set

create appreciate values sincerely diversified and for and we ongoing strive Again, clients their portfolio our shareholders. support, our shareholders long-term trust and for to and

listening, the for open questions. Thank and you for floor we'll

Melo Xi

Lee Grant. you, have from Helen Now first, Instructions] Thank we [Operator UBS.

Helen Lee

Okay. language] [Foreign

This questions. may. my if Helen questions, Two translate UBS. from me is Let I

I RM first remember number a was or RM onshore sequential of increase on a previous of plan. your in no In is RM. guidance increase the slight first saw onshore the quarter, expansion increase XX. The

and of change is newly Kong rather local attributable increase What have clients for The RM, of is revenue So acquired many there in from firm? any contribution be business. question can how onshore plan? than onshore joiners second to Hong many And referrals? the XX RMs revenue left new proportion client were the the on how

Wang Jingbo

[Foreign language]

Grant Pan

with thanks, XX market the domestically. expansion. in cities, are do and Beijing, X program in So strategy basically domestic called future also Shenzhen, The believe the change XXX, XX the that or we cities XX other that's major have actually Helen. We very the compliance cities. first-tier our very, are important RMs Basically, a Shanghai, for

for So actually these that's cities, have goal we a average over X do each years. for [XX business, billion] the X within to year

expanding still So actively. these also and cities, for we're recruiting

they in are probably on or third, performing result, are choose the the to data of a obviously we turnover cities, branch that to base some fourth we'll RMs smaller tier be the it. or operating it, leave. the have offices, the networks don't happy of cities let not track exact As you to need to the standard go XXX provide But the very

heavily the of We do especially strategy market doesn't fit want hiring, the that XXX aside to talent surrounded the to strategic current is standpoint, the compensation But we the to cities. basically, a fact, invest set just budget supplement domestic to higher I continuously from budget in probably actually, the scheme. as matter the support into

So relatively so to we budget a cities tier supplement they actually able do these have attract to talents. the higher strategic are

younger see will basically client blood the of also big partially team. to X. number into the the and contributed we're you That's a attract to number RM trying in a So relatively

background actually talents able years the So have basically, supplement less in the RM years. RMs will be with will team future their so to into that a great better experience, of with team academic younger and large ones but grow than and that X to

Wang Jingbo

[Foreign language]

Grant Pan

your to that local basically, so characterize we business. don't second, referral typically Helen So as

viewed arising are are the locally that business developed. XXX% clients' basically, So the from all as overseas demand

RMs, focus will know one and clients overseas overseas they and kind do out allocation domestic aware, or allocation what actually them that not Kong on help provided express actually to RM what they them. RM their continually fact Hong advice the I the the is domestic on when need have figuring Singapore, assets, and they to the domestic to exactly up to what or of basically, placing is. assets, allocation do they're on, is able with RMs some to for that the team be in think will But realize they So not is exactly sure orders of

the on say served So would market. that's XXX% I locally being as overseas

already overseas, served assets these already bank are And they're private other institutions. or the clients' overseas and by being probably

that business purely be of piece allocation. basically, built So overseas will as

Helen Lee

[Foreign language]

Grant Pan

[Foreign language]

Melo Xi

Next, Huang Chiyao we Morgan have Stanley. from

Chiyao Huang

the revenue [Foreign of first especially trend So the and be more products certain year, the preference seeing we some and more individuals, their are language] the drivers other management the right What's on and this still question is second high-net-worth question asset certain, allocation are is now? this the And uncertainty the part what on latest and the profit is preference year. what outlook their think will more have products.

Wang Jingbo

[Foreign language]

Grant Pan

macro we at basically, are looking well, So still rather outlook. uncertain

majority stance strategy. say terms balance So clients minded in or defensive the it of strategy investment pretty will of actually type market minded better a or of take

one it's to entrepreneurs fact owners. or interesting or first-generation of think individuals the I age majority note high-net-worth that of the structure business

will, strategy. looking the first now half to if especially the between at -- the XXXX obviously, of they're baby of attack very the But their aggressive investment their life, half and you was probably born getting in that boomers second So in they're XXXX, in lives. the mode,

towards and strategy. allocation mindset So investment much asset defensive more they're taking strategy

looking past. they're If you in allocation erupting at diversify strategy the and a the heavily are probably pro China that investment it, asset about risks. majority wealth as probably very of and now globalization to And geographic think their

structure, to the investment a of clear the citizen of allocation, on insurance terms type probably to in preservation not the of seeing but family of lifestyle asset products some terms So the asset in also increasing actually we're strategy style. of trust support the even trend planning very allocation only the global

still, assets. strong situation, but the assessing currently would I believe -- we the Not the is investment action recovery conservative. I type in of quick mindset a very say, and they're I believe yet seeing that a recovery, guess still also

your to first Chiyao. question, that's So the answer

still terms profit of profit getting the And revenue But give Exchange, Kong to Stock we revenue and is and to investing think strategy, maintain globalization, profit cost obviously, actually question, cannot of I the from the past consistent your year. that a margin to we're expense rest even since trying heavily sure thing relatively listed one for on or year, we're if second the in for primarily Hong the guidance. we're

especially efficiency, cost more from seeing we're basically, operations. domestic So

cities also of marketing the which letting we're using example, low-performing hotel and heavily headquarter down more on larger the is especially scenario paying for and the of also some NWC, Shanghai closing Zhangzhou actually in RMs go the For smaller of the some instead millions cities concentrated provinces. the new rooms, as by

relatively maintain will capital steady expense profit a margin, we especially human So standpoint. from

we'll believe we strong continuing as still new the where in means that revenue recovery a very newer the on That's maintain. have two, we're from first And the see for, strive we you quarter, that growing clients. which larger in wallet actually commission, share onetime

So goal hopefully, a the recovery a China obviously, that recovery increase. during GDP has year for even

So quite and very been say, units the standpoint, have targets, well territory installing management, annual are We're same growth-minded. the wealth overseas X we we just would At business as ambitious I budget have from that the as time, growing obviously, business. the obviously for global new in we mentioned. the still

hopefully larger be the we'll So relatively on a same margin. time, growth top at line, maintain the profit seeing healthy

Melo Xi

investors we analysts. and no further the So Instructions] [Operator questions from have

all you have to contact And at don't for our the thank if to questions, earnings Investor release please any today. So Noah. Relations team listening you hesitate

Grant Pan

stop by do headquarter. our hesitate well. Please don’t as you. Thank new Please to

Melo Xi

Thank you.

Noah Holdings Limited (NOAH) 30 May 232023 Q1 Earnings call transcript