Noah Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 29, 2023

There are 6 speakers on the call.

Operator

Good day and welcome to NOLA Holdings Third Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd now like to turn the conference over to Melo Zee, Investor Relations Director.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good morning, and welcome to Noah's 2023 Third Quarter Earnings Call. Joining me on the Call today are Ms. Wang Jingbo, our Co Founder, Chairlady and CEO and Mr. Graham Pan, our CFO. Ms.

Speaker 1

Wang will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. They will both be available to take your questions in the Q and A session that follows. I'd like to gently remind you that we just held our Annual Investor Day on November 14 in Hong Kong, where Noah's executive management team Focus on our resilient standardized product offering, overseas expansion plans, solution driven advisory services, global product leadership, as well as A full replay of the event and presentation materials can be found on our Investor Relations website, which I encourage all of you to watch. Before we begin, please note that the discussion today will contain forward looking statements that are subject to risks and uncertainties That may cause actual results to differ materially from those in our forward looking statements.

Speaker 1

Potential risks and uncertainties include, but are not limited to, Those outlined in our public filings with the ICC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward looking statements, except as required under applicable law. In addition, today's call will include discussions of certain non GAAP financial measures. A reconciliation of the non GAAP measures to the most directly comparable GAAP measures can be found in our earnings release. Lastly, this call should not be interpreted as a solicitation to sell or purchase an interest in any Noah or Noah affiliated products.

Speaker 1

Please also be aware that the link to a live webcast with presentation materials is available on our Investor Relations website. With that, I would like to pass the call to Ms. Wang. Please go ahead. Thank you all for joining us.

Speaker 1

I would like to begin today's call by sharing some recent insights gleaned from the face to face interactions I had with Noah clients and my thoughts on the state of the wealth management industry. After that, I'll cover the recent progress in our overseas business, provide a comprehensive overview of our Q3 performance and go over some updates from our business segments. Over the past 2 months, We have held numerous annual meetings with over 1200 domestic clients at our new headquarters in Shanghai, where we offer each of them an asset allocation assessment paired with strategic advice tailored to their unique circumstances. Subsequently, in Singapore and Hong Kong, we held meetings with over 150 and over 800 international Black Clients respectively, allowing us to gain valuable insights into their needs while promoting Noah International's product and service offerings. Our closed discussions revealed an encouraging evolution in the wealth management needs of Noah's high network clients.

Speaker 1

In particular, there has been a noticeable shift in focus from specific products and returns to a broader array of considerations encompassing asset enterprise and family succession plans and global strategic asset allocation. This transition is particularly pronounced amongst Noah's international clients, reflecting their journey from product centric to asset allocation driven wealth management needs. Over the past 2 to 3 years, Noah has overhauled its offering, transitioning from a product driven to a solution driven approach. In our International Wealth Management segment, we rolled out the CCI model comprising of the Chief Investment Office, Client Strategy Office Our Investment and Product Solution Office through the CCI model would directly align our macro house views with the client demand to build product and solutions and improve relationship manager service standards and client satisfaction. Noah International Wealth Management's product offering and services, Matrix, Provide high network clients with our 4 global account allocation schemes embedded in our technology infrastructure, significantly enhancing the ability of Noah's relationship managers to provide as an application advice and continuity of service.

Speaker 1

We believe to achieve success, wealth And asset management firms must have a solid track record, offer a diverse product portfolio, maintain efficient sales channels and build high quality AUM base. At Noah, we recognize the pivotal role of talent and focus on cultivating a strong team through a long term talent screening and development system. We also believe it's crucial to have a mission, vision and values that resonate with our clients. Our organizational and technological architecture underscores our commitment to providing high quality client centric services with client satisfaction serving as the cornerstone of our long term relationships. Noah remains dedicated to serving high network Chinese clients globally.

Speaker 1

Leveraging Hong Kong as a hub, we have begun building teams of relationship managers in key locations such as Singapore, Europe and the United States to cater to Chinese clients' comprehensive asset allocation needs. As the international wealth management team continues to mature, We're confident that we'll sustain our growth and expand our reach to serve a growing number of clients globally. Now turning to our financial performance for the first in 3 quarters of 2023. We generated total revenues of RMB2.5 billion, a year on year increase of 11.9%. The domestic business contributed RMB1.5 billion, a year on year decrease of 11.6%, accounting for 59.9% of the total net revenues.

Speaker 1

The growing client demand for global asset allocation coupled with Noah's ongoing investments in channels, products and comprehensive services Propel's overseas revenues to RMB1 1,000,000,000, a year on year increase of 85.1 percent, accounting for 40.1 percent of revenue, up from 24.3% in the previous year. Breaking it down by segment, Wealth Management contributed RMB1.9 billion, a significant year on year increase of 20.9%. The Domestic Wealth Management Business RMB1.1 billion, a slight year on year decrease of 0.2%. The Overseas Wealth Management Business contributed RMB RMB784 1,000,000, a year on year increase of 72.3% as it benefits from the growth in overseas The Asset Management segment contributed RMB582 1,000,000, A year on year decrease of 5.4 percent, the domestic asset management business contributed RMB358 1,000,000, A year on year decline of 31.8 percent, while the overseas business contributed RMB223 1,000,000, a year on year increase of 150.3%, primarily driven by the growth of overseas AUA and AUM. On the comprehensive services front, we continue to see robust demand for wealth protection and inherited solutions from high network clients.

Speaker 1

Our domestic insurance brokerage business Achieved a remarkable year on year growth of 63.4% in the 1st 3 quarters of 2023. Meanwhile, revenues from overseas insurance, trust and other comprehensive services surged 381.8 percent year on year. The number of active overseas insurance clients increased more than fourfold in year on year Q3. Over the past quarters, We have increased our investments in digitalizing our insurance and comprehensive services program. Our technology team has begun integrating our systems with insurance companies worldwide making us the 1st company in the Hong Kong market to offer fully digital insurance applications and premium payments through a Noah's nominee account.

Speaker 1

This has made insurance application a significantly more efficient experience for our clients, while enhancing our ability to provide high quality fulfillment services. For the 1st 3 quarters of 2023, Operating profit is due at RMB877 1,000,000 with an operating profit margin of 35.2%. Our domestic wealth management strategy continues to focus on 1st year and other highly populated cities in China. We have also implemented optimization structure adjustments to ensure business compliance. As of the end of the third quarter, the number of domestic relationship managers increased by 6.7% year on year and 0.9% quarter on quarter to 1331.

Speaker 1

Our domestic wealth management funds, we have continuously invested in technology infrastructure, rolling out functions such as CCI portfolio reports in one click The asset allocation review through our mobile app. This enhances the client experience while generating new business leads within the fulfillment service process. In the 1st three quarters, the transaction value of mutual funds exceeded RMB36.9 billion, A year on year increase of 19.3 percent, the transaction value of private secondary products exceeded RMB14.2 billion, a substantial Year on year increase of 46.2 percent. In terms of corporate and institutional clients, the Smile Treasury Platform that launched in 2022 has successfully onboarded nearly 6,000 clients. In the 1st 3 months of In the 1st 9 months of 2023, active clients increased by 73.7 year on year with an average client AUA exceeding RMB600000.

Speaker 1

On the international wealth management side, we continue to recruit private bankers in Hong Kong and Singapore. As of the end of the third quarter, We had 77 relationship managers in Hong Kong and Singapore, up 37.5% quarter on quarter as we make steady progress toward Our annual recruitment goal of 120 overseas relationship managers. Additionally, in the Q3 of 2023, We opened a client service center in Los Angeles, relaunched our U. S. Insurance products and continued setting up Our Dubai office to better serve the wealth management needs of Chinese clients around the world.

Speaker 1

As of the Q3 of 2023, Noah International had more than 14,200 international clients with the number of clients in Hong Kong and Singapore growing by 12.8% and 315.2% year on year respectively. Cash management product AUM reached 570,000,000 reflecting a quarter on quarter increase of 14.4% with the number of active clients in Q3 increasing by 30.3% quarter on quarter and the number of cumulative clients reaching 2,598, up 3.5% quarter on quarter. Clients AUA with Noah on a discretionary investment basis reached US300 $1,000,000 up 15.1 percent quarter on quarter with the active clients during the quarter increasing 40.5 percent quarter on quarter and cumulative number of clients hitting 653, up 38.6 percent quarter on quarter. In terms of international online wealth management, we continue to expand the product offerings On our wealth management app, expanding client service categories to provide different solutions to individual clients, institutions and in particular, agency clients, which we have made significant progress during the quarter. In Q3, the number of overall active Overseas clients increased by 78.6 percent year on year and 14.6 percent quarter on quarter to 2,284.

Speaker 1

Overseas transaction value reached US957 million dollars reflecting a year on year increase of 106.9 percent Quarter on quarter increase of 22.9 percent, the number of active clients in the U. S. Dollar mutual funds Reached $1758, reflecting a year on year increase of 105.6 percent with transaction value reaching Attracting more than 210 overseas corporate and institutional clients, the transaction value of overseas mutual funds reached over $120,000,000 year to date. In addition, the International Online Wealth Management business began trial operations for its 2 agent business, which drives the development of EAMs and multifamily offices, Leveraging SaaS platform and Noah's comprehensive product offering, our objective is to develop diverse sales channels and targeting the goal of serving 300 overseas EAMs and multifamily offices. In terms of asset management, Gopher's total AUM was RMB154.9 billion, representing a year on year decrease of 0.9%, driven by the continued exit of RMB Private Equity Funds and decrease in NAV of some public market security products.

Speaker 1

As of the end of the third quarter, RMB AUM decreased by 5% year on year, reaching RMB119.4 billion. The Q3 of 2023 was categorized significant volatility in public markets with the Shanghai Composite Index and Shenzhen Component Index falling by 4.1% and 9 point 4%, respectively. Gopher's actively managed target strategy product team remains committed to balancing drawdown volatility and maximizing long term yields. As of the end of the third quarter, annualized returns for active investment products was negative 1.6% with the volatility of 6% and the Sharpe ratio of negative 0.5%. The balanced investment products generated an annualized return of 3.1% with volatility of 5.7% and a Sharpe ratio of 0.3%.

Speaker 1

Stable Investment Products Internationally, we are fully committed to enhancing our global investment product matrix. The overseas AUM of actively managed products Reached US4.9 billion dollars reflecting a year on year increase of 13.4 percent and its Proportion of group's total AUM also increased to 22.9%. In the primary market, Beyond traditional PEVC products, we have gradually launched infrastructure, GP stake, private credit, Secondary funds and resulting in a more comprehensive product matrix. Burying the domestic strategy, our ESG strategy deployed The Silicon Valley BC ecosystem focused on fundraising from the top GPs first, followed by investing as an LP through a funnel fund with a goal to ultimately establishing a long cooperative relationships with GPs to secure core investment opportunities. We expect to deploy our DSC strategy across a wider spectrum of product segments in the future.

Speaker 1

As of the end of the Q3, overseas PE AUM reached US3.8 billion dollars reflecting a year on year increase of 5.7%. In public markets, we have intensified our screening and coverage of top hedge fund managers worldwide. 10 of the top 50 hedge fund managers globally have been on boarded with 9 more in the due diligence process. Our offering encompasses a diverse range of strategies including long, neutral, hedging, trend following and multi strategy. At the same time, our investment team is developing new actively managed Products such as fund of hedge funds and discretionary investment products.

Speaker 1

In terms of our ESG efforts, Noah's management places premium on promoting effective corporate governance and organizational decision making mechanisms. We employ a committee based operation and collective leadership decision making progress across our business units to ensure that Noah remains a dynamic organization and an industry leader. We maintain our strong focus on data security as well and prioritize in the confidentiality and We have established separate domestic and foreign data centers governed by stringent client data usage audit mechanism to create a robust firewall between domestic and foreign data and ensure that we safeguard client privacy at all times. In conclusion, as an independent wealth management institution, Noah's core competitive advantage stems from its profound client insights and strong track record. We are firmly committed to investing in the digital capabilities and infrastructure needed for our relationship managers to grow the business and provide the best client experience.

Speaker 1

We pride ourselves in providing high quality asset allocation solutions rooted in prudent research based house views. While acknowledging the significant role of technology, we recognize that the human touch, trust And personalized relationship remains indefensible, particularly in meeting the complex needs of Noah's high net worth clients. Our core competencies are centered on creating real and long term client value, encapsulated in the ethos of client centric With the survival as to the bottom line, we firmly believe that only by helping our clients thrive can we succeed as a business and thereby creating enduring value for Finally, a note on our updated shareholder return policy. NOLA's Board of Directors recently approved a plan to allocate up to 50% of company's annual non GAAP net profit towards dividends and share repurchases. This strategic decision underscores management's confidence in the company's stable operations and long term growth potential.

Speaker 1

I'll now hand over to Mr. Grant Pan for a detailed overview of our Q3 financial results. Thank you, everyone.

Speaker 2

Thank you, Nelo. And yes, thanks, Nelo. And thank you, Chairlady, for walking us through the quarter three operations. And good morning, investors and good evening. For today's presentation, I'd like to start by sharing the latest insights Our clients profile and how Noah's strategy has been adapting to meet their needs in order to drive the growth of business.

Speaker 2

According to a recent survey, more than half the clients are engaged in the past in export oriented manufacturing, Trade or Internet Industries with very deep foreign currency assets already, including cash, equity and stock options. Age wise, most of the Black Card and Diamond Chart Lines or in their mid-50s or even 60s. They predominantly reside in China's major metropolitan centers, echoing our recent strategy of consolidating operations in key cities. In terms of their wealth management objectives, we're seeing 2 key shifts in investment appetite taking place among our expiries. China's 1st generation entrepreneurs continue to be the primary decision makers within their families and are seeking more balanced and security driven allocation strategies for their wealth.

Speaker 2

This is marked by distinct shifts from the rather aggressively seeking high returns on investment in the past to a focus on wealth protection. Secondly, many of our clients and now entering a new phase of globalization in business and also capital. Not only is there a personal demand for global asset allocation service increasing, but the enterprise side need to enter global markets as entrepreneurs is also growing. This will lead to an accelerated wealth accumulation effect for our high net worth clients in the coming years. According to the survey, 70% of the clients demand global asset allocation.

Speaker 2

And as a result, the ability to provide global solutions as a key requirement for wealth management firms. With years of in-depth experience in building a business In the high net worth wealth management industry, we now possess a deep understanding of our clients and is capable of providing Our results for the 1st 3 quarters of 2023, which featured solid revenue growth driven by insurance product sales and robust expansion in our overseas business We are well positioned to further expand with close to RMB5 1,000,000,000 in cash on our balance sheet, A healthy debt to asset ratio and 0 interest bearing debt on the balance sheet. Crucially, we also have a very clean AUA, We are in a legacy domestic private credit or residential real estate exposures. In addition, we have a deep bench These factors give us confidence that no one is ideally positioned to meet the ever evolving needs Mandarin speaking high net worth individuals in the next phase of China's globalization. With that, let's get into the details of our quarter 3 financial performance.

Speaker 2

In the 3rd quarter, our top line continued to See robust year over year growth with net revenues reaching RMB750 1,000,000 close to 10% increase compared to the same period last year. Additionally, our 3rd quarters are relatively quiet due to seasonality as our sales and marketing teams prepare for the red opening season at the beginning of Q4. Net revenues for the 1st three quarters 2023 increased by 12.5 percent year over year to RMB2.5 billion, mainly driven by the 90% year over year growth of one time commission fees, which Amounted to RMB780 1,000,000. Insurance products contributed 94% of total one time commission fees in quarter 3 and have emerged as an important component of our revenue structure. This can be attributed to the more defensive Position being adopted by our clients with the emphasis of safeguarding assets and wealth in light of ongoing market volatility And geopolitical factors.

Speaker 2

We believe the trend of clients increasing allocation towards protection driven Products will continue for the near future. That being said, we'll continue to strengthen our overseas alternative product offerings, including global primary market and hedge fund solutions to provide clients with more balanced solutions that can deliver long term return, while minimizing volatilities and risks. Overseas net revenues accounted for 39% of total net revenues during the Q3, A figure we anticipate will continue to grow going forward. Notably, we officially opened our Los Angeles office In the Q3, we will provide client service interface for local clients in the United States, expanding our U. S.

Speaker 2

Insurance business and promote our investment business. Additionally, we have an exciting lineup of events planned for our clients, including a flagship annual conference exclusively our esteemed Black Card clients. In addition, we recently began establishing A dedicated product selection team based in New York City, specifically focusing on U. S. Hedge fund managers.

Speaker 2

We expect overseas revenue contribution to increase further as we continue to expand our global footprint. Recurring service fees, which are a key stabilizer in our revenue mix, were RMB1.4 billion year to date, A slightly decrease of 3.2 percent year over year due to a decrease in our AUM as we continue to exit RMB Investments. Performance based income was RMB125 1,000,000 in the 1st 9 months of 2023, down 45% year over year. This decline can be attributed to the relatively low valuation of assets resulting from a high yield environment. That being said, our Silicon Valley team We're still able to achieve exits in this tough market, contributing to the performance based income for this year.

Speaker 2

Other service fee income in the 1st 9 months of the year was RMB205 1,000,000, up 37.2% year over year, primarily due to more value added services provided to our clients. Operating profit for the 3rd quarter was RMB250 1,000,000 up 7.4% year over year and down 28% quarter over quarter. Operating profit margin for the 3rd quarter remained largely stable year over year at 33.2%. Our compensation and operating expenses decreased by 15% quarter over quarter, but increased by 10% year over year, mainly due to the high phased effect created by COVID-nineteen lockdown in 2022, which curtailed both marketing activity and business travel as well as the increase in international travel this year in support of our global expansion. In addition, we incurred a number of one time expenses related to the relocation Over the long term, however, we'd expect to reduce annual cost savings by RMB50 1,000,000.

Speaker 2

Government subsidies for the Quarter were RMB105.3 million, a sharp increase of 141% year over year, but flat on a year to date basis due to the delay in distribution of government subsidies across various regions this year. Non GAAP profit for quarter 3 was RMB232 1,000,000, up 21.8% year over year And RMB785 1,000,000 year to date, down 8.7% year over year due to a soft Q1 earlier this year. Transaction values reached RMB22.3 billion in the 3rd quarter, representing a strong increase 24% year over year and 21% quarter over quarter. By region, the total domestic transaction value in the 1st 3 quarters Of 2023 was RMB15.3 billion, up 4.5% year over year and 20% quarter over quarter. The total overseas transaction value was US957 million dollars up 106.9 percent year over year And 22.9 percent quarter over quarter.

Speaker 2

The increase in transaction value was primarily driven by mutual funds and overseas private secondary products, thanks to the introduction of U. S. Dollar cash management and structured products. In the Q3, mutual funds contributed RMB14.9 billion in transaction value, up 28.1% year over year. Our total transaction value for overseas private secondary products was US530 million dollars In the Q3, up 17 times year over year and 65% quarter over quarter, driven mainly by strong demand for Rational Investment Products and Smart Air Products.

Speaker 2

Going forward, we expect to increase the share of global investment products and foster the growth Of overseas AUM, as of September 30, our overseas AUM grew 13.4% year over year to US4 $900,000,000 Turning to the results of each segment in the 1st 9 months. Net revenues from Wealth Management were RMB1.9 billion and net revenues from Asset Management were RMB0.6 Accounting for 75% and 23% of total revenues, respectively. As of the end of quarter, we had 7,461 Diamond Card clients and 2,250 Black The total number of Diamond and Black Card clients were 9,711, up 0.3% quarter over The number of active clients of quarter 3 was 9,489, Down 58% year over year, primarily due to individual clients adopted a rather conservative approach towards RMB public In light of 4.1% and 9.2% pull up in Shanghai Securities Compostive Index and Shenzhen Securities from Positive Index respectively during the Q3. That being said, transaction value during the quarter was not negatively impacted as our corporate and institutional clients continue to transact with us. On the other hand, overseas active clients increased Close to 80% year over year to 2,284 as we continue to build up our overseas distribution channels with 77 overseas RMs by end of this quarter.

Speaker 2

Turning to the balance sheet. Our debt to asset ratio and common ratio improved sequentially. We have maintained a very healthy liquidity position with our current ratio at 3.5 times and our debt to asset ratio at 18.4 percent with 0 interest bearing debt. We have RMB5.0 billion in cash and cash equivalents providing ample resources To support our global expansion plans, we also saw a decrease in accounts receivable in quarter 3, primarily to exclude accelerated collection of Domestic Insurance Commission. The Board has always placed shareholder return and capital management efficiency as a priority.

Speaker 2

Based on strong and clean balance sheet and strong liquidity position and after considering the necessary investments associated With our global expansion plan, the Board has authorized new shareholder return policy where we will allocate up to 50% Total annual non GAAP net income attributable to shareholders through corporate actions budgets to be used for purposes including dividends and share repurchases. Under this new policy, We will allocate no less than 35% of its annual non GAAP net income attributable to shareholders towards dividends Subject to various factors, the final dividend payout ratio for fiscal year 2023 and still in timing of any share repurchase program will be determined at the company's 4th quarter Board meeting in March 2024 and announced thereafter. To sum up, we remain optimistic for the high net worth individual wealth management industry. The 3rd quarter showcased Our ability and resilience to drive robust revenue growth and generate strong cash flow given a relatively quiet market environment. Looking ahead, with a robust balance sheet and nearly $5,000,000,000 in cash and cash equivalents and for liquidity And a standardized product offering and AUA, we're well positioned to fuel future growth and execute on our strategy as well as increased returns for shareholders.

Speaker 2

Our other balance sheet, a clean AUA with no legacy private credit Our residential real estate exposure has built us a solid reputation as trusted advisor to our clients, which we're leveraging to drive our global expansion as demand for global asset allocation grows. We will continue to scale our international operations following the successful launch of the Alaya office in the 3rd quarter We're still preparing to commence operations in Dubai and continue to recruit relationship managers in Hong Kong and Singapore and other talents Activity. As we continue to execute our growth strategy, we will embrace evolving landscape and maintain our corporate Flexibility. In the long term, we're very confident that our diverse offerings and commitment to globalization We enable us to meet the needs of global clients, investors and continue creating value for our shareholders.

Operator

Thank you. We'll now begin the question and answer session. I'll momentarily pause to assemble the roster. First question will be from Helen Lu of UBS. Please go ahead.

Speaker 3

Thanks, management. This is Helen from UBS. I have two questions, if I may. First, The gross increase in Gopher AUM was RMB4.7 billion in the 3rd quarter, Almost double that of the second quarter. But why did one time commissions from gopher managed funds declined sharply to RMB 32,000, that's my first question.

Speaker 3

And second question, in terms of the transaction value mix, I noticed that a proportion of Gopher products Increased to 21% in the Q3. I'm just wondering whether you have any longer term target for the transaction value mix From Gopher Products and what are Gopher's product pipelines for the Q4 and into next year? Thank you.

Speaker 2

So, Helen, I'll explain your first question. So basically, a good chunk of the AUM increase The Gopher product actually came from U. S. Dollar cash management products and some of the discretionary portfolio investments for deposits. So basically, majority of the revenue structure will come from management fees going forward.

Speaker 2

The same quarter Revenue actually doesn't reflect as we actually don't charge very high so called subscription fee for this type of product.

Speaker 1

Thank you, Helen. I will translate So in terms of Gopher's international front, we are committed Increasing our capabilities in actively managed product space, including primary, secondary public Securities as well as cash management. So that is kind of a more of a long term process. Now in terms of The 3rd party distributed products versus our actively managed products, we don't have quite a clear picture in terms of the split yet. But then going forward, it will be depending on what the client really needs.

Speaker 1

And Our investment in increasing our research and investment capabilities in Gopher's overseas market.

Speaker 4

Alan?

Speaker 1

Yes. Thank you, Alan. Operator, I believe we have Peter lining up

Speaker 3

Next

Speaker 5

Let me do the translation. I have two questions. First one is on the wealth management Transaction volume, we noticed that the transaction volume increased sequentially in the 3rd quarter. We wish to understand what's the driver behind it is mainly driven by the transaction of, say, Yes, from international clients overseas clients. And management also mentioned that Noah engaged with a client in 3rd quarter.

Speaker 5

What's the latest kind of investment sentiment you'll get back? This is the first question. Our second question, we noticed that On the call side for the Q3, there's a large contribution from the government subsidiary, which helped you Due to the OPEC in Q3, we wish to understand what does that represent or what's the driver behind it And what's the trend going forward? Thank you.

Speaker 2

So Peter, the first question, the contribution actually mainly came From the U. S. Dollar side, which we managed to actually distribute around 1,000,000,000 U. S. Dollars in the transaction value, which have seen a significant increase about 132% year over year.

Speaker 2

At the same time, we'll maintain a rather healthy distribution on RMB, which It's attributable to the corporate client transaction institution client from Smile Treasury that account for about 100 Actually, RMB 12,900,000,000 of RMB mutual funds transactions. So both actually added And contributed to a rather healthy transaction values this year. And to your second question, In terms of I'll leave the client sentiment observation to Chairlady and also I will share a little bit of my insights as well. The second question in terms of the government subsidy, the total year to date actually remained pretty stable, the first 3 quarters, 1st 3 quarters comparing to last year. But the timing of the grant of the actual cash, the timing usually is, I will say, pretty spontaneous based on the government's fiscal situation.

Speaker 2

So this year, we happen to receive of the subsidies in the 3rd quarter, but the total amount actually remained rather stable from the last period of the year.

Speaker 1

Yes. I'll try to translate for both Grant and Chairlady. So, we have held various conferences and annual gala events in the past couple of months. In Shanghai, Singapore and Hong Kong, we have interacted with over 1,000 clients lately. So, what we have witnessed was that, 1st, overall that the clients have remained rather rational and they are seeking kind of a more balanced solution and diversity in their global asset management or global asset allocation needs.

Speaker 1

And also, we have witnessed a very obvious shift from focusing on products and And the rates and returns from the past comparing to now that the clients are more focusing on the comprehensive Solution on their overall wealth management needs, including their family and enterprise inheritance and succession plans. And we have seen that basically the maturity and sophistication of clients have increased. So which is a good news for independent wealth managers like Noah, we have spent quite a lot of resources in investor education and building our No research capabilities. So now that we are it's easier for us to reach our consensus with our clients. And Chairlady has also commented that in the past year or Basically, the general market or high network individuals in China in general, not just only Noah's client have seen many risk related events in the past and their Demands and needs have become more clear and more focusing on asset protection and security and more focusing on global macro views, including currency risk and such.

Speaker 1

So we're spending more and to do investor education on those funds. Hope that answers your question, Peter.

Speaker 5

Let me do the translation. So I have a follow-up Question on government subsidiary. Because Mr. Pan just mentioned that the year to date amount Has been stable from previous level. Can I say that going forward, the annual amount likely to be Stable while there can be a seasonality in quarter by quarter?

Speaker 5

Thank you.

Speaker 2

Peter, I think for 2023, it's probably the right way to put it. Going forward, I think it's very hard to say in terms of the government subsidies, which is a Form of refund of taxes or actually some of that is associated with the job So depending on the structure going forward on the RMB revenue That we actually make domestically, I'm not sure whether or not safe to say that it will remain consistent. It's pretty hard to predict. So if we do have an increased revenue going forward on the domestic side, we'll probably see a higher Subsidy, but if not, we'll see a little bit volatility in that. But I guess from what we have seen, I believe At least this year, the government is still honoring other subsidies to us.

Speaker 5

Thank

Speaker 3

you.

Operator

Next question will be from Chiao Chuang of Morgan Stanley. Please go ahead.

Speaker 4

Let me translate briefly. The first question is follow-up on the Blackhawk SCADA that took place in several Citi is recently just wondering what's the progress in terms of the transaction value generated and would it We provide quite strong support to the 4Q revenue. And the second question is regarding the insurance commission rate. We saw some adjustment, Actually quite notable, Desmond, on the Advanced Insurance commission rate. So could management expect the commission rates in NOLIA would also base on

Speaker 2

Thank you. I'll take the first question. We're actually seeing a very good turnout Attendance for the past three stops and we have 2 more to go for the annual gala, but probably will take place in next year, early next year. From what we have seen for our first three stops with the high attendance, I believe the total creation of revenue or placement of financial products We're pretty optimistic about what's going to come. But in terms of transaction value, as much as we understand, It's a pretty key metric in terms of to measure how much of clients' wallet share you're taking.

Speaker 2

We are not aggressively pushing for any specific type of products, We're mainly focusing on, as we mentioned earlier, the total solution for our clients. So basically, if the client prefers to allocate more towards insurance products. You probably wouldn't see as high as transaction values as in traditional investment products, But we're okay with that. I think we're pretty comfortable with the strategy of as long as it caters our clients will need as we believe that they are much more sophisticated than before. But with that said, we do have very ample supplies Of investment products, especially on the overseas side, we believe our clients are still very globally minded comparing to the past.

Speaker 2

They are more, I think, more sophisticated and deeper understanding I believe there is a second question. Can you remind me what the second question is? No, that's the only one.

Speaker 4

Yes, without the mission rate change. So is there any

Speaker 1

Yes. So on the insurance commission side, in terms of insurance brokerage Commission declines. Right now, the regulation is mainly focused on bank insurance channel. So the independent insurance brokers are not affected yet, but if the regulation should in the future to include the independent brokerage, then we would be have no choice but to follow. But in terms of a Global scale, we're not seeing any regulatory changes in the overseas insurance brokerage business or market.

Speaker 1

So that part should not be affected. And in fact that after COVID, the overseas insurance brokerage business has being generating more revenue share comparing to our domestic business at the moment.

Operator

Thank you, Chiao. Thank you. That concludes our question and answer session. That also concludes our conference for today. Thank you for attending today's presentation.

Operator

You may now disconnect.

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Noah Q3 2023
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