Noah Holdings - Q3 2022

Transcript

Sonia Han (Managing Director of Investor Relations)

Hello, dear investors and analysts, and welcome to the Noah Holdings third quarter 2022 earnings conference call. Please note, your line has been automatically muted, and this event is being recorded. The company management team will first give a quarterly update presentation. After today's presentation, there will be an opportunity to ask questions.

Please use the Raise Hand function in Zoom during the Q&A session. When selected, you can then turn on the microphone to ask a question and please mute yourself after the question. Thank you. I would now like to turn the conference over to Miss Jingbo Wang, Chairperson and CEO of Noah Holdings. Please go ahead.

Jingbo Wang (Co‑founder, Chairwoman of the Board of Directors, and CEO)

Today's telephone conference agenda, I would first like to share my macro view, introduce Noah's overall performance in the third quarter of 2022, the development of several business sectors, and our overall strategy. Next, let's invite Pan Qing to introduce quarterly financial information, then conclude with an interactive Q&A. First of all, I would like to report to you that we have received the acknowledgement from the Hong Kong Stock Exchange regarding our voluntary application for conversion to dual primary listing in Hong Kong.

We thank the recognition from the Stock Exchange. Before the new year of 2023, Noah would become a dual primary listed company, both in the United States and Hong Kong. Although the compliance requirements of the two jurisdictions are stricter, Noah has also completely removed the ADR delisting risk. The third quarter of 2022 is a difficult quarter we have experienced. With the Federal Reserve raising interest rates significantly and the global secondary market continuing to fluctuate.

The prevention and control policy of COVID in China has continued to cause lockdowns in different cities across the country, bringing huge challenges to business operations. Our clients' investment sentiment has continued to be low. With the increasing fierce competition between China and the United States, as well as the Russia-Ukraine war, investors' willingness to invest fell to the freezing point in the third quarter.

The most urgent demand of clients is to protect the security and liquidity of the investable assets of their own and families. The increase of global uncertainty superimposed many external risks, making us feel that the period of strategic opportunities for peaceful development has turned into a wartime state. In time of crisis, how to increase the frequency of contact with clients, increase the client wallet share under management, and protect client assets are the key points of our thinking and action.

At such a moment, Noah's management needs to be aware of the market situation and make decisions decisively. The execution team needs to implement efficiently, respond quickly, and reconfigure resources quickly to ensure Noah's future survival and development and keep it in a healthy state.

We believe the current macro situation presents not only challenges, but also opportunities. The global asset allocation of China's high-net-worth clients will become a major trend in the future. The end of industrial globalization is exactly the beginning of China's tech-to globalization. The wealth management needs of overseas Chinese-speaking client group are ignored, or at least have not been fully met, and need to be served by financial institutions familiar with their needs. The change of client demand is the core driving force for Noah's international development, and also the key development direction of Noah, now and for the future.

呃 2022 年 第 三 季 度 洛 亚 实 现 了 销 售 净 收 入 六 点 八 亿 元 人 民 币 归 属 股 东 的 非 通 用 会 计 准 则 净 利 润 为 一 点 九 亿 元 人 民 币 同 环 比 均 有 所 下 降 截 止 九 月 三 十 日 呃 2022 年 全 年 累 计 完 成 利 润 八 点 六 亿 完 成 全 年 盈 利 指 引 的 百 分 之 五 十 九 点 三 落 后 于 时 间 进 度 在 核 心 业 务 数 据 方 面 三 季 度 新 增 募 集 量 为 一 百 七 十 九 点 七 亿 元 人 民 币 同 比 下 降 百 分 之 二 十 五 点 三 环 比 下 降 百 分 之 七 在 如 此 艰 难 的 环 境 下 取 得 这 样 的 新 增 规 模 我 们 还 是 深 感 客 户 的 信 任 来 之 不 易 感 谢 客 户 还 继 续 愿 意 把 他 们 的 钱 包 份 额 放 在 洛 亚 在 这 个 季 度 公 募 基 金 募 集 量 同 比 增 长 百 分 之 三 十 点 三 环 比 下 降 四 点 四 私 募 证 券 的 基 金 募 集 有 所 略 有 回 暖 为 三 十 三 点 三 亿 环 比 增 长 百 分 之 三 十 八 点 九 私 募 股 权 募 集 量 为 二 十 四 点 九 亿 同 环 比 均 有 所 下 降 三 季 度 洛 亚 总 活 跃 客 户 数 达 到 了 两 万 两 千 六 百 四 十 一 人 同 比 增 长 百 分 之 六 点 五 环 比 大 增 百 分 之 七 十 六 其 中 海 外 活 跃 客 户 数 接 近 一 千 四 百 人 环 比 增 长 百 分 之 八 十 四 高 净 值 和 超 高 净 值 客 户 是 洛 亚 的 核 心 客 户 群 钻 石 和 黑 卡 客 户 一 直 稳 步 增 长 截 止 2022 年 9 月 30 日 洛 亚 钻 石 客 户 达 到 了 七 千 六 百 五 十 三 位 同 比 增 长 百 分 之 十 七 点 四 黑 卡 客 户 数 达 到 了 二 两 千 一 百 二 十 九 位 同 比 大 幅 增 长 百 分 之 三 十 九 点 四 洛 亚 持 续 增 加 和 客 户 接 触 的 频 率 以 及 挽 回 非 标 和 房 地 产 清 零 过 程 中 的 流 失 客 户 截 止 11 月 17 日 今 年 已 经 累 计 挽 回 一 千 零 十 四 位 流 失 客 户 值 得 一 提 的 是 我 们 在 2021 年 12 月 推 出 了 自 主 研 发 的 聚 焦 企 业 现 金 管 理 的 微 尚 私 库 平 台 截 止 2022 年 第 三 季 度 通 过 微 尚 私 库 开 户 且 交 易 的 企 业 客 户 数 达 到 了 三 千 两 百 三 十 七 家 环 比 增 长 百 分 之 二 百 二 十 四 点 三 实 体 经 济 中 小 微 企 业 的 现 金 流 管 理 过 去 一 直 是 未 被 机 制 化 服 务 我 们 着 力 增 强 机 构 端 财 富 管 理 产 品 服 务 的 均 衡 性 和 可 及 性 做 专 做 优 资 产 配 置 方 案 打 造 全 生 命 周 期 全 光 谱 的 财 富 管 理 产 品 服 务 体 系 我 们 将 继 续 深 耕 和 拓 展 这 一 领 域 相 信 可 以 不 断 地 扩 大 实 体 经 济 小 微 企 业 的 获 得 感 幸 福 感 安 全 感 2022 年 第 三 季 度 洛 亚 加 快 了 国 际 业 务 拓 展 的 步 伐 以 适 应 客 户 的 全 球 资 产 配 置 需 求 在 香 港 和 新 加 坡 组 建 了 洛 亚 国 际 财 管 直 销 团 队 国 际 业 务 收 入 在 第 三 季 度 环 比 上 升 百 分 之 二 十 一 点 五 在 净 收 入 中 占 比 从 上 个 季 度 的 百 分 之 二 十 一 点 六 提 升 到 了 百 分 之 二 十 八 点 三 我 相 信 在 不 久 的 将 来 洛 亚 国 际 业 务 将 为 集 团 贡 献 更 多 的 收 入 说 你 啊

Third quarter of 2022, Noah realized net revenues of CNY 680 million and a non-GAAP net income attributable to shareholders of CNY 190 million, both decreased both year-on-year and quarter-on-quarter. As of September 30th, the accumulated non-GAAP net income of 2022 has reached CNY 860 million, reaching 59.3% of the annual guidance, which is behind the schedule. In terms of core business data, transaction value in the third quarter was CNY 17.97 billion, down 25.3% year-on-year and 7% quarter-on-quarter. Achieve such results in this difficult environment makes us feel that the trust of our clients has not come easily.

Thank clients for their willingness to continue to put their wallet shares in Noah. In this quarter, the transaction value of mutual funds increased by 30.3% year-on-year, down 4.4% quarter-on-quarter. The transaction value of private secondary funds also picked up slightly to CNY 3.33 billion, up 38.9% quarter-on-quarter.

The transaction value of private equity was CNY 2.5 billion, down both year-on-year and quarter-on-quarter. In the third quarter, Noah's total number of active clients reached 22,641, up 6.5% year-on-year and 76% quarter-on-quarter. Among them, the number of overseas active clients was close to 1,400, an increase of 84% quarter-on-quarter.

High net worth and ultra high net worth clients are Noah's core client base, and Diamond and Black Card clients have been growing steadily. By September 2022, Noah had 7,653 Diamond clients, up 17.4% year-on-year. The number of Black Card clients reached 2,129, up 39.4% year-on-year.

Noah continued to increase the frequency of contact with clients as well as to reach as well as to recover those lost clients in the process of exiting private credit funds and real estate funds. As of November 17th, 1,014 lost clients have been recovered this year. It is worth mentioning that our independently developed Smile Treasury platform focusing on institutional cash flow management was launched in December 2021.

By the end of the third quarter, the number of institutional clients who opened accounts and transacted with Smile Treasury had reached 3,237, an increase of 224.3% quarter-on-quarter. The cash flow management of the real economy micro businesses and small-to-medium-sized enterprises has not been systematically served in the past.

We focus on enhancing the balance and accessibility of wealth management products and services at institutional level, providing dedicated and optimized asset allocation solutions, as well as building a full life cycle and full stack of wealth management product services system. We will continue to deepen and expand in this field and believe we can continuously improve the sense of gain, happiness, and security of the vast real economy and small and micro enterprises. In the third quarter of 2022, Noah accelerated the pace of international business development to adapt to clients global asset allocation needs.

In Hong Kong and Singapore, we set up a direct sales team for international wealth management. The international business revenue in the third quarter rose 21.5% quarter-on-quarter, and its share in net revenues rose to 28.3% from 21.6% in the previous quarter. I believe that Noah's international operations will contribute more revenues to Group in the near future.

截 止 二 零 二 二 年 九 月 三 十 日 ， 格 非 资 产 管 理 的 规 模 为 一 千 五 百 六 十 二 亿 元 人 民 币 ， 较 上 季 度 末 增 长 百 分 零 点 五 。 其 中 私 募 股 权 的 管 理 规 模 增 长 至 一 千 三 百 二 十 八 亿 元 人 民 币 。 公 开 市 场 产 品 的 管 理 规 模 受 净 值 波 动 影 响 ， 从 上 季 度 的 一 百 零 七 亿 下 降 到 一 百 零 二 亿 。 在 房 地 产 基 金 方 面 ， 主 动 管 理 的 美 国 出 租 公 寓 房 地 产 基 金 规 模 由 上 季 度 的 六 十 二 亿 增 长 到 六 十 七 亿 。 一 级 市 场 方 面 ， 格 非 S 基 金 管 理 规 模 也 取 得 一 定 的 成 绩 ， 同 比 增 长 十 三 点 三 亿 ， 目 前 在 管 规 模 超 过 八 十 亿 元 人 民 币 。 格 非 的 海 外 资 产 管 理 规 模 同 比 上 升 百 分 七 点 一 ， 环 比 上 升 百 分 三 点 一 ， 达 到 三 百 零 五 亿 ， 五 亿 元 人 民 币 。 私 募 股 权 、 公 开 市 场 、 房 地 产 均 保 持 了 增 长 趋 势 ， 各 自 取 得 了 百 分 之 一 、 百 分 之 四 点 五 和 百 分 之 三 十 点 三 的 环 比 增 长 。 对 格 非 的 国 际 AUM， 我 们 保 持 了 良 好 的 增 长 预 期 。 格 非 的 财 富 抵 偿 目 标 策 略 产 品 稳 健 、 平 衡 及 第 三 个 类 型 的 策 略 在 第 三 季 度 持 续 大 幅 跑 赢 ， 中 证 八 百 、 沪 深 三 百 。 截 止 十 一 月 十 一 日 ， 今 年 收 益 分 别 为 负 的 一 点 一 九 、 负 的 六 点 六 九 和 负 的 九 点 三 三 ， 而 同 期 的 沪 深 三 百 、 中 证 八 百 分 别 为 负 的 二 十 三 点 三 二 、 负 的 二 十 一 点 六 六 。 三 个 策 略 资 金 ， 呃 ， 成 立 至 今 最 大 的 回 撤 分 别 是 负 的 三 点 二 十 四 、 负 的 十 点 五 七 和 负 的 十 三 点 七 四 ， 对 比 同 期 沪 深 三 百 的 负 的 三 点 ， 三 十 三 点 四 五 和 中 证 八 百 的 负 的 二 十 九 点 零 九 ， 可 以 说 是 持 续 在 市 场 波 动 中 发 挥 了 稳 健 抵 仓 的 作 用 。 说 完 了 。

As of September 30, 2022, Gopher's AUM was RMB 156.2 billion, an increase of 0.5% over the end of the second quarter. Among which private equity increased to RMB 132.8 billion. public securities were affected by the fluctuation of NAV, falling from RMB 10.7 billion in the previous quarter to RMB 10.2 billion.

In terms of real estate funds, our actively managed U.S. rental apartment real estate funds increased from RMB 6.2 billion in the last quarter to RMB 6.7 billion. In the primary market, the AUM of Gopher S-fund has also made achievements, with a year-on-year growth of RMB 1.33 billion to exceed RMB 8 billion.

Gopher's overseas AUM rose 7.1% year-on-year and 3.1% quarter-on-quarter, and reached RMB 30.5 billion. Private equity, public securities and real estate all maintained the growth trend and achieved a quarter-on-quarter growth of 1%, 4.5% and 30.3% respectively. We maintain good growth expectations on our overseas AUM.

Gopher's wealth stabilizer product target strategy continued to outperform China's Securities Index 800 and Shanghai's Shenzhen CSI 300 significantly in the third quarter. Across all stable, balanced and positive strategies. As of November 11, 2022, returns were -1.19%, -6.69% and -9.33% respectively in 2022.

While those of CSI 300 and CSI 800 in the same period were -23.32% and -21.66% respectively. The maximum drawdowns of the three strategies since their establishment were -3.24%, -10.57% and -13.74% respectively, compared with -33.45% of CSI 300 and -29.1% of CSI 800 in the same period. It shows that target strategy has continuously played a role in stabilizing clients' portfolio amid market fluctuation.

二 零 二 二 年 开 年 ， 诺 亚 建 立 起 服 务 高 净 值 和 企 业 财 富 客 户 的 新 流 程 ， 以 CIO 办 公 室 的 宏 观 资 产 配 置 观 点 ，CSO 办 公 室 的 中 观 客 户 经 营 策 略 和 跨 产 品 线 解 决 方 案 为 基 础 ， 结 合 RPS 办 公 室 给 出 零 和 灵 活 调 整 的 筛 选 出 包 含 最 优 先 级 保 障 产 品 、 抵 挡 稳 健 、 流 动 管 理 、 成 长 进 取 的 四 个 层 级 的 客 户 资 产 配 置 解 决 方 案 。 在 二 零 二 二 年 这 个 极 端 不 确 定 的 市 场 ， 应 该 说 取 得 了 较 好 的 成 绩 ， 得 到 了 客 户 的 认 可 。 我 们 相 信 优 秀 的 财 富 管 理 公 司 和 资 管 公 司 会 在 熊 市 为 下 一 个 牛 市 做 好 充 分 的 准 备 。 诺 亚 控 股 香 港 上 市 成 功 后 ， 需 要 同 时 满 足 中 国 和 美 国 证 券 ， 呃 ， 证 券 交 易 委 员 会 和 香 港 交 易 所 的 要 求 ， 以 TCFD 框 架 指 定 集 团 的 碳 中 和 战 略 。 我 们 启 动 了 相 关 规 划 ， 来 完 善 集 团 的 气 候 风 险 管 理 方 针 。 计 划 风 控 设 立 TCFD 小 组 ， 完 成 相 关 气 候 信 息 披 露 报 告 。 集 团 的 可 持 续 发 展 委 员 会 将 气 候 风 险 纳 入 了 投 资 管 理 的 流 程 框 架 ， 定 期 出 具 报 告 向 董 事 会 进 行 汇 报 。 同 时 在 逐 步 推 进 在 投 资 流 程 中 纳 入 对 气 候 因 子 的 评 估 ， 并 结 合 科 技 团 队 搭 建 投 资 组 合 碳 足 迹 的 计 算 模 型 。 可 持 续 发 展 是 我 们 的 宗 旨 。 说 完 了 。

At the beginning of 2022, Noah established a new process to serve high net worth and corporate clients. Based on the macro asset allocation house view of the Chief Investment Office, the client strategy and cross credit line solutions of the Chief Strategy Office, combined with the investment products and services office.

Noah provides flexible adjustment and screens out all levels of client asset allocation solutions, including the high risk priority protection and inheritance solution, stabilization solution, liquidity management solution, and growth solution. In this extremely uncertain market in 2022, we could say that we have achieved great results and have been recognized by clients. We believe that excellent wealth management and asset management companies will make full preparations for the next bull market in the bear market.

After the successful listing of Noah Holdings in Hong Kong, it needs to meet the requirements of both the Securities and Exchange Commission of the United States and Hong Kong Stock Exchange, and specify the carbon neutral strategy of the group in the TCFD framework, AKA, the guideline recommendations of the Task Force on Climate-related Financial Disclosures.

We have launched the relevant plans to improve the group's client risk management policy, a plan to set up a TCFD team for risk control, and completed the relevant client climate information disclosure report. The Sustainable Development Committee of the group incorporates climate risk into their investment in management process framework, and regularly submits reports to the board of directors.

Sonia Han (Managing Director of Investor Relations)

At the same time, we're gradually promoting the inclusion of climate factor assessment in the investment process, and working with the technology team to build a calculation model for the carbon footprint and investment portfolio. Sustainable development is our tenet. Although we have encountered great challenges in the micro perspective, Noah adheres to the core values of client-centric and survival at bottom line, and the company has maintained a healthy state of existence.

The organizational change promoted by Noah in the past three years has also highlighted value this year. The optimization of the client service model of the relationship manager end from a single relationship manager to the Noah Triangle service model makes the development of our international wealth management possible.

On the client development side, through the reform of Leads to Cash under the difficult market situation this year, we have made hard-won achievements in the treasury management business of small to medium-sized enterprises, both in terms of the number of clients and AUA. Psychologist Abraham Maslow once said, "In any given moment, we have two choices: Step forward into growth or step backward into safety."

It may need two brands to think about the destiny of the country, but based on ourselves. For market participants, individuals, even in difficult situations, we still believe that to gather together the power of each Noah employee, we can seize the opportunity in the challenge, expand and strengthen our international business, maintain the leading position in China, and achieve our value of professionalism and empathy. Now, let's invite CFO Qing Pan to introduce the quarterly data in detail. Thank you.

Qing Pan (CFO)

Thanks, Sonia. Thank you, Chair lady. Good morning, investors and analysts online. As our Chair lady has mentioned, following our successful secondary listing in Hong Kong in July, on October, we received acknowledgement from the Hong Kong Stock Exchange in respect to the application of voluntary conversion to dual primary listing in Hong Kong.

The effective date on which of the primary conversion is expected to be before December 31st, 2022. With the successful conversion, we'll be dual primary listed on both the Hong Kong Stock Exchange as well as the New York Stock Exchange, which removes our ADR delisting risk because Hong Kong shares and ADR shares are fully fungible. We also hope to be able to join the Stock Connect link in the future, which will allow investors from the Chinese stock market to be our shareholders.

We're mindful that the following impact from continued geopolitical conflicts in the second quarter, the macro environment in the third quarter continued to be highly challenging. The United States Federal Reserve raised rates twice in the third quarter, each time by 75 basis points, following its rate hikes in March, May and June, followed by another 75 basis points on November third.

That means accumulated 375 basis points in 2022, the highest level in 14 years. In China, lockdown measures that came with COVID zero policy was not alleviated, as many had originally anticipated and hoped, further affected investor sentiment, especially towards making investment decisions in large sums and in equity market products. This is evidenced by the drop of mutual fund net asset value in the third quarter, and also the declining of revenue from fund distributions across the industry.

Now, please let me walk you through more detailed results for the third quarter. As a result of the challenging market environment dampened investment sentiment, total transaction value decreased to RMB 18 billion. Down 25.3% year-over-year and 7% quarter-over-quarter. The transaction value of private equity declined by 34% year-over-year and 36% quarter-over-quarter to RMB 2.5 billion.

Noticeably, the transaction value of private secondary products saw a significant increase of 38.9% quarter-over-quarter to RMB 3.3 billion, representing a short rebound, but still down 68.5% year-over-year. Moreover, the transaction value of mutual funds was RMB 11.7 billion, up 30% year-over-year and down 4% slightly quarter-over-quarter.

The total number of active clients for the quarter was 22,641, a 6.5% increase year-over-year and a 76% increase quarter-over-quarter. Benefiting from continued strategic investments in our core client group, Diamond Card and Black Card clients grew to 9,782, up 14.3% quarter-over-quarter and 21.6% year-over-year.

Among which the number of Black Card clients and Diamond Card clients increased by respectively 39% and 17% year-over-year. Thanks to the operation enhancements of a more targeted client segmentation strategy program and resumed client events. Our client-centric philosophy will continue to be a key strategy in the long run.

It is also worth mentioning that through our self-developed customized treasury platform, Smile Treasury, which was launched in December 2021, the number of institutional clients boomed to 2,522 as of the end of third quarter, more than double from the end of last quarter. We believe there remains a large treasury management market potential for these underserved small to medium-sized enterprises, we'll keep developing this segment with our comprehensive product line and well-established service network. As a result of slower placement in every market products, we have seen perhaps the slowest quarter in recent years. Non-GAAP net income was CNY 190.9 billion for the quarter, down 32% year-over-year and 46% quarter-over-quarter.

As of September 30, 2022, it was RMB 860 million, representing 59% our full year non-GAAP net income guidance floor. Income from operations for the quarter was RMB 231.8 million, a 1.3% growth year-over-year due to our tightened expense control policy, but a 28.3% decrease quarter-over-quarter due to a 7.3% decrease in net revenue and also 8% increase in operating costs and expenses as less expenses were incurred in second quarter of 2022 due to the unprecedented COVID lockdown in Shanghai. Consequently, the operating margin was 33.9%, up 8.7% year-over-year and down 9.9% quarter-over-quarter.

We expect to see continued challenges from the Fed rate hikes, sporadic lockdowns in China due to its prolonged zero-COVID policy, as well as very volatile public market. Considering the impact of these factors on clients' investment sentiments especially, the company revised its estimated non-GAAP net income attributable to Noah shareholders for the full year 2022 from a range of RMB 1.4 billion-RMB 1.45 billion to RMB 1.55 billion as previously published to a range of RMB 1 billion to RMB 1.1 billion.

In addition, to comply with the applicable requirements under the Hong Kong Listing Rules and being in line with the general market practice for companies with primary listing in both the United States and Hong Kong, we no longer publish its annual forecast after the conversion to a dual primary listing in Hong Kong, starting from our results announcement next quarter. As a result of lower transaction value, net revenues for the third quarter was RMB 684.5 million, down 25% year-over-year and 7.3% quarter-over-quarter. One-time commissions fell to RMB 99.9 million, down 53% and 51% quarter-over-quarter.

Recurring service fees were fairly stable with RMB 489.6 million, up 6.7% quarter-over-quarter, but still down 13% year-over-year, affected by NAV movements of private secondary products. Performance-based income grew to RMB 27.6 million, up 6.8% quarter-over-quarter, but down 66.4% year-over-year. Net revenues from other services continued to grow to RMB 67.3 million, a 50% increase year-over-year and a 45% increase quarter-over-quarter, mainly due to more value-added services Noah offers to our high net worth clients.

As for segment results, net revenues from the wealth management segment were CNY 465.9 million, down 28.7% year-over-year and 8.4% quarter-over-quarter due to a decrease in transaction value during the quarter. Net revenues from the asset management segment were CNY 200 million, down 17% year-over-year and down 4.8% quarter-over-quarter.

Gopher's AUM stayed relatively stable at CNY 156.2 billion as of September 30, 2022, slightly higher than CNY 155.4 billion at the end of the second quarter. Moving on to the balance sheet. We remain very healthy liquidity position as our current ratio stood at 3.7x. The debt to asset ratio was 17.9%, still with no interest on debt on our book.

By the end of third quarter, we had RMB 4.3 billion in cash. Supported by a strong balance sheet. We expect to announce our dividend payout ratio in the second quarter of 2023. In light of the current volatilities in the public market, Noah CIO office reiterated the house view of domestic international dual circulation and has suggested our clients to balance their portfolio accordingly.

We have implemented stricter cost control measures internally while committing to further develop our international operations. Noah will, for the first time, host a global Black Card gala event for our clients in Singapore next month. Together with Diamond clients events in various cities in China that's ongoing right now, hoping to better understand clients domestic and international asset allocation needs. Again, we thank all shareholders and analysts for ongoing trust and support, especially during this difficult time. Thank you everyone for listening. I will open the floor for questions.

Sonia Han (Managing Director of Investor Relations)

Thank you, Qing Pan. Dear investors and analysts, you can now use the Raise Hand function in Zoom during the Q&A session. Once elected, you can then turn on the microphone to ask a question. Please mute yourself after the question. Thank you. The first question comes from Chi Yao.

Chi Yao Huang (Equity Analyst)

Maybe I'll briefly translate. The first question is on the strong growth in the Diamond Card and the Black Card clients in the third quarter. I'm just wondering what's the key drivers behind? The second question is on the wallet share of the clients AUM, both in and onshore and offshore, and what's our current wallet share and how do you see the potential there, and especially to raise the wallet share for client overseas assets. What kind of drivers should we be looking at? Thanks.

Qing Pan (CFO)

Great. Chi Yao, take the first question and Pearly will comment on your second question. First question, we actually installed the Diamond Black Card client strategic program with actually a strategic budget set aside. That program has been running for over two years. This is the third year actually. The group that's running this project has obviously gained more experiences.

Also the programs we have increased more client-centric, especially incentives for our RM to actually bring in high potential client with more accurate KYC programs as well as more importantly, that's supported by the budget. They'll able to host those mini Diamond Black Card client conferences, if you will, locally and be able to increase the interaction frequency with the potential clients.

Another measurement that has been very effective is the MGM program that we have installed in place that basically encourages our Black Card and Diamond clients to bring their circle of friends to participate. Actually, most of them are now marketing events that to help them getting more familiar with Noah as well as the trust towards the brand name, which also is the one of the strategic program investments this year for the brand name. I guess it's a comprehensive set of factors. I think more importantly is that the culture of the organization have improved really over the last three years when we are implementing client centric policy. From top to, you know, the front line, everybody is more client service oriented. I think that's probably one of the very important reasons.

Jingbo Wang (Co‑founder, Chairwoman of the Board of Directors, and CEO)

所 以 我 们 过 去 十 年 的 话 ， 我 们 也 打 下 了 一 些 基 础 吧 。 在 全 球 的 这 个 国 ， 就 是 海 外 的 华 人 ， 我 们 服 务 大 概 有 一 万 多 位 ， 呃 ， 总 量 哈 。 那 么 而 且 过 去 我 们 做 的 都 是 相 对 比 较 长 期 的 这 个 私 募 产 品 ， 呃 ， 在 美 ， 投 资 美 国 本 土 的 规 模 也 还 是 比 较 大 的 。 那 这 些 客 户 呢 ， 总 体 还 是 享 受 到 了 整 个 ， 呃 ， 这 个 我 们 的 服 务 ， 并 且 他 们 觉 得 还 是 非 常 稳 健 的 。 那 我 们 在 海 外 的 这 个 保 险 的 客 户 的 规 模 也 有 接 近 二 十 亿 美 金 ， 还 有 我 们 在 很 早 就 设 立 了 这 个 信 托 的 服 务 ， 其 实 管 理 了 四 百 多 个 核 心 的 大 家 族 。 那 么 我 觉 得 核 心 驱 动 因 素 第 一 个 就 是 过 去 洛 亚 在 海 外 是 没 有 直 销 团 队 的 ， 我 们 更 多 的 是 产 品 专 家 跟 IC。 那 么 在 今 年 二 三 季 度 开 始 ， 我 们 成 立 了 这 个 香 港 和 新 加 坡 的 直 销 团 队 ， 然 后 我 们 来 分 跟 我 们 已 经 有 的 这 些 客 户 ， 我 觉 得 效 果 还 是 比 较 明 显 的 。 当 然 也 有 一 个 ， 呃 ， 点 ， 就 是 因 为 今 年 美 联 储 加 息 ， 所 以 像 定 存 啊 像 这 样 的 相 对 比 较 简 单 的 产 品 ， 其 实 中 国 客 户 是 比 较 喜 欢 的 ， 所 以 也 会 有 一 些 增 长 的 。 我 们 对 未 来 我 们 是 更 加 看 ， 我 们 还 是 很 乐 观 的 ， 就 在 海 外 的 这 块 资 产 的 AUM 的 规 模 的 增 长 方 面 。 好 ， 我 先 说 到 这 。

Qing Pan (CFO)

I think Charlie just mentioned that as the majority of our client bases are entrepreneurs, especially in the manufacturing and exporting businesses. They do have quite a bit of demand in terms of allocation of their overseas assets. We probably served around roughly 100,000+ cumulative that had oversea asset allocation, and we have about $2 billion about oversea insurance cumulatively, and also serving 400+ families in our trust services.

We're significantly strengthening the direct service teams in Hong Kong and Singapore since the last two quarters and hoping to be able to more closely serve these clients or maybe even including some local clients in this type of situation. Also obviously, you know, with the rate hikes, the simple deposit products overseas are more attractive to our clients.

We don't have the exact ratio between our clients' wealth share in terms of domestic and overseas assets, but probably by estimate of how our own AUM is allocated, probably about 30%-70% in terms of oversea versus domestically, that we think that the ratio and also the assets that's already overseas for our clients probably a little bit higher than what we have seen. We believe there's actually ample room for growth, especially in the needs of allocating their overseas assets. Chi Yao, hopefully that covered your question.

Chi Yao Huang (Equity Analyst)

Thank you very much. That's very helpful.

Qing Pan (CFO)

Okay, thank you. We'll take another question.

Sonia Han (Managing Director of Investor Relations)

The second question come from Han Yu, from CICC.

Han Yu (Equity Analyst)

好 的， 感 谢 管 理 层 给 我 这 个 提 问 的 机 会。 我 是 中金公司 的 分析师 余涵。 我 这 边 有 2 个 问 题， 第 1 个 问 题 是 关 于 我 们 理 财 师 的 这 个 增 长 情 况。 3Q 看 到 理 财 师 环 比 有 一 些 提 升， 想 请 教 一 下 管 理 层 关 于 理 财 师 的 这 个 扩 充 计 划。 第 2 个 问 题 也 是 刚 刚 前 1 位 分析师 提 到 关 于 这 个 海 外 业 务 的 发 展， 看 到 3Q 的 海 外 业 务 收 入 贡 献 进 一 步 提 升， 想 请 问 能 否 给 我 们 进 一 步 介 绍 一 下 关 于 海 外 业 务 未 来 的 战 略 规 划。

I'll briefly translate my question. My first question is regarding to relationship managers. The number of relationship manager has achieved slightly growth quarter-on-quarter. I just wondering the future recruitment plan of relationship managers. My second question is regarding to overseas business. In the third quarter of 2022, overseas revenue contribution increased to 28%. Management please introduce to us overseas business expansion strategy. Thanks.

Qing Pan (CFO)

王 总, 您.

Jingbo Wang (Co‑founder, Chairwoman of the Board of Directors, and CEO)

好.

Qing Pan (CFO)

来 回 答.

Jingbo Wang (Co‑founder, Chairwoman of the Board of Directors, and CEO)

我 ， 我 来 回 答 。 我 ， 我 觉 得 就 是 在 理 财 师 端 的 话 ， 在 国 内 的 理 财 师 端 ， 我 觉 得 我 们 主 要 是 乘 龙 换 鸟 吧 ， 就 是 市 场 不 好 的 时 候 ， 但 是 有 非 常 多 人 才 的 溢 出 ， 那 我 们 希 望 能 够 主 要 就 是 提 升 品 质 。 那 么 在 ， 呃 ， 这 个 理 财 师 扩 充 端 ， 我 们 会 更 关 注 在 海 外 的 这 个 IM 的 扩 充 。 我 们 也 定 了 一 些 计 划 ， 包 括 在 香 港 、 新 加 坡 、 美 国 ， 我 们 要 构 建 这 个 IM 的 团 队 吧 。 我 觉 得 这 个 是 一 个 比 较 ， 比 较 重 要 的 这 个 海 外 业 务 能 够 发 展 的 这 个 核 心 的 关 键 点 。 那 么 在 这 个 海 外 业 务 方 向 的 话 ， 我 觉 得 还 是 其 实 跟 我 们 在 国 内 的 做 法 是 差 不 多 的 。 第 一 ， 我 们 肯 定 是 要 扩 大 割 肥 脂 管 ， 我 们 的 这 个 资 产 管 理 规 模 也 是 从 方 得 放 到 分 头 到 指 头 ， 啊 ， 以 及 扩 充 我 们 的 产 品 线 。 第 二 点 呢 ， 就 是 我 们 也 上 线 了 一 个 方 舟 达 富 的 港 美 股 的 这 个 平 台 ， 我 想 可 能 有 些 分 析 师 可 能 已 经 看 到 了 ， 我 觉 得 我 们 主 要 是 定 位 ， 就 是 能 够 让 我 们 的 客 户 在 我 们 的 平 台 上 有 更 多 的 品 类 ， 而 且 可 以 全 面 的 在 线 下 单 ， 那 我 们 会 扩 充 这 个 海 外 的 公 募 基 金 ， 呃 ， 业 务 。 另 外 呢 ， 刚 才 我 们 也 特 别 谈 到 了 ， 在 机 构 私 库 小 机 构 的 这 个 发 展 方 面 ， 我 们 今 年 其 实 是 左 右 成 效 的 吧 ， 已 经 到 了 三 千 多 个 客 户 ， 那 我 们 也 做 了 一 些 统 计 ， 我 们 这 些 客 户 里 边 有 非 常 多 的 都 是 有 美 元 的 ， 因 为 他 们 都 是 以 外 贸 行 业 是 非 常 突 出 的 ， 那 我 们 希 望 我 们 也 能 够 在 海 外 ， 呃 ， 在 现 在 市 场 一 个 比 较 就 是 以 美 元 利 息 比 较 高 的 这 样 的 一 个 前 提 下 ， 能 够 帮 助 他 们 管 理 他 们 的 美 元 的 这 个 存 款 吧 。Uh, third one is we are, uh, enhancing our wealth management services.

We place great importance on both domestic and international markets. Our current customers have very strong demands for insurance, trust planning, and identity planning. We are also expanding our team to be able to provide such services to customers. Let me summarize a few points. One is to establish our offline wealth management team overseas. The second is to optimize our online orders. They are all international. The third is to expand our product line and make our overseas product line more complete. Okay, I'll stop here. Qing Pan.

Qing Pan (CFO)

Thank you, Han Yu, for your question. I think, in terms of the strategy towards the RM, I think, domestically, we are actually growing the team on a more controlled pace. Basically, we are, you know, actually, outing the lower performances and also continue to look for better performance RM domestically.

I think in general, domestically, it is a controlled pace. We do have quite a bit of talent supply, probably increasing due to difficult times from banks and security brokers. Actually have the luxury to be more selective on domestic side. In terms of overseas side, we are putting significant investment and budget to grow the teams, you know, both based in Hong Kong and Singapore.

We believe that actually going to be a strategic differentiating factor in the next step strategy, especially facing competition from similar institutions. That's the side of RM. In terms of oversea business, obviously, we are continuing to invest significantly to beef up the product supplies.

Both from the Gopher side, direct investment in Silicon Valley, as well as the real estate products in New York. We also have been beefing up the selected product suppliers on the pipeline to provide that to our clients. Also on the iKnow side, we're continuing to developing that and now have the capability of actually helping our clients to transact both Hong Kong and U.S. stocks on our online platform.

Also on the Smile Treasury platform that we have seen very strong growth in this year. Actually a very successful strategy this year that we have grown basically from, you know, less than 100 institutional clients to now over 2,500 accounts online. We have been noticing that even the small to medium enterprises, especially when they're exporting oriented, they do have quite a bit of U.S. dollars waiting to be managed. We actually noticed that some of the treasury teams, they don't usually have a large team that would be able to help them to talk to overseas banks or institutions. They just basically lack the capability or visibility of what's available to them and what they could actually subscribe to.

We, with the Smile Treasury function that they'll be to easily have access to U.S. dollar-based products. Also the fourth one is obviously continuing to build on the insurance, oversea insurance, trust services and heritage services, especially when the clients are now more serious, seriously, looking at, you know, how to make sure that they have meaningful presence in their oversea operations. There are quite a abundance of opportunities on the oversea side. Han Yu, hopefully that cover your question.

Han Yu (Equity Analyst)

Thank you. That very clear.

Qing Pan (CFO)

Thank you.

Sonia Han (Managing Director of Investor Relations)

Dear investors and analysts, you can now use the Raise Hand function. When selected, you can turn on the microphone to ask a question. Please mute yourself after question. Thank you. If there are no further questions, the conference is now concluded. Thank you all for participating. Have a nice day or a nice evening. Thank you.

Qing Pan (CFO)

Thank you very much, everybody.

Jingbo Wang (Co‑founder, Chairwoman of the Board of Directors, and CEO)

Thank you.