Hello and welcome to the Noah Holdings 1Q 2022 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jingbo Wang. Please go ahead.

Okay. Thank you. [Foreign Language] On the agenda of today's conference, I would like to talk about the micro review [ph] first and then report on the overall performance of Noah Holdings in the first quarter of 2022 and the developments of main business segments. Then let's invite our CFO, Mr. Qin Pan to introduce the quarterly financial information, followed by an interactive Q&A. I'd begin 2022, Noah and Noah's clients finished on a risk-off mode. Noah's clients, relationship managers and investment managers may have never experienced a complete multifactor superposition cycle of continuous hikes in interest rates, credit expansion, AKA quantitative easing, liquidity collapse, and massive excess credit. At the beginning of 2022, we realized that in the strong headwind, aviation will be a challenge. In the first quarter of 2022, we talked with relationship managers and clients repeatedly and emphasized that no one was transformed when entering this theater, but many people were tempoed when they came out. In the first quarter of 2022, we suggested Noah's clients to re-examine the asset allocation of themselves and their families, actively rebalance the asset allocation and make the family asset allocation safer and more effective from the perspective of protection over growth. The ongoing war between Russia and Ukraine is worrying, but as a professional institution of growth management, we suggest that our clients should remain rational. Under this dilemma, the only certainty is that the market will continue to fluctuate. This market environment is not suitable for quotation market 'commit from managers and clients'. Avoiding risks has become a better choice. At the beginning of the New Year, Noah's strategic allocation strategy to clients is protection first, then grow. Since this sub-prime mortgage crisis in 2008, the global long-term quantitative easing policy and abundant liquidity have caused the huge…

Thanks Tanya. And thank you, Chairlady for group [ph] and hello to investors and analysts like Chairlady Wang has mentioned the first quarter of 2022 has been a difficult one, amid lingering impacts of the COVID 19 pandemic, as well as uncertainties around the macro-environment, policy changes and geopolitical conflicts. These factors were reflected in the challenging capital marketing environment overall, with MSCI oversee China down 23%. Shanghai securities composite index down 11%, as well as NASDAQ and SP500 down 9% and 5% in the first quarter, respectively. The emergence of negative volatility has started to pressure the equity market since the second half of last year, translating into softened investment investor sentiment, evidenced by a decline of 74% year-over-year and 57% quarter-over-quarter decreasing new issuance of mutual funds during the first quarter of 2022. Nevertheless, Noah has managed to weather through these challenges with a client-centric mindset, continuing to enlarge our black card and diamond card client group, made noticeable progress in our client segmentation strategy and also achieved 8% quarter-over-quarter increase in non-definite income with discipline OpEx management, while remaining committed to essential investments in client and market strategic initiatives. Now, let me walk you through more detailed results of the first quarter. As a result of the lacklustre performance in equity markets in the first quarter, as well as our adjustment in the secondary product distribution strategy, as mentioned by Chairlady, client investment sentiment softened. As a result, one-time commission income was down on the back of the decrease in transaction value from RMB27 billion in 2121 [ph], the same period last year to RMB15 billion in '22 quarter one. Carrying income comparing to the first quarter of '21 record-setting quarter was also down due to the weak performance of equity market. As a result, overall net…

We will now begin the question-and-answer session. [Operator instructions] First question comes from Ethan Wang from CLSA. Please go ahead.

I have two questions. The first is on the redemption of the asset management products. So we understand that in the first quarter, the whole industry is suffering from the product sales, but have we seen any sign of material redemption in the products, especially for different tiers of clients is my first question? And second question is on the fee level. Just want to check with management, when we see the pressure on the fund sales, have we seen the pressure from fee level when we negotiate with some management companies. Thank you.

Okay. I'll translate briefly of what Chairlady has said, supplement some of my input. To your first question, Ethan I also thank you for asking about Shanghai, we're doing okay. And for your first question, I think it's actually a strategic reallocation between different strategies in terms of your question regarding whether or not there's large redemption. Since last quarter we have been pushing forward the protection first kind of strategy for the client allocation strategy. So we did not see a huge outflow or pure outflow, net outflow, if you will from one fund, but rather a reallocation probably between long-only sort of the funds that shooting for alpha in the market, but to a more balanced type of products like the CPA and mutual strategy especially the multi strategy kind of products. So we'll see some rebalancing between different strategies. In terms of the fee pressure from the fund providers or fund managers, it really depends on, I guess the performance of their funds. When they do see a large group of unhappy clients, they probably will experience some pressure on the fee wise. But in terms of the suppliers that we work with, we have not seen too much of a downward pressure in terms of the fee ratios on these funds. And, we had actually started preparation for the shifting strategy of fund supplying if you will probably a couple of years ago moving to more balanced portfolio especially like the multi-strategy kind of products and also started exiting from some of the funds especially the loan-only funds and that is probably part of the reason that we achieve pretty high level of carry income in 2021. But in terms of fee pressure, especially how we negotiate with our fund suppliers, we haven't seen too much of a change unless the fund is really performing really pretty. Ethan?

Thank you. Your next question comes from Emma Liu from Bank of America Securities. Please go ahead.

So I will briefly translate my questions. I have two questions. The first one is about your insurance sales. You said in first quarter, your insurance sales was impacted by the regulation issued in October last year, but you already make some rectification and achieve recovery in the second quarter. So could you elaborate a little more, how the regulation impacts your insurance business and how are you able to achieve the recovery in the second quarter? And the second question is about COVID impacts on your business. Once you see there are more COVID lockdown in China since second quarter. So how will it impact your business and you are still -- and you still want to achieve your full year net profit guidance. And how do you -- how are you planning to achieve this guidance given the very tough first quarter already? Thank you.

The impact on the new insurance regulation was basically, there was a very abrupt cut-off on the compliance date, which is December 31, 2021, that the previous sale nationwide on the internet was not continuing to be allowed, as of January 01, 2022 and you have to obtain the license in certain cities to be able to actually make that sale. And at that time we were actually in the middle of the application for that permit and we obtained the permit actually in the first quarter of 2022. So it's basically the abrupt cut-off on the rule and regulation sort of caused a pause on the sale, especially for the first couple of months in the first quarter. And, once we have obtained that permission, I'll be able to do the sale starting from the second quarter. So the financial results will reflect on that and… So basically a quick summary of, what Chairlady has shared, basically, I think couple of reasons. One is that Shanghai is obviously more impacted than other cities. So nationwide we'll still be able to hold the client conferences, although at much smaller scale than in the past, but still be able to actually get in touch with clients and as you would mention that under, as you would imagine that under situations like this, the desire to connect with people actually become stronger. So, the client actually interact with us on a more frequent basis and two is, we probably stay more prepared than competitors, if you will especially from the product distribution from the online sharing sessions and especially on the diversity of products, as well as services, that'll be able to provide with the clients under different situations that we have primary, secondary as well as all kinds of comprehensive services,…

Thank you. Your next question comes from [indiscernible]. Please go ahead.

I will translate my questions. So thanks management for taking my question. [indiscernible]. It's still very exciting to see the stable growth our number of core clients. I have two questions here. The first question is regarding the investment was management give us more introduction on the progress of fee business like how much contribution does it have on our mutual transaction value or revenue and second cost from the decrease of the number of relationship managers, what's the behind that.

Thank you [indiscernible] for the question. And thanks for the support, by the way, in terms we're both quarantined, I hope everything is -- you and your family are doing okay. In terms of the smile treasury which is the institutional version of our mutual fund platform, we have actually started the campaign officially in the first quarter and made obviously strategic initiatives and push for that. Reason being is that we're actually seeing a gap in that service that majority of our clients, probably 60%, 70% of our clients are entrepreneurs and they have their own enterprises, which is they either lack experience to work with more market oriented sort of treasurer management or money market type of funds or they actually didn't have enough research ability to actually navigate through the mutual fund market. The reason being is that in the past the treasury function pretty much served by the banks products and as the banks products also shifting towards the NAV-based products, it actually lacks the attraction in the past and the treasures are forced to actually to screen through thousands of sort of money market funds or mutual fund, and Noah is actually able to sort of transform the experience we have on a mutual fund researching capability, and also placing that with very conveniently designed staff-based solution for these institutions. So we actually use that as a strategic opportunity to actually expand this particular gap in terms of service in the market. As we understand it's not much similar products in the market and we're actually be able to actually make pretty good progress. We gained about 250 new clients in the very first quarter and seeing the latest data, this number is still accelerating. In terms of revenue contribution, it probably going to take some while to shape up as it will accelerate, but at the same time the AUM obviously in treasury light funds doesn't contribute to a lot of revenue right away, but we're pretty confident to see that growth in the following view quarter. Does that answer your first question?

[indiscernible].

Yeah. So first question first point is that we actually did shift from, I guess, immediately following the transformation in 2019. Obviously the priority was to stabilize the team. So the strategy was to retain as much talent as we could. Then we started off, once the transformation has been completed in 2021 we started off, our transformation in terms of talent from talent retention only to talent upgrading. So the mild change in number of wage managers is really the result of how we actually being screening the better RMs and we're trying to hire a lot more advanced or if you will, a lot more experienced and excellent ready managed to the talent roster. So it's really upgrading in the talent perspective. And second point is also, we actually it's interesting that we're seeing quite a bit of repay training clients, if you will, that during the so-called now standard type of product era some clients may probably go to another institution and at the same time actually brings with them the professional that serves with them. So now we're seeing quite a bit of repayment funds because, after all the transformation, as well as the market condition they continue to realize that Noah has been very transparent at the same time being pretty professional about our product selection and also product recommendation. So with the repatriation of this group of clients, we're also seeing the inflow of the radiation managers.

Thank you. Your next question comes from Peter [ph] from JPMorgan. Please go ahead.

Okay. thanks for giving me the opportunity to ask this question. I wish to check with Wang, do we have more update on our Hong Kong based team? Thank you.

Thank you, Peter. Obviously with the pressure that's being placed on the Chinese PIs especially the so-called pre-listing prices, no one similar as other Chinese PS have been exploring other necessary options. Hong Kong listing obviously is one of the pretty apparent decisions, but at this stage of time I'm just, I don't have any liberty to comment on that. Hopefully you understand Peter.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to your speakers for closing remarks.

Okay. Thank you. And thank you everyone for the investor analyst and thanks for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.