Good day and welcome to the Noah Holdings Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Jingbo Wang, CEO of Noah Holdings. Please go ahead.

Thank you. On the agenda of today's teleconference, I will first share my views on the micro environment, then introduce the overall performance of Noah in the second quarter of 2022, the developments of our major business segments and our overall strategy. Next, I will invite our Group CFO, Pan Qin to introduce the quarterly financial information, followed by our Q&A. In the past 2 years, the global real economy deleveraging and capacity reduction caused by the epidemic and the impact of the Russian Ukraine war has exacerbated global inflation in the first half of 2022. China's continuous epidemic prevention and control policy have brought unprecedented challenges to the economic growth of core regions, including the Pearl River Delta and the Yangtze River Delta. On one hand, the supply side has been impacted, and the demand side has contracted significantly. On the other hand, expectations are weakening, the economy reached the bottom and the market bottomed out in the second quarter. As a company headquartered in Shanghai, more than 1,800 employees experienced a lockdown at home in the second quarter. We observed that the investment sentiment of high net worth families and private enterprise clients has changed significantly, improving the safety and liquidity of assets is the first demand of clients. At the same time, the global allocation needs of Chinese private enterprises and high net worth families have been significantly improved. Noah's judgment on client demand and asset allocation suggestions are stability first, survival of the fittest and domestic international do situation with Chinese enterprises and high net worth families. We suggest that clients saw the rebalancing of their global asset allocation. The ratio of Chinese and overseas asset allocation is 100 to 100. Domestic assets are allocated to the Chinese market and overseas assets are allocated to the…

Thank you. Thank you, Chairlady, and hello dear investors and analysts, including our new shareholders, who supported our secondary listing in Hong Kong. Following the impacts of major events such as geopolitical conflicts in the first quarter, the macro environment in the second quarter continue to be under pressure. As of the end of July 2022, the United States Federal Reserve has raised interest rates by a cumulative 225 [indiscernible]. In China, prolonged COVID-19 [indiscernible] let you only 0.4% GDP growth in the second quarter. Investor sentiment hasn't fully recovered, evidenced by distribution value of mutual fund products [indiscernible] decreased by 25.8% year-over-year in the quarter and dropped a whopping 57.8% year-over-year for the first half of the year, as well as the savings rate has risen to 34% as of the end of second quarter, compared to only roughly 30% pre-pandemic. At the same time, we're mindful of the tensions between the two largest economies in the world. In July, Noah successfully completed the secondary listing in Hong Kong, partially mitigating the ADRP listing risk. This month, we have also announced to pursue a voluntary conversion to dual primary listing status in the U.S and Hong Kong, open to further results delisting pressure. [indiscernible] a long-term scheme to pay at least 10% of our non-GAAP net income as annual dividends to shareholders starting from April next year. Now please let me walk you through more detailed results of the second quarter. Non GAAP net income was RMB355 million for the quarter, up 5.4% year-over-year and 13.3% quarter-over-quarter. For the first half, it was RMB669 million, representing 46.1% of a full year non-GAAP net income guidance. Income from operations of the quarter was RMB323 million, a 3.6 decrease year-over-year, but a 3% growth over the last quarter, mainly because of…

[Operator Instructions] And the first question will come from [indiscernible] Huang with Morgan Stanley. Please go ahead.

Maybe I'll just briefly translate. The first question is about the client base. We are delighted to see, given a very volatile market environment, we're still achieving a steady growth in the number of key clients in [indiscernible] clients, diamond cards. So just wondering, management if we can share any of the driver behind it and do we have any target or plans over the decline in number growth this year or next year? And second question is on the number of relationship managers, which is we think it's important to keep the high hedge service. And we see the number has kind of fluctuating between 1,200 and 1,300 in the last 2 years, and with some slightly decline in the past 2 months, two quarters. So wonder, how is the teams reaction or acceptance to the newly completed restructuring on the [indiscernible] system, and do we have any target for the next 2 to 3 years? Thank you.

Okay. So [indiscernible] to your first question, we believe that because of the complex situation, especially face to the lockdown, so it's quite -- it has been quite difficult to get to the client scenario, especially in the offline situation. So what we have been doing is really to serve and make the existing client base increase their satisfactory level. And the majority of the growth achieved in the diamond and black card clients here is from the existing clients when they actually made more investments and upgrades internally. And at the same time, the strategy of making the existing client happy, and they are more willing to actually bring in their clients and make referrals. So we actually have another program called MGM, Member Get Member, which has shown actually very positive progress as well. Seems that the strategy has been working. And just a little bit of supplement to what Chairlady has mentioned. Another thing is that we have been continuously investing and upgrading our branding as well as the benefits of some that's associated with the black card and diamond card members. In the past it's mostly probably just some rebates or some points that's associated with benefits, but this time we actually added a lot more benefits in terms of free classes, free lessons that can get on investors as well as some other educational sessions, which adds to being very welcomed by the client. So basically, the internal system during the lockdown will actually have more time to invest as well as [indiscernible] to actually increase the satisfactory level of the clients greatly. In terms of the relationship managers team, obviously, we're still eyeing for growth. But I think the strategy for this year is mainly for making a room for better talents to come in and to upgrade the talent mix, especially we're investing more heavily towards the fresh graduates from good schools. I want to make sure actually we have a younger pipeline for the future RMs team. At the same time, we're also actually having another program called [indiscernible], which means that we're actually targeting to recruit good veterans into Noah. And so the overall strategy undoubtedly will be towards the growth of our team. But at the same time, [indiscernible] make sure that the quality is well selected. We're also actually missing planning to invest why heavily in terms of teams that's in Hong Kong and Singapore will probably see a greater growth speed in that team in this two places. [Indiscernible] do we have your question?

Yes, thanks very much management.

Okay.

[Operator Instructions] Our next question will come from Peter [indiscernible] with J.P. Morgan. Please go ahead.

Hello. Hi. I will do the translation. So my question is while the second half outlook [indiscernible] our non-GAAP focus, so -- which will translate to quite strong growth in second half non-GAAP profit goals. So we are wondering what will be the key driver and what’s, say, [indiscernible] outlook in second half? Thanks.

Okay. Thank you, Peter. Appreciate your question. Yes, we actually are [indiscernible] happy, especially with the challenges that we faced in the second quarter, especially one of our main cities, Shanghai was also the headquarter of Noah faced 2 months lockdown, and are still be able to actually obtain a 46% progress. And actually, the non-GAAP net income actually its growth over both last quarter as well as year-over-year. So we believe that we are still on track to make the full year guidance, especially for the industry seasonality majority of the big so-called client conferences and marketing events, usually occur in the second half of the year. For example, we have [indiscernible] which are both the end of year as well as the beginning of year, major marketing points as well as the main event of black card Gala every year usually takes place in November and December. So we still believe that good wave marketing events as well as the client conference are waiting to happen. Obviously, we are prudently optimistic about how the client sentiment will be before the big conference in probably October, November. But we believe that no matter what the outcome is, once our clients sentiment actually see some sort of level of certainty, they will definitely have a higher sentiment of making, especially in [indiscernible] and probably easier for them to make investment decisions. So that's primarily the reason behind.

[Operator Instructions] This will conclude our question-and-answer session. I would like to turn the conference back over to Qin Pan for any closing remarks. Please go ahead.

Thank you, operator, and thank you very much our investor analysts. We have [indiscernible] and we're striving to get positive results for the market. Thank you very much for your time.

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