Good morning, everyone, and welcome to Noah's 2023 First Quarter Earnings Call. I'm Melo Xi, Director of Investor Relations at Noah Group. Presenters joining us today are Ms. Wang Jingbo, our Co-Founder, Chair Lady and CEO; and Mr. Grant Pan, our CFO. I'd also like to inform you that we're currently live from our new headquarters, Noah Wealth Center located at Hongqiao, Shanghai. Before we start, we would like to kindly remind you that during today's call, we may make forward-looking statements based on our current expectation of the business. Please keep in mind that these statements are subject to risks and uncertainties that may cause Noah's actual results to differ from these statements. We do not undertake any duty to update these statements. For discussions of some of the risks that could affect results, please see the safe harbor statement section of our 6-K filing. We'll also refer to certain non-GAAP measures, and you'll find reconciliations in our 6-K report made available on the Financial Reports section of Noah's Investor Relations website. Also, please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in any Noah or Noah-affiliated products. This call is copyrighted material of Noah, and may not be duplicated without consent. With that, I would like to welcome our Chair Lady and CEO, Ms. Wang Jingbo.

For the agenda of today's conference call, I'd like to first talk about the macroeconomic environment, Noah's global expansion progress and then report on the overall performance of the first quarter as well as our various business segments. Then Grant Pan, our group CFO, will present the financial information for the quarter. And lastly, we'll end with a Q&A session. After an extremely complex macro invent in 2022, the macro challenges still persist in 2023. We heightened interest rate levels and a tight credit environment in the U.S., not only limited the recovery in economic activities, but also significantly impact the stability of the European and financial systems. The loss of depositor confidence in small- and medium-sized banks and regional banks spell into an accelerated withdraw of savings and bank drafts, also causing shareholders of these banks suffering significant losses. While the U.S. regulators provided timely protection for client deposit in these banks, the restoration of investor confidence in the capital markets was inevitably delayed again. In the Chinese market, after 3 years of pandemic control, we believe the Chinese economy will get back to trajectory for growth as COVID restrictions were lifted and borders opened. However, it will take time for the economy to recover, and we see that while consumption in sectors such as tourism, restaurants are picking up; sales of big items tickets such as real estate, automobiles, and home appliances are still weak, which indirectly reflects the cautious attitude of consumers towards future income growth expectations. We believe that China's wealth management and asset management industry which is dominated by Capital Markets products will encounter great challenges as the bank deposit portion of consumers' financial assets might be held longer. And China's wealth management industry will shift back to bank dominance. On the bright side, we believe the rising savings rates also provides growth opportunities for diverse investment products in the future, benefiting distinguished independent wealth managers like us. As overseas inflation and U.S. dollar interest rates remain high, we have seen a substantial increase in overseas Chinese demand for global asset allocation. As an independent wealth manager, Noah's overseas offices in Hong Kong, Singapore and the U.S. have become substantially more attractive to overseas Chinese high-net-worth clients as they can offer a more diversified range of global wealth management products. From 2019 to 2022, after 3 years of organizational reforms, Noah has internally formed 3 established product business units, namely Gopher Asset Management, Fund Smile and Noah Glory, which provide insurance, family trust and other value-add services. Each of these product BUs had relatively independent domestic and international operations. Starting 2022, Noah has also begun to actually build overseas direct sales capabilities and online client service interfaces to better serve global Chinese investors.

During the first quarter of 2023, the company recorded overall net revenues of RMB 803 million, up 1% year-on-year and down 8.9% quarter-on-quarter. Domestic business contributed RMB 488 million, accounting for 60.3%, down 20.2% year-on-year and 19% quarter-on-quarter; while the overseas business segment contributed RMB 321 million, up 68.4% year-on-year and 13% quarter-on-quarter, an increase to 39.7% of the total revenue from 23.8% from the comparable period last year. With the gradual improvement of Noah's overseas setup, we hope that the contribution of overseas revenue can reach more than 50% of the whole group in the next 3 to 5 years. And thanks to better cost management, the operating margin for the first quarter was 34.7%, and the operating profit was RMB 279 million, an increase of 26.9% quarter-on-quarter. The wealth management segment contributed RMB 589 million, up 1.5% year-on-year and down 9.4% quarter-on-quarter. The domestic portion contributed RMB 351 million, down 17.5% year-on-year and 20.7% quarter-on-quarter, while the overseas portion contributed RMB 238 million up 15.7% year-on-year and 14.8% quarter-on-quarter, thanks to the growth of overseas product transaction value and insurance distributions. The asset management segment contributed RMB 206 million, up 2.3% year-on-year and down 8.1% quarter-on-quarter. The domestic portion contributed RMB 123 million, down 26.7% and 16.6% year-on-year and quarter-on-quarter, respectively. While the overseas portion contributed RMB 83 million, up 136 -- 38.8% year-on-year and 8.2% quarter-on-quarter. This was mainly due to the growth in the scale of overseas AUM and the increase in carrying -- from overseas private equity exits in the first quarter. On the protection and preservation side, the demand for insurance product allocation from high-net-worth individuals remain high. During the first quarter, domestic insurance brokerage business generated 241% year-on-year growth in revenue, and the number of active clients increased more than 6x year-over-year. For our overseas insurance brokerage business and overseas family trust services, during the first quarter, overseas insurance revenue increased 179.8% year-on-year and 2.9% quarter-on-quarter. And the number of active clients also increased 234.1% year-on-year and 31.7% quarter-on-quarter. Our overseas family trust team has provided family trust services to a total of 473 overseas Chinese families as of the end of the quarter, an increase of 8.2% compared to the end of 2022. Evidently, in an environment where capital market volatility continues and uncertainty in the macro environment has yet to subside, there's still a lot of unmet demand for asset allocation security from Chinese clients around the world.

Our domestic wealth management business. Our core strategy is to focus on upsizing and strengthening central hub cities. Tier 1 cities have more talent resources and better innovation environment as well as better education options for children. As domestic high-net-worth individuals migrate to Tier 1 cities, Noah is also reducing the number of satellite cities to further reduce cost and increase efficiency while increasing investments in Tier 1 cities. As of the first quarter, the number of domestic relationship managers was 1,299, a 3.2% increase from the previous quarter. In terms of domestic online channel, we focus on strengthening the empowerment of technology systems and upgrading client experience. By providing a wider array of online product shelf, CCI asset allocation tools and investment strategy reports, as well as a more interactive and informative portfolio interface, transaction value for mutual funds reached RMB 10 billion, an increase of 40.3% year-on-year. In terms of corporate and institutional clients, the Smile Treasury Platform launched in 2022, successfully attracted nearly 5,000 corporate institutional clients. During the first quarter, the number of active clients of Smile Treasury Platform increased by 325.5% year-on-year, and the overall AUA with us reached RMB 2 billion. On the international wealth management side, we further expanded the number and quality of our branch offices and private bankers. As of the end of the first quarter, Noah's Hong Kong and Singapore wealth management team had 28 relationship managers with the goal of reaching 100 private bankers in Hong Kong and 20 private bankers in Singapore by the end of the year. As of the first quarter of 2023, the number of clients in Hong Kong and Singapore achieved 13.1% and 77.6% year-on-year growth, respectively. Clients' AUM with Noah on a discretionary investment basis reached USD 230 million, up 33.2% year-on-year. And…

In terms of ESG, 2023 was the ninth year for us to publish a Sustainability Report to showcase the new developments and achievements of Noah towards ESG every year. In the past 3 years, Noah started to track ESG awareness among diamond and black card clients, and saw the willingness of investing in ESG increase from 35% to 87%. Noah's continuous ESG advocacy and investor education also played a non negligible big role in the progress of clients' greater recognition of ESG concepts. In addition to environmental and sustainability aspects, we have made continuous improvements in the corporate governance level. We have built collective leadership by establishing 5 major committees at group level, including the Strategy Committee, Talent Committee, Reform Committee, Operation Committee and Technology Committee. We have also established the AT and SD framework in each business unit and region, which is responsible for building and motivating talent as well as making and managing key business objectives respectively, thus completing the transformation from individual leadership to organizational capability. In this process, although the management awareness and decision-making efficiencies seem to be slower, but the quality of decision-making has been greatly improved. Finally, we have officially opened our brand-new headquarter on May 18 this year. Noah Wealth Center is located at the core area of Hongqiao transportation hub located in the central axis of Shanghai. The whole complex has a total area of about 72,000 square meters. With the geographical advantage of Hongqiao transportation hub, Noah can service clients from the other Triangle as well as the whole country and even the world more conveniently. We have made a stand-alone building of our new headquarters, a client-centric experience center, for Noah's global clients making Noah a truly private bank with a unique client interface. Next, I would like to ask our CFO, Grant Pan, to present the financials in detail. Thank you.

Thank you, Chairlady, and good morning, investors and analysts. As mentioned by the Chairlady, the first quarter of 2023 entails a moderate economic recovery in China. Indicated by a 4.5% year-over-year growth in GDP. Market sentiment started to slightly lean away from savings, turning to a mild increase in the demand for investment, evidenced by a 2.2% quarter-over-quarter rate rebound in the issuance value of mutual fund products. Although investors' activities became more active and transaction values in the markets have gone up, sentiment towards relatively higher risk profile products like private equity products still remain prudent. In the meanwhile, from an international perspective, the U.S. federal reserves have been sticking to a hawkish monetary policy throughout the quarter, accumulatively raising the federal interest rate twice from 4.5% to 5%, which largely indicate a continuation of the theme from 2022. In addition, the sudden collapse of SVB in March caused U.S. banking sector in crisis and even had spillover effect on global financial industry which brought concerns to investors about market volatilities on top of hiking rates and tightening credit conditions. Staying true to our client-centric strategies, we dedicated to transform these uncertainties into opportunities to generate cross cycle preservation and growth for our clients' wealth. Coupled with our constant improvement in domestic capabilities and ongoing expansion in the international market. In terms our client engagement and financial performance when hindered by the concurrent complex macro environment. Noah's quarterly transaction value increased by 12% year-over-year to RMB 16.8 billion, 31.5% of which contributed by overseas products. Reflecting our financials, revenues from overseas business for this quarter increased 68.4% year-over-year and 13% quarter-on-quarter to RMB 321 million, taking up 40% of the group's total revenue. Combined with the cost efficiency strategy, Noah achieved 26.9% quarter-over-quarter increase in operating income to RMB…

Okay. Let me translate my questions. This is Helen from UBS. Two questions, if I may. The first is on RM expansion plan. In the first quarter, the number of onshore RM saw a sequential increase of 40. I remember your previous guidance was no increase or a slight increase in onshore RM. So is there any change of plan? And for the 40 increase in onshore RM, how many were new joiners and how many RMs have left the firm? The second question is on revenue contribution from Hong Kong business. What proportion of the revenue can be attributable to newly acquired local clients rather than onshore client referrals?

So thanks, Helen. Basically, the change in the domestic RMs are in compliance actually with our strategy domestically. We do have a program called 311, basically the 14 cities. The 3 major cities, that's Beijing, Shanghai, Shenzhen, and also 11 or 12 other first-tier cities that we believe are very, very important for the future market expansion. So for these cities, we actually do have a goal for the average business, that's over each year within 3 to 5 years. So for these cities, we're still expanding and also recruiting actively. As a result, on the smaller cities, probably in the third, fourth tier networks the branch offices, some of the RMs that are not operating or performing to the standard of the 311 cities are obviously let go or they choose to leave. But we don't have exact data to track the turnover base you need it, we'll be very happy to provide it. But basically, the strategy surrounded the domestic market is to continuously to heavily invest into the 311 cities. We actually, as a matter of fact, I just want to supplement from the budget standpoint, we do set aside strategic budget to support the hiring, especially the higher talent that probably doesn't fit in the current compensation scheme. So we actually do have a strategic budget to supplement these cities so they are able to attract the relatively higher tier talents. So you will see a number in the number of RM and also contributed partially to the client big 3. That's basically we're trying to attract a relatively younger blood into the team. So basically, the ones with less than 5 years experience, but with great academic background and to supplement the RM team so that will actually have a team of younger talents that will be able to grow into large and better RMs in their future years.

So Helen to your second, so basically, we don't typically characterize that as referral local business. So basically, all the overseas business that are arising from the clients' demand are 100% viewed as locally developed. So basically, the domestic RMs, when they do realize or their clients actually express to them that they do have overseas assets, and they need some help on the allocation of overseas assets, the domestic RM will actually team up with the RMs in Hong Kong and Singapore, to continually to focus on figuring out what exactly the allocation is. But I think one fact is for sure that domestic RM is not aware, and they will not be able to know what exactly they're placing orders on, or what kind of allocation advice is provided to them. So that's I would say 100% as being served locally on the overseas market. And these clients' assets are already overseas, and they're probably already being served by the overseas private bank or other institutions. So basically, that piece of business will be built purely as overseas allocation.

Next, we have Chiyao Huang from Morgan Stanley.

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

So well, basically, we still are looking at rather uncertain macro outlook. So majority of the clients actually take a pretty defensive stance in terms of investment strategy or it will say better market minded or balance minded type of strategy. I think it's one interesting fact to note that the age structure of majority of the high-net-worth individuals or first-generation entrepreneurs or business owners. So in the first half of their life, obviously, very aggressive and probably in the attack mode, if you will, in the investment strategy. But now they're getting -- especially the baby boomers that was born between 1962 to 1972, they're looking at the second half of their lives. So they're taking much more defensive strategy mindset towards investment and asset allocation strategy. If you think about it, that a majority of their wealth and asset and investment probably are very heavily pro China in the past. And now they're probably looking at erupting globalization as allocation strategy to diversify the geographic risks. So we're seeing a very clear trend of the increasing allocation probably to the preservation strategy in terms of asset structure, in terms of the insurance products even trust some of the family planning to actually not only support investment asset allocation, but also the lifestyle on the global citizen type of style. Not yet seeing a quick recovery, a strong recovery in investment type of assets. I believe -- we believe that they're still assessing the situation, but I guess the action and also the mindset currently is still, I would say, very conservative. So that's the answer to your first question, Chiyao. And to your second question, in terms of revenue and profit for the rest of the year, obviously, since we're getting primarily listed Hong Kong Stock Exchange, we…

So we have no further questions from the investors and analysts. So thank you all for listening to our earnings release today. And if you have any questions, please don't hesitate to contact the Investor Relations team at Noah.

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

Thank you.