Noah Holdings Ltd (NOAH) 2023 Q3 法說會逐字稿

Good day and welcome to Noah Holdings third-quarter 2023 earnings conference call (Operator Instructions) Please note that this event is being recorded. I'd like to turn the conference over to Melo Xi, Investor Relations Director. Please go ahead.

Thank you, operator, and good morning, and welcome to Noah's 2023 third quarter's earnings call. Joining me on the call today are Ms. Jingbo Wang, our Co-Founder, Chairlady, and CEO, and Mr. Grant Pan, our CFO. Ms. 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&A session that follows. I'd like to generally remind you that we just held our Annual Investor Day on November 14, in Hong Kong, where Noah's executive management team provided an in-depth review of the business and laid out our strategic priorities for the future.

The presentations and panel discussions, focus on our resilient standardized product offering, overseas expansion plans, solution driven advisory services, global product leadership as well as the client service strategies. A full replay of the event and presentation materials can be found on our Investor Relation 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. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC and the Hong Kong Stock Exchange nor 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.

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.

(spoken in foreign language)

Thank you all for joining us. I would like to begin today's call by sharing some recent insights gleaned from face-to-face interactions I had with your 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 third quarter performance and go over some updates of our major business segments.

Over the past two months, we have held numerous annual meetings with over 1,200 domestic clients at our new headquarters in Shanghai. We offer each of them and asset allocation assessments paired with strategic advice tailored to their unique circumstances. Subsequently in Singapore and Hong Kong, we held meetings with over 130 and over 800 international black card clients, respectively, allowing us to gain valuable insight into their needs while promoting our international product and service offerings.

Our closed discussions reviewed an encouraging evolution in the wealth management needs of Noah's high-net-worth clients. In particular, there has been a noticeable shift in focus from specific products and returns to a broader array of considerations encompassing asset security, enterprise and family succession plans and global strategic asset allocation.

This transition is particularly pronounced among lower international clients, reflecting their journey from product centric two asset allocation driven wealth management needs. Over the past two to three years, Noah has overhauled its offerings transitioning from a product driven to a solution driven approach in our international wealth management segment.

We roll out the CCI model comprising of the Chief Investment Office, Client Strategy Office, and Investment 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 class client satisfaction.

Noah international wealth management product offering and services matrix provides our [China] clients with our four global account allocation schemes and better in our technology infrastructure, significantly enhancing the ability of Noah's relationship managers to provide asset allocation advice and continuity of service.

(spoken in foreign language)

We believe to achieve success wealth and asset management firms must have a solid track record to offer a diverse product portfolio, maintain efficient sales channels, and build high-quality AUA base. And Noah, we recognize the pivotal role of talent and focus on cultivating a strong team through a long-term class 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 relationship. Now, we remain dedicated to serving high-net-worth Chinese clients globally.

Leveraging Hong Kong as a hub, we have done building teams of relationship managers in key locations such as Singapore, Europe, and the United States to cater to Chinese clients comprehensive asset allocation need. 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.

(spoken in foreign language)

Now turning to our financial performance. For the first three quarters of 2023, we generated total revenues of RMB2.5 billion, a year-on-year increase of 11.9%. Domestic business contributed on the RMB1.5 billion and year-on-year decrease of 11.6%, accounting for 59.9% of the total net revenues. The growing client demand for global asset allocation, coupled with those ongoing investments in channels, products, and comprehensive services, propelled overseas revenues to RMB 1 billion, a year-on-year increase of 85.1%, accounting for 40.1% of revenue, up from 24.3% in the previous year.

Breaking it down by segments, wealth management contributed RMB, EUR1.9 billion, a significant year-on-year increase of 20.9%. The domestic wealth management business contributed RMB1.1 billion, a slight year-on-year decrease of 0.2%. The overseas wealth management business contributed RMB784 million, a year-on-year increase of 72.3% as it benefits from the growth in overseas transaction value and comprehensive services income.

The asset management segment contributed RMB582 million, a year-on-year decrease of 5.4%. The domestic asset management business contributed RMB358 million, a year-on-year decline of 31.8%, while the overseas business contributed RMB223 million a year-on-year increase of 150.3%, primarily driven by the growth of our overseas AUA and AUM.

On the comprehensive services front, we continue to see robust demand for wealth protection and heritage solutions from (inaudible) Our domestic insurance brokerage business achieved a remarkable year-on-year growth of 63.4% in the first three quarter of 2023. Meanwhile, revenues from overseas insurance trust and other comprehensive services serves 381.8% year-on-year.

The number of active overseas insurance clients increased more than fourfold year on year [2023] 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 first company in Hong Kong market to offer fully digital insurance applications and premium payments through Noah's nominee accounts.

This has made insurance application that's a significantly more efficient experience for our clients while enhancing our ability to provide high-quality fulfillment services. For the first three quarters of 2023, operating profit stood at RMB877 million with an operating profit margin of 35.2%.

(spoken in foreign language)

Our domestic wealth management strategy continues to focus on first year and other highly populated cities in China. We have also implemented organizational 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 1,331.

Our domestic wealth management funds, we have continuously invested in technology infrastructure rolling now functions such as CCI portfolio, reporting one-click in 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 first three quarters, the transaction value of mutual funds exceeded RMB36.9 billion, a year-on-year increase of 19.3%. The transaction value of private secondary products exceeded RMB14.2 billion, a substantial year-on-year increase of 46.2%. In terms of corporate institutional clients, small treasury group platform that launched in 2022. It successfully onboarded nearly 6,000 clients in the first nine months of 2023.

Active clients increased by 73.7% year on year with an average client AUA exceeding RMB600,000. 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 towards our annual recruitment goal of 120 overseas relationship managers.

Additionally, in the third quarter of 2023 we opened a client service center in Los Angeles. We launched our US insurance products and continued setting up our Dubai office to better serve the wealth management needs of Chinese clients around the world. As of the third quarter of 2023, Noah International had more than 14,200 international clients with a number of clients in Hong Kong and Singapore growing by 12.8% and 313.2% year-on-year, respectively.

Cash Management Product ,AUM, which are USD570 million, 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. Client AUA with on a discretionary investment basis reached USD300 million, up 16.1% quarter on quarter with the active clients during the quarter, increasing 40.5% quarter-on-quarter and cumulative number of clients hitting 653-up 38.6% quarter-on-quarter.

In terms of international online wealth management, we continue to expand the product offering on our wealth management, expanding client service categories to provide different solutions to individual clients, institutions and in particular, our agency clients, which we have made significant progress during the quarter

In Q3, the number of overseas clients increased by 78.6% year-on-year and 14.6% quarter-on-quarter to 2,284. Overseas transaction value reached USD957 million, reflecting a year-on-year increase of 106.9% quarter-on-quarter increase of 22.9%. The number of active clients in the US dollar mutual funds reached [1,768], reflecting a year-on-year increase of 105.6% with transaction value reaching USD269 million, up 59% year on year.

As of the end of Q3, we have successfully attracted more than 210 overseas corporate institutional clients. The transaction value of overseas mutual funds reached over USD120 million year to date. In addition, the international online wealth management business began trial operations for its two agent business, which drives the development of EGM's 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 EGMs and multifamily offices.

(spoken in foreign language)

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 energy of some public market securities. As of the end of the third quarter, RMB AUM decreased by 5% year-on-year, reaching RMB119.4 billion.

The third quarter of 2023 was categorized by significant volatility in public markets with the Shanghai Composite Index and Shenzhen Component Index falling by 4.1% and [9.4%], respectively. Gopher's actively managed target strategy products team remains committed to balancing drops all down 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 6.6% and the Sharpe ratio of negative 0.5. Balanced investment products generated an annualized return of 3.1% with volatility of 5.7% and a Sharpe ratio of 0.3. Stable investment products generated an annualized return of 8.2% with volatility of 2.1% and the Sharpe ratio of 3.2.

Internationally, we are fully committed to enhancing our global investment product matrix overseas AUM of actively managed products reached USD4.9 billion, reflecting on your increase of 13.4% and its proportion of group's total AUM also increased to 22.9%. In the primary markets beyond traditional PVC products, we have gradually launched infrastructure GP6 private credit secondary funds and resulting in a more comprehensive product matrix.

Mirroring the domestic strategy. Our ESG strategy deployed across the Silicon Valley VC ecosystem focused on fund raising from the top GPs first, followed by investing as an LP to a fund of funds with a goal to ultimately establishing a long cooperators and additional relationships with GPs to secure co-investment opportunities.

We expect to deploy our ESG strategy across a wider spectrum of products and segments in the future. As of the end of the third quarter, overseas AUM reached USD3.8 billion, reflecting a year-over-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 30 hedge fund managers globally have been onboarded with nine more in the due diligence process. Our offering encompasses a diverse range of strategies, including long neutral hedging trend following a 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.

(spoken in foreign language)

In terms of our ESG efforts, Noah's management, places premium and promoting effective corporate governance and organizational decision-making mechanism. We employ a committee based operations and a collective leadership decision making progress across our business units to ensure that no, it remains a dynamic corporate organization and an industry leader.

We maintain our strong focus on data security as well and prioritize the confidentiality and security of client information. 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. I ensure that we safeguard client privacy at all times.

In conclusion, as an independent wealth management institution, Noah's core competitive advantage stem from its profound client insights and strong track record. We're 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.

We pride ourselves in providing high quality asset allocation solutions through to improve and research based houses, while acknowledging the significant role of technology. We recognize that a human touch trust and personalized relationship remains indispensable, particularly in meeting the complex needs of Noah's high-net-worth clients.

Our core competencies are centered of clients that you have with the survival actually 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 our shareholders.

Finally, a note on our updated shareholder return policy. The Board of Directors recently approved a plan to allocate up to 50% of company's annual non-GAAP net profits towards dividends and share repurchases. In this strategic decision underscores management's confidence in the company's stable operations and long-term growth potential.

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

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

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 card clients are in their mid 50s or even 60s. It predominantly resides in China's major metropolitan centers, anchoring our recent strategy of consolidating operations in key cities.

In terms of their wealth management objectives, we're seeing two key shifts in risk appetite [taken through similar time]. China's first generation entrepreneurs continue to be the primary traditional makers within their families and are seeking more balanced and security driven allocation strategies for their wealth. This is marked by distinct shifts from the rather aggressively seeking higher returns on investment in the past so a focus on wealth protection.

Secondly, many of our clients are now entering a new phase of globalization in business and also capital, not only has their personal demand for global asset allocation service increasing for the enterprise sites need to enter global markets as entrepreneurs is also growing. This will lead to an accelerated wealth accumulation effect for a high-net-worth clients in the coming years.

According to a survey, 70% of the clients demand global asset allocation. And as a result, the ability to provide global solutions is a key requirement and wealth management firm. 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 comprehensive solutions for their globalization needs.

Our results for the first three quarters of 2023, which featured solid revenue growth driven by insurance product sales and a robust expansion in our overseas business demonstrated how we are successfully meeting wants demand in both situations. Furthermore, our healthy financial position ensures we are well positioned to further expand.

We closed RMB5 billion in cash on our balance sheet and healthy debt to asset ratio of zero interest bearing debts on the balances. Crucially, we also have a very clean AUA free from any legacy domestic private credit or residential real estate exposures. In addition, we have a deep bench of talent across our key functions, pharma investments, sales teams, both domestically and globally.

These factors give us confidence that Noah is ideally positioned to meet the ever evolving needs of mentoring speaking, high net worth individuals in the next phase of China's globalization. With that, let's get into the details of our Q3 financial performance.

In the third quarter, our top line continued to see robust year over year growth with net revenues reaching RMB750 million, close to 10% increase compared to the same period last year. Additionally, other quarters, the rest of the clients due to seasonality as our sales and marketing teams prepare or the Brett opening season at the beginning of the fourth quarter.

Net revenues for the first three quarters of 2023 increased by 12.5% year-over-year to RMB2.5 billion, mainly driven by the 90% year-over-year growth of onetime commission fees, which amounted to RMB780 million. Insurance products contributed 94% of total onetime commission fees in quarter three 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 an emphasis of safeguarding assets and wealth in light of ongoing market volatility and geopolitical factors. 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 markets and hedge fund solutions. We provide clients with more balanced solutions that can deliver long-term rates higher while minimizing volatilities and risks.

Overseas revenues accounted for 39% of total net revenues during the third quarter, a figure we anticipate will continue to grow going forward. Notably, we officially opened our Los Angeles office in the third quarter, which will provide a client service interface for local clients in the United States. Expanding our US insurance business and promote our investment business.

Additionally, we have an exciting lineup of events planned for our clients, including a flagship annual conference from exclusively by stream black card clients addition, we recently began establishing a dedicated product selection team based in New York City, specifically focusing our US hedge fund managers. We expect oversea revenue contribution to increase further as we continue to expand our global footprint.

Recurring service fees, which are a key stabilizing revenue mix were RMB1.4 billion year to date, a slightly decrease of 3.2% year over year due to a decrease in our AUM as we continued to exit RMB investments. Performance-based income was RMB125 million in the first nine 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 was still able to achieve this in this tough markets contributing to the performance based income for this year. Other service fee income in the first nine months of the year was RMB205 million, up 37.2% year-over-year, primarily due to more value-added services providers who are in the clients.

Operating profit for the quarter was RMB215 million, up 7.4% year-over-year and down 28% quarter-over-quarter. Operating profit margin for the third 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 base effect created by COVID like lockdown in 2022, which curtailed both marketing activity and business travel as well as increased international travel this year in support of our global expansion.

In addition, we incurred a number of onetime expenses related to the relocation to the Shanghai headquarter and the consolidation of our domestic network among others, amounting to RMB40 million. Over the long term, however, would expect to reduce annual cost savings by RMB15 million. 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 three was RMB232 million, up 21.8% year-over-year and RMB785 million year to date, down 8.7% year over year due to a soft first quarter earlier this year. Transaction values reached RMB22.3 billion in the third quarter, representing a strong increase of 24% year over year and 21% quarter over quarter.

By region, the total domestic transaction value in the first three quarters of 2023 was RMB15.3 billion, up 4.5% year over year and 20% quarter over quarter. The total overseas transaction value was USD957 million, up 106.9% year over year and 22.9% quarter over quarter. The increase in transaction value was primarily driven by mutual funds and overseas private secondary products.

Thanks to the introduction of US-dollar cash management and structured products. In the third quarter, mutual funds contributed RMB14.9 billion in transaction value, up 28.1% year-over-year. Total transaction value for overseas private secondary products for USD530 million in the third quarter, up 17 times year-over-year, 65% quarter over quarter, driven mainly by strong demand for discretionary investment products and structured products.

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 USD4.9 billion.

Turning to the results of each segment. In the first nine months, net revenues from wealth management was RMB1.9 billion and net revenues from asset management were RMB0.6 billion, accounting for 75% and [23%] of total revenues, respectively. As of end of quarter, we had 7,461 diamond card clients and 2,250 black card clients.

The total number of diamond and black card clients were 9,711, up 0.3% quarter-over-quarter and down 0.7% year-over-year rather flat. The number of active clients of quarter three was 9,489, down 58% year over year, primarily due to individual clients adopted a rather conservative approach towards RMB public security products.

In light of 4.1% and 9.2% drop in Shanghai Securities Composite Index and Shenzhen Securities Composite Index respectively during the third quarter. That being said, transaction value during the quarter was not negatively impacted by this 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 arms by end of this quarter.

Turning to the balance sheet, our debt to asset ratio and current 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% with zero interest bearing debt. We have RMB5.0 billion in cash and cash equivalents, providing ample resources to support our global expansion plans.

Whilst we saw a decrease in accounts receivable in quarter three primary fleet with accelerated collection of domestic inference commissions. The Board has always placed shareholder return and capital management efficiency as a priority, based on our strong clean balance sheet and strong liquidity position and after considering the necessary investments associated with our global expansion plan.

The Board has authorized a new shareholder return policy where we will allocate up to 50% of 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 fourth quarter Board meeting in March 2024 and announced thereafter.

To sum up, we remain optimistic for the high net worth individuals wealth management industry. The third quarter showcased our ability and resilience to drive robust revenue growth and generate strong cash flow even in a relatively quiet market environment.

Looking ahead with a robust balance sheet and nearly RMB5 billion in cash and cash equivalents, ample liquidity and a standardized product offering in AUA were well-positioned to fuel future growth and execute our strategy as well as increase returns for shareholders.

Our other balance sheet, quote-unquote, a clean AUA with no legacy private credit or residential real estate exposure has built out a solid reputation as a trusted adviser to our clients, which we're leveraging to drive our global expansion of demand for global asset allocation tools. We'll continue to scale our international operations following the successful launch of Dubai office in the third quarter, while 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 involving landscape maintain our corporate flexibility. In the long term, we're very confident that our diverse offerings and amendments to globalization, we enable us to meet the needs of global client investors and continue creating value for our shareholders. Thank you for listening. We'll now open the floor for questions.

Thank you. We'll now begin the question and answer session (Operator Instructions) Helen Lu, UBS.

Thanks, management. This is Helen from UBS. I have two questions, if I may. First, the growth increase in Gopher AUM was RMB4.7 billion in the third quarter, almost double that of the second quarter. But why did one-time commissions from Gopher managed funds declined sharply to RMB32,000? That's my first question.

And second question. In terms of the transaction value mix, I noticed that the proportion of Gopher products increased to 21% in the third quarter. I'm just wondering whether you have any longer-term targets for that transaction value mix from Gopher products and what our Gopher product pipeline for the fourth quarter and into next year? Thank you (spoken in foreign language)

(spoken in foreign language) So Helen, your question. So basically on a good chunk of the AUM increase in the Gopher product actually came from the US dollar cash management products in some of the discretionary portfolio investments for deposits. So basically majority of the revenue structure will come from management fees going forward.

The same quarter, our revenue actually doesn't reflect as we actually don't charge very high. So call it, that subscription fee for this type of product (multiple speakers)

(spoken in foreign language)

Thank you, Helen. I will translate for Chairlady. So in terms of Gopher's international funds, we are committed to increasing our capabilities in actively managed product space, including primary secondary public securities as well as cash management and so on that, that is kind of more of a long-term process.

And now in terms of the third-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 and also our investment in increasing our research and investment capabilities in Gopher's overseas market. Helen?

(spoken in foreign language)

Thank you, Helen. Operator, I believe we have Peter lining up the queue as well.

Yes. Thank you again (Operator Instructions) Peter Zhang, JPMorgan.

(spoken in foreign language) Let me do the translation. I have two questions. First one is on the wealth management transaction volume. We noted that the transaction volume increased sequentially in third-quarter. Well, wish to understand what's the driver behind it is mainly driven by the transaction of savings will come from international clients, overseas clients. And I might also mention that Noah engage with a client in third-quarter, what's the latest client investment sentiment you'll get back? This's the first question.

Second question, we noticed that on the cost side for the quarter, it is a large contribution from the government subsidiary which help you reduce the OpEx this quarter, but wish to understand what was the what does that represent or what's the driver behind it? And what was the sales trend going forward? Thank you.

(spoken in foreign language)

So Peter, on the first question, the contribution actually mainly came from the US dollar side, which we managed to actually distribute around USD1 billion in the transaction value, which has seen a significant increase about 132% year over year. At the same time, we maintained a rather healthy distribution on RMB side, which is attributable to the corporate client transaction institution client from smart treasury.

That account for about RMB12.9 billion 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 my insights as well.

The second question, in terms of the government subsidies, the total year to date actually remained pretty stable in the first three quarters comparing to last year, but the timing of the grant of the actual cash, the timing usually will, I will say, pretty spontaneous based on the government's fiscal situation. So this year we happened to receive the subsidies in the third quarter, but the total amount actually remained rather stable from the last period of the year (spoken in foreign language)

(spoken in foreign language)

Yes, I will 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 first overall, that clients have remained rather rational and they are seeking kind of a more balanced solutions and diversity in their global asset management or global asset allocation needs.

And also, we have witnessed a very obvious shift from focusing on product and recent returns from the past comparison now that the clients are more and 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 the set 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, investor education, and building our internal research capabilities. So now that we can -- it's easier for us to reach a consensus with our clients.

And Chairlady has also commented that in the past year or so, you know, basically to general market or high-net-worth individuals in China in general, not just on the Noah's client has seen in 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 as such, so we are spending more time to do investor education on those fronts. Hope that answered your question, Peter.

(spoken in foreign language) Let me do the translation. So I have a follow up question on government subsidiary (technical difficulty) Mr. Pan just mentioned that year to date amount has been stable from previous level crises that going forward, and you are more likely to be stable while there can be a seasonality in quarter-by-quarter? Thank you.

Peter, I think for 2023 is 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 one of a refund of taxes or actually some of that is associated with the job creation. So depending on the structure going forward on the RMB revenue income that we actually make domestically--I'm not sure whether or not it's safe to say that it will remain consistent.

It's pretty hard to predict. So if we do have 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.

Thank you sir, that was clear.

Thank you, Peter.

Thank you. Chiyao Huang, Morgan Stanley.

(spoken in foreign language) Let me translate briefly. On the first question is follow up on the black card that took place in several cities recently. Just wondering what's the progress in terms of transaction value generated and then with the EPS (technical difficulty) quite strong support to the 4Q revenue?

And the second question is that regarding the insurance commission rate, we saw some adjustments actually quite notable, I guess (inaudible) insurance commission rates. So the management expects on the commission rates in Noah. I would also say some potential changes going forward and that could potentially impact your revenue? Thank you.

Thank you. I'll take the first question, we actually see a very good turn up attendance or the past three stops, and we'll have two more to go for the Annual Gala, but probably will take place in in next year, early next year. From what we have seen for first three stops with a high attendance, I believe the total creation of revenue or placement of financial products will. I'm pretty optimistic about what's going to have to come--in terms of transaction value as much as we understand is a pretty key metrics in terms of middle to measure how much of clients' wallet share you're taking.

We are not aggressively pushing for any type of products, but 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 higher transaction values as the traditional investment products. But we're okay with that.

And I think we're pretty comfortable with the strategy of as long as it caters to 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, they are more, I think more sophisticated and deeper understanding of how the global investment and products play as compared to figures back.

I believe there is the second question. Can you remind me what the second question is? No, that's the only one that?

Yeah, without the commission rate. Is there any risk (multiple speakers)

(spoken in foreign language)

Yeah, so on the insurance commission side, in terms of the insurance brokerage commission, our declining mode -- right now, the resolution is mainly focused on bank insurance channel. So the independent insurance brokers are not affected yet, but as the regulation should change 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 are not seeing any regulatory changes in the overseas insurance brokerage business or market. So that part should not be affected. And in fact, that's after COVID, the overseas insurance brokerage business has been generating more revenue share compared to our domestic business at the moment.

I will see you later. Thank you.

Thank you, Chiyao. Thank you.

Thank you, that concludes our question and answer session and also concludes our conference for today. Thank you for attending today's presentation. You may now disconnect.

Thank you all for your--

Thank you.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.