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. After an extremely complex macro environment in 2022, the macro challenges still persist in 2023. Heightened interest rate levels and a tight credit environment in the U.S. not only limited the recovery in economic activities, but also significantly impacted the stability of the European financial systems. The loss of depositor confidence in small- and medium-sized banks and regional banks led to an accelerated withdrawal of savings and bank drafts, also causing shareholders of these banks to suffer significant losses. While U.S. regulators provided timely protection for client deposits in these banks, the restoration of investor confidence in the capital markets was inevitably delayed again. In the Chinese market, after three years of pandemic control, we believe the Chinese economy will get back on a 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 and restaurants are picking up, sales of big-ticket items 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. Additionally, the Chinese wealth management industry will shift back to bank dominance. On the bright side, we believe the rising savings rates also provide 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, offering a more diversified range of global wealth management products. From 2019 to 2022, after three years of organizational reforms, Noah has internally formed three established product business units, namely Gopher Asset Management, Fund Smile, and Noah Glory, which provide insurance, family trust, and other value-added services. Each of these product business units has relatively independent domestic and international operations. Starting in 2022, Noah has also begun to 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, increasing to 39.7% of the total revenue from 23.8% in 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. 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 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 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 remains 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. 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 core strategy is to focus on upsizing and strengthening central hub cities. Tier 1 cities have more talent resources, a better innovation environment, and better education options for children. As domestic high-net-worth individuals migrate to Tier 1 cities, Noah is reducing the number of satellite cities to further reduce costs 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 the domestic online channel, we focus on strengthening the empowerment of technology systems and upgrading client experience. By providing a wider array of online product shelves, 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 the 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. The cumulative number of clients reached 327, up 70.7% year-on-year. Noah's international overall clients grew 13.2% year-on-year to 13,427. The number of active overseas clients during the quarter reached 1,763, up 35.3% year-on-year. In terms of international wealth and online wealth management, in 2023, we will mainly focus on helping overseas private bankers to be able to fully execute their clients' transactions and provide portfolio advice and services more efficiently. The number of active clients for overseas mutual funds reached 1,409 in the first quarter, a significant increase of 537.5% year-on-year. Transaction value reached USD 340 million, an increase of 10.4% quarter-on-quarter on top of a more significant year-on-year increase. The overall overseas mutual fund AUA reached USD 970 million, an increase of 588.7% year-on-year. Our international Smile Treasury business also began to show significant progress and so far has successfully attracted more than 140 overseas corporate and institutional clients. The transaction value for the first quarter reached USD 35 million, an increase of 13.4 times. On the asset management side, Gopher's overall AUM was RMB 157.6 billion, up 0.9% year-on-year, among which Gopher's actively managed target strategy products executed disciplined risk management and limited pullback during the past year. During this quarter, the investment team made timely investment judgments and active investment strategies, achieving 12.3% annualized return, annualized volatility of 6.3%, and a sharp ratio of 1.7 for the quarter. Balanced investment products achieved 14.9% annualized return, 5.2% annualized volatility, and a sharp ratio of 2.6. Lastly, the stable investment products reached 7.8% annualized return, 1.9% annualized volatility, and a sharp ratio of 3.3 during the quarter. Overseas AUM of Gopher's international actively managed products achieved a 14.9% year-on-year increase to USD 4.9 billion, accounting for 21.2% of the total AUM. In the current interest rate and economic cycle, we see excellent entry opportunities and investment thesis in credit products, private equity buyouts, special opportunities and PE secondary funds, as well as early-stage technology VC investments. Gopher's overseas PE AUM also achieved a 7.5% year-on-year increase to USD 3.9 billion in the first quarter. We also plan to continue to improve our coverage of global top managers and expand our partners' network, as well as upgrade our KYP technology system to better provide overseas alternative investment product solutions to our global Chinese clients. 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 three years, Noah started to track ESG awareness among diamond and black card clients, and saw the willingness to invest in ESG increase from 35% to 87%. Noah's continuous ESG advocacy and investor education also played a significant role in the progress of clients' greater recognition of ESG concepts. In addition to environmental and sustainability aspects, we have made continuous improvements in corporate governance levels. We have built collective leadership by establishing five major committees at the 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, 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, the quality of decision-making has improved significantly. Finally, we have officially opened our brand-new headquarters on May 18 this year. Noah Wealth Center is located in the core area of the 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 investor 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 remains prudent. In the meantime, from an international perspective, the U.S. federal reserves have been sticking to a hawkish monetary policy throughout the quarter, cumulatively raising the federal interest rate twice from 4.5% to 5%, which largely indicates a continuation of the theme from 2022. Additionally, the sudden collapse of SVB in March caused a crisis in the U.S. banking sector and even had a spillover effect on the global financial industry, which brought concerns to investors about market volatility on top of hiking rates and tightening credit conditions. Staying true to our client-centric strategies, we are dedicated to transforming 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 of 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, with 31.5% 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 a 26.9% quarter-over-quarter increase in operating income to RMB 279 million, implying an operating margin of 34.7%. As a result, non-GAAP net income was RMB 240 million, up 60.6% quarter-over-quarter, with a net margin standing at 29.8%. Now please allow me to share with you the detailed financial results for the first quarter. We recorded quarterly net revenue of RMB 803 million, up 1% year-over-year, but down 8.9% quarter-over-quarter. Notably, our one-time commission fees were up 72.5% year-over-year to RMB 176 million, indicating a quick recovery in investor sentiments regarding products with lower risk profiles such as insurance products. As our global expansion strategy progresses, the distribution of offshore insurance products took up an increasing share of revenue this quarter, and we believe the expansion of offshore product distribution to our investors residing abroad will have ample growth potential. The stabilizing revenue stream, recurring service fees was RMB 474 million in the first quarter of 2023, which represents 58.8% of total revenues and remains relatively steady from last quarter. Performance-based income was RMB 83 million, flat from the previous quarter but down 52% year-over-year due to weaker market performance, especially on security type products. Quarterly operating income was RMB 279 million, down 11.1% year-over-year but up 26.9% quarter-on-quarter, implying an increase of 9.8% quarter-over-quarter in operating margin due to a 20% quarter-over-quarter decrease in total operating cost expenses, which has resulted from a precise cost efficiency strategy in G&A and selling expenses. Interest income in this quarter was RMB 34 million, up 172.1% year-over-year and 141% quarter-on-quarter, mainly due to our U.S. dollar deposits. Consequently, non-GAAP net income was RMB 240 million, down 23.6% year-over-year, but up 60.6% from the last quarter indicating a non-GAAP net margin of 29.8%, which increased 12.9% from last quarter but decreased 9.6% year-over-year due to the change in the revenue structure, especially in performance fees. Transaction value was RMB 16.8 billion for the quarter, up 12% year-over-year but down 6.7% from the previous quarter. Notably, the transaction value of private secondary products increased 6.5% year-over-year and 27.5% quarter-over-quarter to RMB 4.3 billion. The transaction value of mutual fund products decreased 18% from last quarter to RMB 10 billion but increased 40% year-over-year, thanks to our continuous efforts to enlarge our client base, including both individual and institutional clients, onshore and offshore. Besides, the transaction value of private equity products was RMB 1.3 billion, mainly from U.S. products, which went up 3% quarter-over-quarter. Thanks to the proprietary investment teams of Gopher in New York real estate investment team and also Silicon Valley venture capital investment team, as well as enlarged coverage and selection of global top-tier products. Since the loosening up of the COVID restrictions on both domestic and international traveling, we have been investing heavily to bring back Noah's famous investment seminars to our clients. The Client Summit we held in Hangzhou during the first quarter of 2023 attracted more than 1,200 high-net-worth individuals, clients, and dozens of reputational fund managers in the industry who were invited to provide their latest views on the economy and investment strategies. Additionally, overseas client activities, like the Investment Summit held in Hong Kong, also underpin the promising progress for Noah's global expansion plan with over 600 clients in attendance. A portion of overseas transaction value reached 31.5%, up 15% year-over-year and 3.2% quarter-over-quarter. Overseas AUM also increased about 15% year-over-year and 2.8% quarter-over-quarter to RMB 33.4 billion, taking up 21% of the total AUM. Moreover, overseas active clients went up 35% year-over-year and 1.3% quarter-over-quarter, demonstrating the progress in establishing client channels in our overseas wealth management business. As for our segmented results, net revenues from wealth management were RMB 587 million, taking up 73% of total net revenues. Net revenues from asset management were RMB 205.2 million, taking up about 25.5% of total revenues. Total AUM increased by RMB 445 million from last quarter, sitting at RMB 157.6 billion, primarily due to the increase in the AUM in public securities products, thanks to our U.S. dollar cash management offerings. Overseas AUM increased by RMB 919 million this quarter, making up 21.2% of total AUM. Moving on to the balance sheet, we remain in a very healthy position in terms of liquidity as our current ratio stands at 3.2x. The debt-to-asset ratio was 20.2% with no interest-bearing debt. Currently, we have RMB 4.7 billion in cash, and we're preparing the dividend payouts, as well as executing the other globalization plan. In addition, as mentioned in the previous quarter, we will declare a final dividend of RMB 5.5 per share, equivalent to USD 0.40 per ADS or HKD 6.2 per share, subject to the final approval of the upcoming AGM on June 12, 2023. We look forward to providing stable and sustainable returns to the shareholders with the growth of our business. Wrapping up, our first quarter performance delivered a stable set of underlying results with a positive outlook on our domestic and international dual circulation strategy. We believe that Noah will be able to tread through the uncertainties and seize the opportunities to expand in the coming years. Again, we sincerely appreciate our shareholders for their ongoing trust and support, and strive to create diversified portfolios and long-term values for our clients and shareholders. Thank you for listening, and we'll open the floor for questions.

Okay. Let me translate my questions. This is Helen from UBS. Two questions, if I may. The first is on the RM expansion plan. In the first quarter, the number of onshore RMs saw a sequential increase of 40. I remember your previous guidance was no increase or a slight increase in onshore RMs. So is there any change of plan? And for the 40 increase in onshore RMs, how many were new joiners and how many RMs have left the firm? The second question is on the revenue contribution from the 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 is in compliance with our strategy domestically. We do have a program called 311, basically for 14 cities: the three major cities, that's Beijing, Shanghai, Shenzhen, and also 11 or 12 other first-tier cities that we believe are very, very important for future market expansion. So for these cities, we actually do have a goal for above-average business growth within 3 to 5 years. So for these cities, we are still expanding and recruiting actively. As a result, in the smaller cities, probably in the third and 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 needed; we'll be very happy to provide it. Essentially, the strategy surrounding the domestic market is to continuously invest heavily into the 311 cities. We actually, as a matter of fact, want to supplement the budget to support hiring, especially for 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 can attract relatively higher-tier talents. You will see a number in the number of RMs, which partially contributed to the client base shift. That's essentially we're trying to attract relatively younger blood into the team; basically, those with less than five years' experience but with great academic backgrounds to supplement the RM team so that we will have a team of younger talents that will be able to grow into strong and better RMs in their future years.

So, Helen, to your second question, we don't typically characterize that as referral local business. All the overseas business that arises from client demand is 100% viewed as locally developed. The domestic RMs, when they do realize or their clients express to them that they have overseas assets, they need help on the allocation of those assets, will team up with the RMs in Hong Kong and Singapore to focus on figuring out the exact allocation. One fact is for sure that domestic RMs won't be 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% is being served locally in the overseas market. These clients' assets are already overseas, and they're probably already being served by other private banks or institutions. That piece of business will be built purely as overseas allocation.

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

Well, basically, we still are looking at a rather uncertain macro outlook. The majority of clients are taking a defensive stance in terms of investment strategy or a more market-minded or balanced-minded type of strategy. An interesting fact to note is the age structure of most high-net-worth individuals or first-generation entrepreneurs or business owners. In the first half of their lives, they were aggressive, probably in an attack mode in investment strategy. But now they are getting older—especially the baby boomers born between 1962 to 1972—looking at the second half of their lives, and they are taking a much more defensive strategy mindset towards investment and asset allocation strategy. Most of their wealth and assets were very heavily pro-China in the past, and now they are probably looking at erupting globalization as an allocation strategy to diversify geographic risks. We’re seeing a clear trend of increasing allocation toward preservation strategy in terms of asset structure, in terms of insurance products, and even trust in some family planning, not only to support investment asset allocation but also to align with the lifestyle of a global citizen. We are not yet seeing a quick recovery or a strong recovery in investment-type assets. We believe they are still assessing the situation, but the action and mindset currently are, I would say, very conservative.

To your second question, in terms of revenue and profit for the rest of the year, obviously, since we're getting primarily listed on the Hong Kong Stock Exchange, we cannot give revenue or profit guidance. One thing is for sure, regarding the expense and cost strategy, even while we're investing into globalization, we still aim to maintain relatively consistent profit margin compared to the past year. We're seeing more cost efficiency, especially from domestic operations. For example, we're concentrating more in larger cities, closing down some of the smaller cities, and letting go of some low-performing RMs while utilizing our new headquarters as the marketing scenario instead of paying millions for hotel rooms, especially in Shanghai and Zhangzhou provinces. Thus, we will maintain a relatively steady profit margin, particularly from a human capital expense standpoint. We believe that the continuing rise in new commissions, as seen in the first quarter, suggests we are still growing new revenue from larger wallet shares from newer clients. That's where we will maintain growth. Hopefully, notwithstanding a recovery year, with China's goal for GDP recovery increase, our annual budget remains growth-oriented. We're excited about growing new territories in global and overseas business while maintaining ambitious targets for wealth management and the three business units we discussed.

So we have no further questions from the investors and analysts. Thank you all for listening to our earnings release today. 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 headquarters. Please do as well. Thank you.

Thank you.