Earnings Call Transcript - NOAH Q3 2023

Operator, Operator

Good day and welcome to Noah Holdings Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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.

Melo Xi, Investor Relations Director

Thank you, operator, and good morning, and welcome to Noah's 2023 third quarter earnings call. Joining me on this call today are Ms. Wang Jingbo, 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 would 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 the panel discussions focused on our resilient standardized product offering, overseas expansion plans, solution-driven advisory services, global product leadership, as well as client service strategies. A full replay of the event and presentation materials can be found on our Investor Relations 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. Noah 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 the 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.

Wang Jingbo, CEO

Thank you all for joining us. I would like to begin today's call by sharing some recent insights gleaned from the face-to-face interactions I had with Noah 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 from our 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, where we offered each of them an asset allocation assessment paired with strategic advice tailored to their unique circumstances. Subsequently, in Singapore and Hong Kong, we held meetings with over 150 and over 800 international black card clients, respectively, allowing us to gain valuable insights into their needs while promoting Noah International's product and service offerings. Our close discussions revealed 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 Noah's international clients, reflecting their journey from product-centric to asset allocation-driven wealth management needs. Over the past two to three years, Noah has overhauled its offering, transitioning from a product-driven to a solution-driven approach. In our international wealth management segment, we rolled out the CCI model comprising the Chief Investment Office, Client Strategy Office, and Investment and Product Solution Office, through the CCI model, which directly aligns our macro health views with client demand to build product and solutions and improve relationship manager service standards and client satisfaction. Noah international wealth management's product offering and services matrix provides high net worth clients with our four global account allocation schemes embedded in our technology infrastructure, significantly enhancing the ability of Noah's relationship managers to provide asset allocation advice and continuity of service. We believe to achieve success, wealth and asset management firms must have a solid track record, offer a diverse product portfolio, maintain efficient sales channels, and build a high-quality AUM base. At Noah, we recognize the pivotal role of talent and focus on cultivating a strong team through a long-term 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 relationships. Noah remains dedicated to serving high-net-worth Chinese clients globally. Leveraging Hong Kong as a hub, we have begun building teams of relationship managers in key locations such as Singapore, Europe, and the United States to cater to Chinese clients' comprehensive asset allocation needs. 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. 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%. The domestic business contributed RMB1.5 billion, a 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 Noah's ongoing investments in channels, products, and comprehensive services propelled overseas revenues to RMB1 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 segment, wealth management contributed RMB1.9 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 inherited solutions from high-net-worth clients. Our domestic insurance brokerage business achieved a remarkable year-on-year growth of 63.4% in the first three quarters of 2023. Meanwhile, revenues from overseas insurance, trust, and other comprehensive services surged 381.8% year-on-year. The number of active overseas insurance clients increased more than fourfold year-on-year in Q3. Over the past quarters, we have increased our investments in digitalizing our insurance and comprehensive services programs. Our technology team has begun integrating our systems with insurance companies worldwide, making us the first company in the Hong Kong market to offer fully digital insurance applications and premium payments to Noah’s nominee accounts. This has made insurance applications 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 reached RMB877 million with an operating profit margin of 35.2%. Our domestic wealth management strategy continues to focus on first-tier 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. Regarding our domestic wealth management funds, we have continuously invested in technology infrastructure, rolling out functions such as the CCI portfolio report in one click and 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 and institutional clients, the Smile Treasury Platform launched in 2022 has successfully onboarded nearly 6,000 clients in the first nine months of 2023, with active clients increasing by 73.7% year-on-year and 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 Q3 of 2023, we opened a client service center in Los Angeles, relaunched 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 the number of clients in Hong Kong and Singapore growing by 12.8% and 315.2% year-on-year, respectively. Cash management product AUM reached 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. Clients' AUA with no discretionary investment basis reached USD300 million, up 15.1% quarter-on-quarter with active clients during the quarter increasing 48.5% quarter-on-quarter and the 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 offerings on our wealth management app, expanding the client service categories to provide different solutions to individual clients, institutions, and in particular agency clients with whom we have made significant progress during the quarter. In Q3, the number of overall active 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 and a quarter-on-quarter increase of 22.9%. The number of active clients in the US dollar mutual funds reached 1,758, 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 and 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 EAMs and multifamily offices, leveraging the SaaS platform and Noah's comprehensive product offering. Our objective is to develop diverse sales channels targeting the goal of serving 300 overseas EAMs and multifamily offices. 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 excess of RMB private equity funds and decrease in NAV of some public market security products. As of the end of the third quarter, Q3 AUM decreased by 5% year-on-year, reaching RMB119.4 billion. The third quarter of 2023 was characterized 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 product team remains committed to balancing drawdown volatility and maximizing long-term yields. As of the end of the third quarter, annualized returns for active investment products were negative 1.6% with a volatility of 6% and a Sharpe ratio of negative 0.5. The 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 a Sharpe ratio of 3.2. Internationally, we are fully committed to enhancing our global investment product matrix. The overseas AUM of actively managed products reached USD4.9 billion, reflecting a year-on-year increase of 13.4% and its proportion of the group’s total AUM also increased to 22.9%. In the primary market, beyond traditional TVC products, we have gradually launched infrastructure, GPs stake, private credit, and secondary funds resulting in a more comprehensive product matrix. Narrowing the domestic strategy, our ESG strategy deployed across the Silicon Valley VC ecosystem focuses on fundraising from the top GPs first, followed by investing as an LP through a funnel fund with a goal to ultimately establish long cooperative relationships with GPs to secure core investment opportunities. We expect to deploy our DSC strategy across a wider spectrum of product segments in the future. As of the end of Q3, overseas PE AUM reached USD3.8 billion reflecting a year-on-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 50 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, and 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. In terms of our ESG efforts, Noah's management places a premium on promoting effective corporate governance and organizational decision-making mechanisms. We employ a committee-based operation and collective leadership decision-making process across our business units to ensure that Noah remains a dynamic 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 mechanisms to create a robust firewall between domestic and foreign data and ensure that we safeguard client privacy at all times. In conclusion, as an independent wealth management institution, Noah's core competitive advantage stems from its profound client insights and strong track record. We are 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 on providing high-quality asset allocation solutions rooted in prudent research-based house views. While acknowledging the significant role of technology, we recognize that the human touch, trust, and personalized relationships remain indispensable, particularly in meeting the complex needs of Noah's high-net-worth clients. Our core competencies are centered on creating real and long-term client value, encapsulated in the essence of client metrics with the survival as to the bottom line. We firmly believe that only by helping our clients thrive can we succeed as a business, thereby creating enduring value for our shareholders. Finally, a note on our updated shareholder return policy. Noah’s Board of Directors recently approved the plan to allocate up to 50% of the company’s annual non-GAAP net profit towards dividends and share repurchases. 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.

Grant Pan, CFO

Thank you, Melo, and thank you, Chairlady, for walking us through the third quarter operations, and good morning, investors, analysts, and good evening. For today's presentation, I'd like to start by sharing the latest insight into our client's profile and how Noah's 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 were 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 our black card and diamond card clients are in their mid-50s or even 60s. They predominantly reside in China's major metropolitan centers, echoing our recent strategy of consolidating operations in key cities. In terms of their wealth management objectives, we're seeing two key shifts in investment appetite taking place from our expansive base. China's first-generation entrepreneurs continue to be the primary decision-makers within their families and are seeking more balanced and security-driven allocation strategies for their wealth. This is marked by distinct shifts as we are aggressively seeking high returns on investment in the past towards a focus on wealth protection. Definitely, many of our clients are now entering a new phase of globalization in business and capital. Not only is there personal demand for global asset allocation service increasing, but the enterprise side needs to enter global markets as entrepreneurs is also growing. This will lead to an accelerated wealth accumulation effect for our 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 for wealth management firms. 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 are 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 robust expansion in our overseas business, demonstrated how we're successfully leading client demand in both situations. Furthermore, our healthy financial position ensures we are well-positioned to further expand with close to RMB5 billion in cash on our balance sheet, a healthy debt-to-asset ratio, and zero interest-bearing debt. 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 talents across our key functions: product investments, sales teams, both domestically and globally. These factors give us confidence that Noah is ideally positioned to meet the ever-evolving needs of Mandarin-speaking high-net-worth individuals in the next phase of China's globalization. With that, let's get into the details of our third quarter 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 a 10% increase compared to the same period last year. Additionally, our third quarters are relatively quiet due to seasonality as our sales and marketing teams prepare for the 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 one-time commission fees, which amounted to RMB780 million. Insurance products contributed 94% of total one-time commission fees in Q3 and have emerged as an important component of our revenue structure. This can be attributed to the more defensive positioning being adopted by our clients with an emphasis on 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 market and hedge fund solutions to provide clients with more balanced solutions that can deliver long-term return while minimizing volatilities and risks. Overseas net revenues accounted for 39% of total net revenues during Q3, 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 client service interface for local clients in the United States, expanding our US insurance business and promoting our investment business. Additionally, we have an exciting lineup of events planned for our clients including a flagship annual conference exclusively for esteemed black card clients. In addition, we recently began establishing a dedicated product selection team based in New York City, specifically focusing on US hedge fund managers. We expect overseas revenue contribution to increase further as we continue to expand our global footprint. Recurring service fees, which are a key stabilizer in our revenue mix were RMB1.4 billion year-to-date, a slight decrease of 3.2% year-over-year due to a decrease in our AUM as we continue 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 exits in this tough market, contributing to the performance-based income for this year. Other service fee income in the first nine months was RMB205 million, up 37.2% year-over-year, primarily due to more value-added services provided to our clients. Operating profit for the third quarter was RMB250 million, up 7.4% year-over-year and down 28% quarter-over-quarter. The operating profit margin for Q3 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 phased effect created by COVID-19 lockdown in 2022, which curtailed both marketing activity and business travel as well as the increase in international travel this year in support of our global expansion. In addition, we incurred a number of one-time expenses related to the relocation to the Shanghai headquarters and the consolidation of our domestic network, among others, amounting to RMB40 million. Over the long term, however, we expect to achieve annual cost savings of RMB50 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 the distribution of government subsidies across various regions this year. Non-GAAP profit for Q3 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 Q3, 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 22.10% 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 Q3, mutual funds contributed RMB14.9 billion in transaction value, up 28.1% year-over-year. The total transaction value for overseas private secondary products was 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 were RMB1.9 billion, and net revenues from asset management were RMB0.6 billion, accounting for 75% and 23% of total revenues, respectively. As at the end of the quarter, we had 7,461 diamond card clients and 2,250 black card clients. The total number of diamond and black card clients was 9,711, up 0.3% quarter-over-quarter and down 0.7% year-over-year; rather flat. The number of active clients in Q3 was 9,489, down 58% year-over-year, primarily due to individual clients adopting a more conservative approach towards RMB public securities product. In light of the 4.1% and 9.2% pull-up in the Shanghai Securities Composite Index and Shenzhen Securities Component 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 RMs by the 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. We also saw a decrease in accounts receivable in Q3, primarily due to accelerated collection of domestic insurance commissions. The Board has always placed shareholder return and capital management efficiency as a priority based on a strong and clean balance sheet and strong liquidity position. 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 to 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 the 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 about the high-net-worth individual wealth management industry. The third quarter showcases our ability and the resilience to drive robust revenue growth and generate strong cash flow given a relatively quiet market environment. Looking ahead, with a robust balance sheet and nearly RMB5 billion in cash and cash equivalents, ample liquidity, and standardized product offerings and AUA, we are well positioned to fuel future growth, execute our strategy, and increase returns for shareholders. Our clean AUA, with no legacy private credit or residential real estate exposure, has built us a solid reputation as a trusted advisor to our clients which we are leveraging to drive our global expansion as demand for global asset allocation grows. We will continue to scale our international operations following the successful launch of our office in the third quarter while we are still preparing to commence operations in Dubai and continue to recruit relationship managers in Hong Kong and Singapore and other talents actively. As we continue to execute our growth strategy, we will embrace the evolving landscape and maintain our corporate flexibility. In the long term, we are very confident that our diverse offerings and commitment to globalization will 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.

Operator, Operator

Thank you. We'll now begin the question and answer session. First question will be from Helen Lee of UBS. Please go ahead.

Helen Lee, Analyst

Thanks, management. This is Helen from UBS. I have two questions if I may. First, the gross 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 decline sharply to RMB32,000? That's my first question. And second question, in terms of the transaction value mix, I noticed that a proportion of Gopher products increased to 21% in the third quarter. I'm just wondering whether you have any longer-term target for the transaction value mix from Gopher products and what are Gopher's product pipelines for the fourth quarter and into next year? Thank you.

Grant Pan, CFO

So, Helen, I'll explain your first question. So basically, a good chunk of the AUM increase for Gopher products actually came from US dollar cash management products and some of the discretionary portfolio investments for deposits. Basically, the majority of the revenue structure will come from management fees going forward. The same quarter's revenue actually doesn't reflect as we actually don't charge very high subscription fees for this type of product.

Wang Jingbo, CEO

Thank you, Helen. In terms of Gopher international front, we are committed to increasing our capabilities in the actively managed product space, including primary, secondary public securities, as well as cash management. So that is kind of more of a long-term process. 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 going forward it will depend on what the client really needs and also our investment in increasing our research and investment capabilities in Gopher's overseas market.

Operator, Operator

Thank you, Alan. Next question will be from Peter Chung of JPMorgan. Please go ahead.

Peter Chung, Analyst

I have two questions. First one is on the wealth management transaction volume. We noticed that the transaction volume increased sequentially in third quarter. We wish to understand what's the driver behind this. Is this mainly driven by the transaction from international clients? And management also mentioned that Noah engaged with clients in the third quarter. What's the latest client investment sentiment you've observed? This is the first question. Second question, we noticed that on the cost side for the quarter, there's a large contribution from government subsidies, which helped you reduce the operating expenses in the third quarter. We wish to understand what that represents or what's the driver behind it, and what's the trend going forward? Thank you.

Grant Pan, CFO

So, Peter, to the first question, the contribution actually mainly came from the US dollar side, which we managed to distribute around USD1 billion in transaction value, which has seen a significant increase of about 132% year-over-year. At the same time, we maintained a rather healthy distribution on RMB side, which is attributable to corporate client transactions, specifically from the Smart Treasury that account for about RMB12.9 billion of RMB mutual funds transactions. So both added and contributed to a rather healthy transaction value this year. And to your second question, in terms of I'll leave the client sentiment observation to the Chairlady and I will share a little bit of my insights as well. The second question in terms of the government subsidy, the total year-to-date has remained pretty stable, the first three quarters comparing to last year. The timing of the grant of the actual cash is usually pretty spontaneous based on the government's fiscal situation. So this year, we happened to receive the subsidies in Q3, but the total amount has remained rather stable compared to the last period of the year.

Wang Jingbo, CEO

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. What we have witnessed was that overall, clients have remained rather rational, seeking a more balanced solution and diversity in their global asset management or global asset allocation needs. We have witnessed an obvious shift from focusing on products and rates and returns from the past and are now more focused on comprehensive solutions regarding their overall wealth management needs, including their family and enterprise inheritance and succession plans. We have seen that the maturity and sophistication of clients have increased, which is good news for independent wealth managers like Noah. We've invested quite a lot in investor education and building our internal research capabilities. So, now that we are able to reach consensus with our clients more easily. I have also commented that in the past year or so, the general market or high net worth individuals in China, not just Noah's clients, have seen many risk-related events in the past, and their demands and needs have become clearer, focusing more on asset protection and security and global macro views, including currency risks. We are spending more time on investor education on those fronts. Hope that answers your question, Peter.

Peter Chung, Analyst

So, I have a follow-up question on government subsidies, because Mr. Pan just mentioned that the year-to-date amount has been stable from the previous level. Can I say that going forward, the annual amount is likely to be stable, while there can be seasonality in quarter-by-quarter?

Grant Pan, CFO

Peter, I think for 2023, it's probably the right way to put it. Going forward, I think it's very hard to predict the government subsidies, which is a form of refund of taxes or actually some of that is associated with job creation. So depending on the structure going forward on the RMB revenue and income 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. 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 of volatility in that. But I guess from what we have seen, I believe at least this year, the government is still honoring the subsidies to us.

Operator, Operator

Thank you. Next question will be from Chiyao Huang of Morgan Stanley. Please go ahead.

Chiyao Huang, Analyst

The first question is a follow-up on the black card data that took place in several cities recently; just wondering what's the progress in terms of the transaction value generated and whether you would provide quite strong support to the Q4 revenue? And the second question is regarding the insurance commission rate. We noticed some adjustments, actually quite notable adjustments on the commission rates, so do you expect the commission rates in the new year would also be based on potential changes going forward and that the potential impact on the net revenue? Thank you.

Grant Pan, CFO

I'll take the first question. We're actually seeing a very good turnout in attendance for the past three stops, and we have two more to go for the annual gala, which will probably take place early next year. From what we have seen for our first three stops with high attendance, we feel pretty optimistic about what’s going to come in terms of revenue generation or placement of financial products. But in terms of transaction value, we understand that it's a key metric to measure how much of the client's wallet share you're taking. We are not aggressively pushing for any specific type of products, but we are 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 high transaction values as in traditional investment products, but we're okay with that. We're pretty comfortable with the strategy of catering to clients' needs, and we believe that they are much more sophisticated than before. That said, we do have a very ample supply of investment products, especially on the overseas side, and we believe our clients are still very globally minded compared to the past. They have a deeper understanding of how the global investment products play, as compared to years back.

Wang Jingbo, CEO

So on the insurance commission side, in terms of the insurance brokerage commission declining, currently the regulation is mainly focused on the bank insurance channel. So, the independent insurance brokers are not affected yet, but as the regulations should change in the future to include independent brokerage, we would have no choice but to follow. However, on a global scale, we're not seeing any regulatory changes in the overseas insurance brokerage business or market, so that part should not be affected. In fact, after COVID, the overseas insurance brokerage business has been generating a larger revenue share compared to our domestic business at the moment.

Operator, Operator

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.