Q1 2020 Earnings Call
Good evening and welcome to the Noah Holdings, One case <unk> earnings Conference call.
Well be analyst Oddly Myers should you need any assistance, please signal called especially by pressing the stocky qualified.
After todays presentation, there will be an opportunity to ask a question.
Last night the event is being recorded I would now like to attend the corporate so I wasn't much the grass Penn CFR. Please go ahead.
Thank you all corridor.
Hi, Good morning, good evening to all the investors and analysts on the call tour at 81, I am very happy to report to you about first quarter performance first left handed over to Charlie do you want to share with you on forms just doesn't know what for the first quarter in 2020.
[laughter] Ashish.
Well I didn't have to hopefully you can you tell away. So I can't I don't want to kind of pockets will get shot well yeah.
Each of those Sungy it chief.
Hi.
And on the so called he taught that the hutchings grab that you thought you do the housing shape to wholesale who don't want.
I already and the she wage increase which actually go what happened when she goes home fun to watch often forgotten the challenging [laughter] docile away coaching philosophy the suit.
Hi, It's one time she thought I fell so it's all my uncle, we told you going to time periods before so she does action.
Yeah, it's half way the situation that we took home she trends how would you talk to the board say she insulin telling me that you go there always is a good one day also.
Since I forgot to deal with the could you how Hitachi money. That's what you don't want to London she'll go how cheap so with that cohort she dock high school <unk> for everybody, though I do see the fullest.
Yeah, Seatbelts and I call somebody chip in the she has oh goodness. She equation. She didn't know how cool preferences, just Jody I want to cope with the trends how would you switch I shall Watson trampled Joey afford.
Today's agenda I was supposed to share my views on the micro economy and briefly summarize no what are the old performance in the first quarter of Twentytwenty. The development of a business segments on the achievements in challengers doing all the transformation all the CFO Mr. Grand pen with followed with a detailed discussion.
No as financial performance in the first quota we will conclude the call with a question and also session.
It's fair to say that the comes at nine children done. It seems 2020 has pushed wealth management institutions in China to accelerate the transition to provide more proactive and customized asset management services and expedite the supply of lots of value based products.
Industry is constantly transitioning from called up driven product sales oriented to investment advisory oriented providing clients, but effective asset allocation. So this is because it 19 pandemic Oh, sorry, we started wealth management industry with new methods and those contact list services.
Live streaming online solutions intelligence procession processing have become critical elements for the institution as Noah has shifted our focus from providing private credit from two more standardized products were able to enhance technology and innovation in wealth management business.
Our disciplined operational aspects, including your clients in China development product services investment research services and risk management with digital technologies, such as big data and artificial intelligence during the cold that 19 pandemic over 99.5% I've noticed clients have been completing that.
These actions in tiny online.
Yeah I would once that's done so one thing you teach out if you could finish on that definitely by each individual huh.
It's why do you joined antisense you focus on she loves the valley go so the timing telephone Chicago had having trashy, which you can fit on caution. They said they don't worry about why don't you down Johnny I mean people without L.R. fat cells. He didn't show year, maybe quenby sounds and she's looking.
She's on call Nobel got touching them Guzzle FMT told me you saw some balances so badger snowed in France, Quenby sounds ambassadors, just no danger cultural fit all equal compete Oh Gee don't compete on so I buy she del Monte sounds I'm fascinated by fund. It says no Copel do you guys know how campaign that use what do you have called fishing.
Yeah, I got adequate can talk how will they be cheap you. What she said that don't wait until the team quite got should go down the Kanjoya South Alamein [noise].
[noise] Hi, Alan you could you do lastly himself so it seems so she young.
Hi, John Stephens, Inc.
We should go don't if they get Jamie I'd I know you guys I'm, even though I happened to you guys still didn't know so that'd be shellfish I found to be Xabi thinking.
I was on should I use over again, so if you go how about watching silver RT. He told me Shadow Snooty Eattwenty Shadow study. She said she central fills or the fact that she didn't back I mean, I didn't hear the easy to buy have gone with the deal well know for your coast without you end up with him back that's either onebeacon topic because.
She's Oklahoma <unk> coal so you have not changed about Florida unbeaten doctor who they are.
So Jason.
Yes, I did you pay caicos away by that by post Ah, Tony Benn topic, and the snooty eat away cocoa pushing some would you know.
Sorry, Gail so eight when guy that she bought back by the a bench.
Thank you pencil Abrams abaxis bought him back around the country Sandeep they'll go to pick also what's it's also chip you did hold things had how she didn't didn't ashish like what you hear the fact that coupled to how you're just got seem to always told me how many deal when go to do so to that pace I think that's his hands on since I've got to.
[noise] Pangea cocoa, where she told to be on how your children as opposed to the fact that easy to constipation machine that you thought you test the Kathleen can cook, what do you actually on cycle, what you the shuffle jobs in fact shocks issue and so she any tested that fishing taxes are any idea he to warm the G patent pending tool suite country antisense.
You do this happened this city shutdown, we happen to eat seem to find being shot because she I'll tell you ever you census fortune.
Oh Boy Casegoods in Pennsylvania teaching her whole foods I got you can jobs. It's just a coke, we'll just have picked depending I haven't got that either go quite get there. That's it that's all I can.
[laughter]. So change we should see why does she into the shot I thought I will tell you that beat you to accomplish I'll jump back into feed him back clunky shutdown buttons I shot Dale woman teach you know what you'll see a whole should keep with a five day. So they select you said she don't hold me. It's it you said she don't that didn't so for the himself William more [laughter].
So Tom Watson, Jay you like I suddenly battles, how much she has how could that happen when she bought that on the you'll just simple cohort unless I'm doing well don't wait wait away Ashington cookie each handled that we're talking to cool next I would go.
Wealth management segment asset management segment and operational efficiency in the first quota starting from the third quarter of 2019, Noah ceased the distribution of single counterparty non standardize the private credit products I'm 40 entered the field of standardized products now I'm delighted to report that all the.
Somebody who has reached the renminbi 23.19 billion into first quarter, Twentytwenty up 76.1% quarter over quarter, the transaction value of standardized products, including issue phones equity and bond funds achieved an increase of 496.3% year over year and was up 96.9 plus.
Second quarter over quarter, excluding single counterparty known standardize the private credit products. The transaction value has increased by 287.5% year over year I was up 88.3% quota of a coat quota we.
We're pleased to see that standardize the product a well we saved by all the clients. Thanks to their continues trough the growth of the you and have standardized product and Noah has exceeded our expectations, especially in consideration of the severe impact of the covert 19 pandemic in China, where quite satisfied with all the achievements.
So far in the first quarter of Twentytwenty now with net revenues reached this M. B 746 million down 5.4% quarter over quarter non-GAAP net income attributable to shareholders races, any be 256 million up 119.6% quota of a quota the reason for the slide.
Decreasing our net revenues was due to the decline of revenues from other businesses under the impact of the Pope at 19 in the first quarter net revenues from overseas segment reach the renminbi 208 million down 16.1% year over year and down 12.7% quota of a quota accounting for.
27.8% of the group's total revenues in the first quarter Twentytwenty. The number of active clients reached 16831 up 4% quarter over quarter. Among the active clients 12756 will mute your phone clients up 9.2% quota of a quota in the meantime.
By the end of March this year, the number of Black card clients reached 880 up 16.1%, yeah, but yet in the first quarter the transaction value from that caught clients increased the buys I mean be 4.25 billion with you and reaching RMB 78 point 85 billion accounting for.
48.8% up the group's total AIU and Noah's clients generally have heightened comps or have the potential to a high income with excellent educational background and the dedication to long term study of investment and wealth management.
There was session to all the transformation to standardize Dakota has far exceeded all expectations in the past several months.
I understand the micro Psycho accepted the concept of asset allocation and are willing to increase the proportion of standardize the product endeka photos.
Changes in the industry and client demands are also driving the development of other relationship manager team starting from the first quarter, we have been applying a new relationship manager compensation scheme comprehensively relating relationship managers bonuses to clients engine.
This policy demonstrates the shift from the sales driven towards focusing on the maintaining an outstanding AIU and and highlights the consultancy value provided by relationship managers in the first quarter of Twentytwenty the turnover rate of like elite relationship managers dropped to 1% from 4.1% into first quarter.
In the fourth quarter of 2019.
I used the with new market conditions relationship managers need support from a professional one stop service platform. We have formed a skilled to try and go after that location team consisting of product experts fund managers and Expos for integrated services to provide other relationship managers with the strong middle office support.
There is key aspect in that business activities affected by the global pandemic on Monday travel restrictions overseas in the first quarter of Twentytwenty revenue from our insurance business decreased by 51.8% year over year and down 22.5% quarter over quarter. We're currently.
[noise] actively planning for the coming upcoming quotas on one hand, we have launched the service reservation system and all the other hand, we have initiated the mode of providing integrated services online sees the last of Chinese new year, we have conducted over 100 online courses and road shows as well as.
A considerable number of high quality live streaming sessions online for example, no at home initiative has helped to acquire nearly 1600 no new high net was.
Clients for out of mobile App My quinoa.
That's it has already done gets on the I mean, yes, I mean, that's used to go through the even with you can't know base Tee up I'd be shocked Allegheny Tony shutdown will get home.
Well, you eating making that teaching since we don't pay to quit watching shot it sound like just shouldn't he keeps all English seem that sometime the shopko smoke will trend going kind of somehow find these handle clearly, let's see the im little within R&D softening get bad Tony sounds them back in two days, how about just had one way more I bet looks a C N b bench.
Pencil am the baton to slow the effect competing downloading Joel Manby does not go down.
Well need you're talking to Kuwait I've you can go into tempted to let me. It says junco say am that oriented something which you kind of tenant move outs.
That doesn't have decided that stat.
Have plenty hygiene, we'll just have paid that should only seen France I go finishing the way sometimes with ballots attempt paid search what you're doing about it says I want to go. So that's all kinds of top I mean that she's a mom to tell me like it's easy to see in house. So he buttons and sensitive Saint Gobain. She didn't tempting 10, jostling teaching kids eat you do they did have we've always said she didn't you know Toby.
Uh Huh, so fast and we'll get shot [noise].
We see people thought he can you give them yet I mean auditing and she's out so that she them be phone film at most would you actually hooky time should get Maple took only teaching them fishy central don't when he puts us solidly in terms of asset management as of March 31st at Twentytwenty goes with you and stood at running the homogenous 60.
The 1.7 billion down 5% quota other quota and down 5.5% year over year as a result of I've a voluntary early redemption of private credit funds resulted in a net decrease upcoming being 90 171 billion U.N., if we exclude the impact of private credit assets.
The U.M. of private equity public Securities really state and multi strategy funds increased slightly up there's a 0.8% quarter over quarter and up 7.1%, Yeah, Oh, yes, the AIU and other overseas segment reach the renminbi 26.4 billion up 6.9% year over year and.
Up 6.5% quarter over quarter accounting for 16.3% of the group's total AIU and we understand that a high network clients I paint increasing attention to ethanol production capacity, we have officially taken into consideration the diversified rows of go such a U M. One implementing district teaching.
Targets of the group [noise].
In the yellow extended life assets, the wealth management industry has embraced a new paradigm driven by asset allocation under such circumstances go so positions itself as an asset management company that focuses on multi costs asset allocation and pursues absolute returns on the public Securities Fund.
Its flagship mom phones reported an excess return of 30.31% by the end of the first quarter since its launch.
Absolutely return of golf was flat should inhabitants private equity fund was 17.16% by the end up the first quarter, which was 5.72% higher than its market benchmark.
Terms of DCP and really stay phones I will focus for Twentytwenty will be on secondary PE Fund series five Coinvestment P. funk U.S. funds investing data industry really stay flagship phone at U.S. rental property fund, we will continuously improve on management and the capability of direct Inc.
Segment.
I have plenty high at home tempting Sheetal Shah everyone's attention paid to don't so what does that they're doing that he touched before do you sort of conduct sheets are the onto the Gulf LNG that <unk>. So you jago tend to hook to the box out well for couple of how do we only handles the euro cents wasn't done already woman, who do a couple of she choking cushy, the chili Cook, who needs high cohorts attempts.
Since then so well many decode the should you get closer to the phone sits on cohort each out due to just how quickly how fast. So why did you ever actually you know probably your way I'll quit.
Finally, he tempting to check well nobody will go away all play tone Codis out, but you can go you Copel. She took all the time, Chile, you were talking I people time, he began to cope with a total but you also probably I will quickly go when Tony the doctors will tend to do you called him to cope with anyway, I just didn't pitching call usually with them in the time due for that yes. They because you have the pit Tim.
30 times. So a couple touchy, that's all had happiness that one could lead to fashion woman Chiminski Suncor seems like she shops going into tier.
Well my only cookie that would I T, which has always follow fantastically well when do you want can build to suit Dee Ann Johnson until kind of find the timing Pat I thought she though team to hook well jump at things out what's the way I bet you send teaching the whole thing I wish I could you give the coach yes, yes, it's in a cohort sheeple, but I like otherwise how many page you'll have a dark.
I was talking about the I know young woman site crashing truck [laughter] sounds I shouldn't I shouldn't say he has attended she wants to do for the more cities. We got canceled for she's got you [laughter] Oh Boy Alcatel Shanghai took almost before talking for could you talk about she is how you felt they dig into coaching come for your hot [noise].
Shouty people can do it looks a little hook I found a foot attempt and going through some couple of yes, you would have to go any higher the totally she does that mean potentially hotels, the yet you, but I see so that that woman talk when she came to let you pay the go money Sundeep without Baffi then do you meet with coalesced, we'll just stepping back into a couple of the postal hoping that you want to spend with unsold homes.
A phone call do you have for why didn't you got I, So just finishing that Dunkin' giant Phil Jagielka hook wishing her wasn't homes.
Well cheat teaching fascination functions with that want to tell you know gem and up what else can tend to social issues about though so she can go sit I'll talk with Alfonso how to look into cloud you hopefully well, it's annoying so she'll cote gold fish talking to sound. The gondolas office, it's a little 10 shot stop at some point, which I'm a bit Hollywood shops, what do you look at you also want me so she's autos good job titles.
How can testify that holds the bottom quintile feel for as you well going to put that about before though.
It was sold to inject dollars so woman tomczyk into the coal 40, Yeah, well me at hockey cancel a couple of talking about Jessica cope with the touching it.
The wealth management industry is gradually shifting from product driven towards AIU and asset allocation driven to adapt to this market change we have more detailed requirements for the services. Our relationship managers provide we administered responsive Mccann ism and organizational <unk> policies to ensure the quality.
Each step of other operations when serving clients, we have always been adhering to the principal of being kind responsible unreasonable, hoping somebody Tang increased after that it most on typically basing our understanding of their needs. The way we understand our clients is to put ourselves you have a client shoes.
And place their interest into first place following the market moves and acting in accordance with <unk> laws and regulations in Twentytwenty. Noah has established a client interest committee to evaluate any new project before launch from the clients perspective based on the client's needs and long term interest.
The pace of client complaints and disputes the committee will make impartial judgement for the asset allocation of high network clients and know what they will be also a professional team to review the portfolios and good morning to relevant relationship managers and clients any issues as we enter the era of standardized products to better.
The other clients, we must improve their online offline experience I believe that technology will 40 in power and support the wealth management industry in the coming years as such we will conduct Malta research and utilize AI based investment advisory and open product platforms to unlock more channels for pets.
Total management cost reduction and efficiency improvement. Therefore, Noah has been actively improving the user experience on a mutual funds app from smile and is that establishing AI based investment advisory system in the second quarter of Twentytwenty. We also plan to launch new version of I know.
Which will be obvious standardized to pull it up to platform overseas.
Based on the existing models of relationship managers, providing consultation services. We will further develop our business layers. This means so the ultra high net worth clients via the VIP centre and that and investment advisory, while reaching more potential clients online by optimizing payment efficiency.
Offering more high quality content and supplying diversified products with dedicated to constantly improving our client experience with us.
Wealth management industry is quite special Wendover tons of I'll call. It all investment don't meet client expectations, even if the investment accounts for less than 1% of I'll, Let me be 700 billion accumulated transaction value for those clients who are affected it's 100% therefore.
We 40 understand one clients company complaint and voice that dissatisfaction compliance and risk management other lifeline of wealth management institutions, No. One will always keep missing mind and behave more prudently to ensure the compliance of transactions and diligent risk management.
For some risky assets occurred in the past we have established a special nonperforming asset team to deal with them through market forces and by normative and legal means in this process, we have been constantly communicating with our clients and providing updates on the progress. This process turns out to be quite effective.
And now a majority of the risky projects having successfully managed.
The same time, we're continuously working on Investor education, and promoting the formation of a more mature market that didn't clients understand the investments are not deposits has risks while we don't offer implicit guarantees. It does not mean that we're not sure. It when it does not mean that we're irresponsible.
We adhere to the principle of being kind of responsible at least nimble and are committed to creating value for our clients. We're grateful for the trust above a client.
I have seen before it can do that I focus will be tough anyway, So top yes, I'm I'm guessing.
Uh huh.
When you're talking you see thoughts sitting we go too so basically, especially when she held wilkinson couldn't sell so that you go up which it is since you've got it will cost that I woke up which way they use off some thought though today. She she all can do it feels like they do Alessandra Senici should treat Yahoo Dot goggins, a couple with M.T. won't have to when it does have Glenn could Chicago, Boston Sheen's salary that someone before.
Sorry, I didn't hear last patient machine that fleet vehicles sold him. She she got dashing than to do on copper and gradually to do back into the city of Virginia told you that Saddam don't pass on your goals democracy and of course and go well move on to look what's your nobody's hopefully many facets him in pushing away I would you put Jesus.
Hello, that'd be a cookie rents have cook will lead to begin has a way off with select Halloween right Yashi contained gotten genzyme and then she sanjay switching so they gravitas isn't so go to help I need a sound and she don't talk so she can do you Cook, where she was the daughton sujeeva pitching Alco don't seem again. So this is the cooking I can't.
Yes, I can go down it also sounds Sonya you saw him Italia suits, onea, well gosh, it with them with all the Coke Little Shneur woman issue Im on page five vessels on the job well hope hinder you can quickly chic I got the season. So she they seem to get out of the with cool for example, so wait times I guess.
No. This transformation means well returning to the mindset of respect in common sense and the markets as well as raising awareness of potential risks.
Back we have experienced several economic cycles in the past 15 years, especially the code at 19 pandemic makes us realize more than before that we're now in an era with a combination of volatility uncertainty complexity and bigger Ritchie it requires more wisdom to secure certainties a month.
Many uncertainties, but Noah it means we must a pivot around other high network clients and provide them with weighted services, including wealth management as a management and other services, such as insurance and lending and Twentytwenty. Noah has launched a new governance structure and process system aiming to create and.
New corporate culture and incentive plan. In addition, we will focus focus more on monitoring the market developing insight, reaching strategic consensus and implementing strategies, we give up the previous management meeting decision, making for Ken Ism and fully adopted the mechanism of decision, making by committees, we have said.
<unk> committees of the strategy technology, human resources client interest auditing and disciplined et cetera, and in place at execution level well not spending members of the committee also invited to join so as to any show a more comprehensive review of our operations and to improve the quality of decision making.
The appointment of management is subject to their qualification <unk> performance. We have also formed a multi layer relationship manager compensation scheme based on clients different behavior patterns to come out the development of the VIP Centre and self service investment platform.
Twentytwenty marks the 10th anniversary of Noah Holdings listing on the New York stocks change and the 15th anniversary sinks Noahs establishment I'm really grateful for the trust and support our clients and shareholders have placed the with us, allowing us to come such a long way with all of you into future the team and I will continue.
Here to do our best to honor the trust given to us and to create value for our clients shareholders employees and the society.
[noise] thinking generic or sharing and let me walk you through with a more detailed financial performances for the first quarter [noise].
After the year 2020, with a strong start despite the carbonite situation that literally shut down the nation for extended periods of time.
Especially as part of the transformation strategy, we see very positive signs in the strong growth in the distributions of standardized products.
First of all we're on track or as a matter of fact stronger than expected.
To me the guidance of eight to 900 million profit targets for the year as we ended up with the non-GAAP profit 256 million, reaching the milestone one third of the way operating profit margin improved to 34.3% as a result, scrutinized management of total cost and expense.
Huh.
Against all the odd the transformation the pandemic situation.
I have made the first quarter see many very difficult quarter for sales I'm. Most proud of which is also the biggest highlights this quarter that comes from the total transactions bodies distribute in this quarter that went up strongly to 23.2 billion.
Or 76%.
From this last quarter.
Driven by a group of resilient know what team of released a manager and management members on the back of the stronger performance of Chinese stock market in the first quarter that showed signs of is resulting in a wrong investors even during a very difficult quarter.
Well, let me comment here that I'll first quarters, usually strong and we'll continue to face challenges that caused by mainly the travel bans and economic pressures that gradually right as the year goes on.
Revenue wise, considering the major disruption to the overall economy by the on precedent.
Pandemic situation.
We're also delighted to see that recovery onetime commission from last quarter. The went from 160 million from the fourth quarter of 19 to 211 million in this quarter increasing by 33.1%.
The girls can be attributed to largely increasing total transaction volume as mentioned previously.
Comparing to the first quarter 19, onetime commission were down by 34.7% as the traveling restriction hinders the sale of higher margin overseeing insurance products, which in turn affected the total take rate the revenue.
But at the same time, 46% of the total standardized products about 10 billion had the duration longer than three years, which provides our clients a healthier allocation b assets that would offset short term fluctuations from the volatiles stock market and had the same time.
Provides us with assets that would generate more recurring fees for longer periods.
But then again like everybody else the carbon 19 situation, especially good restrictions on traveling and offline gathering did have and will continue to impact Carter businesses.
Especially the oversee business, where some of the services the production would require clots critical right.
For example, the oversee insurance policy, we have mentioned earlier.
More important than a mere quantities distribute it transaction volumes were excited to see a clear switching in product mix. That's in line with a transformation to standardized products.
In the first quarter last year 22.1 billion out the total transaction, which is 28.
About 79%, what's the single counterparty credit problems [noise].
And standardized products at that time only talk about 11%.
No after two quarters three quarters transformation. The mix has clearly switched the standardized public product now takes up about 82%.
Total financial products distributed or.
Obviously, we cannot yet claim final victory in terms of strategic transformation as distribution as a public securities had a lot to do with the stock market performance and happened to be very strong. It's just all market this quarter.
Which may not sustain for the rest of year, but Pelham and we're very encouraged to see that initial signs of success. The indicated our clients confidence in though as well as the increased level of activity former colleagues.
Well continue to feel the pressure in the following quarters, depending on the timing of the relaxation on the traveling back for example, they originally scheduled may eight lifting up mandatory quarantined upon arrival in Hong Kong there have been extended for another month now scheduled for June eight.
Obviously, we didn't just sit around obviously to win for Merrell close to happen. Our team are actively helping our clients to plan ahead and have lost several hundreds of three orders that will be ready converted once the traveling is allowed for the oversee insurance products.
Management, the increases slightly year over year based on the growth of eight when comparing to a year ago went from 490 million to 450 million, a 7.3 growth year over year.
Although we had a 3.4 decreased sequentially from last quarter in 2019, mainly because the generation of some back end loaded management fee from existing from exiting of single counterparty credit products in the last quarter.
We had also again recorded another 20 million outperformance C O carrying this quarter, mostly arising from public security funds. This is the 20 threerd consecutive quarter that we have recorded Kerry and do we anticipate more to come in the following quarters.
Another area that piece of more direct impact part of the Carbonite situation revenues are rising from lending in other service that you Chris.
71.5% year over year, and 50% quarter over quarter, the operations of which typically requires.
Interactions with governmental branches, such as noted by physician services and administrative services, which was not backing in full function during the quarter.
Revenues from offline classes offered by you know education have also seen greater challenges during this quarter.
Our opex operating expenses and not car in the first quarter is witnessing a significant improvement both from year over year and quarter.
Overall quarter perspective for the year over year. It went down about 28.1 person and quarter over quarter del Mar 52.1%.
That resulted from two reasons maybe.
First one is both internal and client oriented conferences have the move online web based platform that led to live cromling and lodging.
Although we anticipate that these expenses will increase your future once the restrictions on traveling and often gathering in relapsed well continue to explore and the best you know IP infrastructure.
Most more client events online.
That's that's already been anticipating a challenging year ahead of US. We had also carried out several cost cutting measures on non essential areas proactively.
That will implement tempur ritu weakness Peyton, even the first quarter and it resulted in nearly 10% dropping comp and benefits in the first quarter.
Although the NPL was a temporary measure and has been historically normal level by now well continue to closely monitoring expenses halt to prefer to prepare for rainy days ahead of us.
In addition, we had also asked a reasonable has to apply for relief on rental expenses throughout the nation. The had cut our overall rental expenses for office space for several meal.
[noise] when it comes to balance sheet, we continue to strive for leaner balance sheets and a further improved.
Asset that ratio to record low of 18.3%, while maintaining a 4.8 multiple current ratio.
We believe the maintaining a healthy level of liquidity [laughter] fuel rather strong recovery. During this difficult time, which also allows us the capabilities to further investing in longer and strategic initiatives, such as technology and online platform explore for new business opportunities.
[noise] what caused the segments the wealth management segment realized the good recovery in this quarter and as operating profit.
It was impacted last quarter was impacted by significant one off expenses.
And this quarter is recorded hundred 66 million contributed to almost 65% or the total operating profit this quarter.
Stronger driver in this quarter's profit also come from our asset management segment reported 93.5 million that is at 37.8% growth year over year, and a 3% quarter over quarter group. They increased level of profit margin bathroom, and it's also demonstrating very disciplined offer.
Ration of the segment and is also showing the effect of this didn't let the car.
[noise] speaking of the asset management said when we do see decrease in terms of absolute amount of the total anything I mean goal of about 8.5 billion, but if we do take into consideration of the massive acceleration of single counterparty credit products.
Nine 9.7 billion the rest of the asset classes recorded total increase of nearly 1 billion, that's mostly driven by PE and our real estate products the noise conventionally stronger.
I remember the growth that you must standardized products manufactured by goalkeeper was disappointing in the first quarter as a few of the standardizing balance one products did not launch schedule, we expect that situation to improve quickly. The following quarters at these products have already been many breaker package them schedule to distribute.
In the second and falling partners.
As mentioned earlier than any other business segments experienced more direct hit by the Cogs 19 situation I recorded an operating loss for the first time since the when profitable in the third quarter in 2018.
Well continue to seek ways to improve the sector. It will most likely will be conducting a more feet carpet business as assistant to the banks and trust company using the technology.
I was just and know how that we have developed in that sector.
Oh, you know, we're pleasantly surprised by the stock starting this quarter that what you're really seeing her claims for their confidence in as evidenced by the growth number active clients.
Also in a number.
Back her clients you and also in a backward transformation to standardize and diversified asset management.
I think our team for the resilience and coverage they have shown in its global pandemic.
We're obviously fully aware of the challenges ahead of us due to the delayed effect going card I mean has been rising employment rates on exports that may affect many of our clients were owners in the export manufacturing business.
We're also confident now we'll continue to be a forward our transformation to a modern financial services, Susan that's equipped with technology as well as great products and services Telecom [noise].
Operator, we're ready to good question.
[noise]. Thanks.
Well now begin the question on the session to I guess my skin you. My Press Star then one on your touch I'm fine.
We're using a speakerphone please pick up your handset before Chris indicating.
Withdraw your question. Please press Star then Terry.
Hi, little pause momentarily to assemble our stuff.
Your first question comes from definitely pattern from Citi. Please.
Please go ahead.
Oh, Hi money management, essentially taking my question.
So a couple questions from the the first regarding draw a tough nachum Ah well you must be published the cookies. Okay. It is very strong we find a till Q. So just wanted to understand back a lot. The key drivers yeah, well, you'll be able to provide a breakdown.
I didn't catch ups products for example, like mutual funds and hybrid arms, a holiday doing that with activity in Q1, maybe compared to the pupils Coalco and also want to tack on to try and Ah in Q2. So hot so as you also mentioned, our yet and that's how we Uh huh.
Pending on the I am I cant performance. So we do see that the Asia <unk> cutting back on normalizing.
So at the back office using P., so how's the trying to do so far and how sustainable do you think this next trends in Q1.
I would be and the second passion, Oh I see on your like I, just had higher whoa I'm. So we've seen a very strong number on new recipes to tie ins Oh, you know the first quarter Irish combined four times out QQ, so people buy more kinda last on the.
Drachman, Oh, my goodness, Oh, due to sensors, Nike or Hum organic growth and also how sustainable you think that [laughter] and I actually wanted to check on the lending business. So we see that completion, Oh 40 quite a long in first call.
Tom So Ah first kind of try on what's the number in the fourth quarter last year, because apparently is increased on a year over year basis. So want to understand that wanted to try friends and maybe at <unk>.
The lagging.
And P. out right off the Oh lending business that you what happens here yet, but that's all my question. Thank you.
Thank you Stephanie <unk> given your second Transbay question answer with management.
Oh My God.
Okay. Thanks, Stephanie for though.
Well the first quarter, Yeah, we actually had a put out quite a bit of the online conferences and especially during the shutdown period, we actually do have very like Oh sessions for the clients get online and that we're actually able to experienced a pretty higher level of activities or in direction where clients.
There are two the comeback from away a human joining those several weeks, we'll probably heard about close to 600000 are kept some visits are joining bats session and I were able actually to launch quite a bit of a standardized products on the backup obviously you know a good performance also.
So from a strong fund managers.
That we're actually able to package a product that has a longer duration actually about 10 billion out too far out the totaled 230, a total of 23 billion, a with a with Jewish and longer than three years.
So in terms the Q2 trends so far I think you brought up a very fair point on the standardized products do.
Little bit a correlation with the issue stock market, but at the same time. We're also offerings you know more balanced funds and type of products for our clients. So we're not just pushing the clients to the equity market, but also a more balanced allocation of the product. So what the mix between you know probably a equity and.
Bond and standardized products. So we'll see how the Q2 wind, but that would do have a good or alternative for our clients other than just no equity security product that ties to the stock market performance.
Well walk will probably show how would you are the ones who doesn't have just happens and then go going more to the job <unk> would you see what's the time hunting have all have a woman see that depends a little <unk>. They buy it she now on them cone dollar because they felt it was sold to phone shan't Woman's will end now that you could talk to us. So she is upsell. They love it handle how does it have widened doses that Sunday channel woman George will have essentially on the jump back.
Yeah downloaded the woman change in boxes, it's really the more so that's what change how the do the Queen Shaw them or should that be into machine. It's almost a woman. She now milk. Her jensen yeah weight change had no woman. So are you just to go too far passage of the May tend to.
Good day, she ended suitable Hulu, yes. It would you do see the full out Coahuila notion or could you go. So how does it had when it goes to the time. The 10 team somebody told but I guess, the woman chambal or to the fashion that is on tecogen could afford them or so that depends on what we would you. This is cheap you Bonnie Joan yet to go the Goggins go ahead.
Did you need on the phones, yet I'm, putting yourself away at any point that you had the viant Jimmy illustrate how much does she told us that yes, yes, the watching for a woman does take advantage that she's not just as home. They dollywood sold off 10 $10 a good she's onto the phones, yes, I do Gogol had just hand, the pages seemed up [laughter].
So Tom to go to pay that she though just a dollar cohort has it gotten away at $10 with time and do you feel the tend to Tavi Levy chief wait till they shopped <unk> just a woman does the beuchaw they'll be should she that these all that's attached they'd be happy meal shutdown Archie it is actually a sudden Donna and so you Cook will do you called out into the 10 minutes to go do you see.
Do I have found golf I don't really and I just wasn't that can go doesn't lots of 10, we should that tinchy that woman to go sandy and she's on the gun they'll have to tax toggled <unk> to go back and do so two woman's you that states that then Dom putting subway more kids and hence along it feel that attack on the way that Tom she that because so you don't have double Hudson hadn't had them once you finish on to Joe.
With these yet as you have t. Kendall hunters is selling to them would you vacancy shutdown, but then Tom she the planning for her carried the fund John.
Two tenths analogous to be talk all about [noise].
[noise]. So yeah, just a few more comments from a nor our Charlie I first of all you know not not just because you know the performance for the stock market what did do quite a bit of prepress ahead of time, so we actually able to put together a good roster of outstanding from it.
So we're actually able to launch a good products here relatively short period of time.
And two is the were moving you know quite a bit of offline conferences onto online, including you know are traditionally held off line on time and conference in hotels Wesley moved them online able to actually getting a lot new clients.
The sessions and third is really the chance in the demand or Brookline that a lot of them have experienced risks or some you know non fuel experiences.
From SOCOM non standardized credit products are in the entire industry. So their demand an appetite is switching to a more balanced allocation assets. Instead of concentrating you know their asset allocation you want costs, especially the volatile class.
And we welcome want to stress that Todd you know other than in addition to the standardized products were still maintain pretty good level up distribution for they'd be BCP products and even George you want to standardize talks about 10 billion is with longer duration, which are obviously the assets that will help our client.
Our kids or could together has a little better quality and actually allow them a longer period of two low profit.
And obviously, we'll see a you know slight depression on onetime commission as for the standardized products I do have a lower fee rate then, though you know oversee a insurance parts, it's worth mentioning but we do believe that you know hovering in the longer duration, Oh pipeline assets for clients would generate.
For recurrent score.
[noise]. So that's the first question deafening a second cuts in terms of the growth in registered in the number resident clients. Yeah, we do have a pretty.
Strong traction as we have mentioned before when we do more with the conferences and also the interactions online or we're actually able to see a very a much higher level activity are interacting with our clients and we're actually able to Ah you know with the help of enhanced IP.
Sure, we're actually able to track and also retain some decline traffic or better than we did before so that's mostly attributable to a the number of new registered clients and also.
Through the distribution of.
Andrew Dice part is actually easier to help the new clients are actually get a cut to us.
And for the third question in terms of lending business or would you have a provision but that is.
Basically a statutory provision that trial as required by the auditors where you have.
Oh the lending please on your balance sheet.
In terms of that particular business or would we are seeing a transition you know, especially from industry in regulator standpoint.
That we wanted to go light in terms of a we do have mostly you know using technology also data basis in terms of open banks and Trust company.
To assess you know the quality of cloud a row, especially properties.
For their clients and we have been experiment and actually seeing some initial cooperations with couple of trust companies that will actually be able to provide you know more or less a service type of a fee type of services to these institutions are instead of us servicing the the loans.
Cells, So we'll be seeing a slight change in business model.
In that particular area.
[noise] Centsforty <unk>.
<unk> onshore so maybe just wanted to follow up its on the last question. So in terms of people mission natural or is that like stable versus the previous quarter. They do see Andy increasing the underlying please I suppose it becomes would be more challenging.
Macroenvironment here and as you mentioned Oh D. A shift in the business model to what was the cost comedy what would the map and new model looks like going forward and.
How how we'll just see me or Mac and we'll do it differs from the PV is models and also want to go back onto the first question.
You mentioned are just now you have to overtime beauty and Oh kinda measure Matthew.
It is coming from the Oh, I see you well over a few your duration products. So <unk>, Oh, <unk> as well from the high Gryphon you I think there was stepping up efforts on on I'm, sending wahhabist Ah this quarter.
I wish I could go on favorable feed me.
Just want to come from HM Okay. That's it.
[noise] careful that lending fees the provision levels, so quite stable obviously, the the shutdown of the nation.
Delayed a little bit of some of the Oh, no refunding as someone administrative expense branches of government actually was a little where do you shut down for a few more for few weeks actually Ah, but we don't see a massive worsening of the provisions for the put a pretty aggressive.
In terms of transitioning a the fee is more or less like a 1% to 2% of all service fee that would be charged on the back of the loans that the trust companies are banks or when they do a issue loans to the investors. So basically out of this will be helping them ask winning these investors as.
Well, as especially assessment and the quality of the car world.
So I'll, let nor Ryan churn any to supplement on your question on the a hybrid funds on the longer Jewish of HM.
Just to pick a woman Daiichi do I see equal charging wishing the two capacity and then I'll go back and she's about how we work with that one could that's a good you can tempe notice articulate that capital pharmacy that you need to be leaping with Oh.
Yes. So the majority of the first quarter is still we are equity Oh type of funds in the first quarter ER and the hybrid upon like I mentioned before I'm, mostly manufactured by Gopher I will be launched in the second quarter and falling corners.
Oh.
Okay. That's not helpful. Thank you.
Yeah no problem.
Thank you.
Your next question comes from eight and a wall from C.L.S. say.
Please go ahead.
Hi management than Q4 pick up my question and congratulations on their fourth quarter results.
I have two questions. The first is and or competition landscape of a neutral from my fifth grade. So Oh, we married that no did very well in the fourth quarter, but actually they are space the quite crowded with all the financial institutions and.
I'm, sorry, that's like if money and added pay so.
When it came in on spread out home during current Notching.
Embedded opened up have a lot of choices. So just wanted to understand why but new turned to Noah rather than I did pay where they can just.
Matt hundreds of phones weaker or simple taberna phone, but just wanted to understand our participation strategic part fishing and if the price.
And my second question is a onetime commission.
Right after working benchmarks that month, so China, maybe you just mentioned Manchester drafting bad <unk> first quarter.
Onetime commission rates went down because of what's been a departure standardized brought up a good rates with lower but I remember from the last call that when we're shifting to bond or hybrid I mean football hybrid standardized products.
Maybe it's got onetime commission rates with no bought for equity it's hard it was higher and we saw that in the third and fourth quarter last year actually either.
Landed onetime or commission rate, what a with quite boot. So the first quarter with lower I just wanted to understand.
I feel good reason behind that on our returning to more maybe low a commission rates kind of neutral from product. So just wondered that more details around that or am I feel question, it's only about general and admin expense for wealth management Fed fund so we understand that last year artist.
Sure good and a third and fourth quarter with booked some legal fees maybe related to come soon thanks again.
During the second one founder generally at a meeting.
And our though.
<unk> expense other operating expenses, what we saw that this level of expense came back to the normal level and fourth quarter for show a shoom that the legal expense on it up and over the past or if that's even though Finland, where we should expect though to come back.
In a fourth in the fourth quarter every year maybe.
Yes, there were that's my question Center.
[noise] thinker Ethan.
Give me a few seconds.
[laughter], what some of that took effect I heard your thoughts yes of course, you know what I said when you enter handle sitting late holds a lot you receive she is largely relinquishing data Hewitt wishing the sandy cases, the baton by what you the way and I wasn't that bad.
Hi, good she and that's the sort of delco, how tempting that couldn't stand out from Boston. He leads on to our since the woman teach us illnesses holiday shopping would die hard surface. The top buttons are kinda dollar how long that didn't wait no go Ali I'll walk away at wishing odd to hear once you put on the you woman Dot Com would you can cope with it the way that yeah circuit told visits.
Yeah, just that you bought last.
You sound that no one will get kind I won't comment generally on the smack on teaching duping genes essentially you entered into it. She it's how we yeah actually been talking Wafergen inching golf surely hobbies high single to get it comes out I mean, she all that you could say the team has found I see the up with a couple of Europe, I think what common that didn't something Howard I know it usually you don't get involved.
So that yes, it be off without attempt pima actually that kinda Cadillac why segregation applequist well go for the whole you can go out and how kinda hey, you're hitting <unk> with that as you can add on my that's the tablets, we always had a bulk of merging paid to though I think a follow up on high pool, the pin pad <unk> I won't get everything has gone down Pat.
Okay. When would you said she said this okay might idea if he taught the VCP idling late hope that's it's half how do you tend to do you haven't done there what do they want it the way has a bunch of with Honda matching them. We can kind of cattle had everything we had a big or would you Philadelphia.
So in the past obviously you know from specializes in.
Alternative products. If you will also on B C O M. P I'm somewhat even the single counterparty credit products, but still credit or alternative products.
In the future. We believe we're positioning will be you know about 80, 20% allocation between standardized products and also as an alternative investments.
So we we are actually get like it mentioned entering into a bigger playing field, oh, probably with more competitions, but.
But still well you know at the very different competitive position as compared to only or a you know tencent some of the retail type of a fun platform. For example, still the you know starting point for the investment a threshold for clients, mostly it's around you know a million RMB and.
Average hmm.
For our clients in the mutual funds is about 310.
Thousand a four or four clients, which comparisons you probably a few thousands you know on the retail mutual fund up you have mentioned so even for the mutual home purchases that we have been serban I'm, mostly young professionals and also have a pretty disciplined on investing a you mutual funds as part of the allocations.
Rattatouille, where even seen some management or professional said you know they might purchase you know mutual funds you know from other platforms still come back to no onto.
Gets more comprehensive uncomplicated type products like fund to funds or even the alternative fund investment argument B C. N P type of program.
[noise] and you can let me take you through the.
Next two questions. The first one is for the take rate you're right Oh for these standardized products. We have mentioned that actually does come up with a pretty good though a few weeks as comparing to a standardized bond funds. We have mentioned before so basically the standardized products.
We have been distribute it this quarter is usually.
Between 100 basis points in terms Commission.
Revenue, but blended a commission rates was higher in the last year, Oh that we have mentioned that the higher profit margin. That's contributed by the oversee insurance products, which also the revenue is accounted for a within a commission revenue actually do have a lot to do.
A with the overall blended take rate hours, you would imagine actually doesn't count for lots of the transaction dollar volume.
But the revenue actually comes in with a pretty hard or margin.
But as you would imagine the first quarter I, especially probably for brief period in January of people weren't able to travel overseas Oh for the for the last two months in that quarter. So that actually does have an impact on the overall take rate, so which is about a 91 basis.
Points as compared to close to 110 are in the past.
But we have always been telling on investors that you know that's the feed with especially the blended take rates do fluctuate between 80 220 basis points range depending.
On the mix of the products, the where big distributing in the quarter.
In terms of the general Oxiana expenses.
For the wealth management segment.
Yes. This is the actually argue level that a of expenses are you know profit margin that we're looking to maintain for the wealth management segment.
The legal if he does actually have a seasonality.
In the last two quarters, especially right. After the competing incident that there was quite a bit of one off initiate a initiate of legal expenses. When you first engaged your law firms and your first probably you know pursue your loss was for the first Tommy So you do have little bit of but down payment, if you will or initiation fees.
So the legal fees, especially in the third and fourth quarter last year, a what's probably I'm, a little bit disproportionately higher and in the in the future I would believe that a this level of expenses for wealth management is about a normal it will fluctuate, but a it shouldn't fluctuate too much.
I hope that answers if it doesn't succeed.
Okay.
Thank you.
Once again, if you wish to ask a question. Please press star one on your telephone and what's your name to be announce.
Your next question comes from U.N. here from the I see see.
Please go ahead.
Well, it's all how well to bear until you go into so sure.
I'm sure about do you think though mutual fund their home increase or dollars recurring so as to what's on Druthers woman, Doug I know in dogs to.
Mutual fund that they got actually the manager to go clinically, though I'm just wish all its all of the take a recurring service speak well she said.
HM.
Phil woman is.
Just don't feel women boards in fact, I believe finished houses at all in for about a whole kind. All go ahead of kind of women didn't have any go home, which is you know when you're talking about $1 million up before the funnier hisun them go or do you true French on though before they go through New York. She is a domestically E <unk> jumping into it should be dot com easier on the drop wasn't happy.
Yeah, the one where me extra cleats you go gun to go being so copel EBITA why somebody would be joked holiday you got field. She took that she's going but a good unit one of your I hope you'll find it.
Oh gosh I like the home they've got to has attempt looking here since the Ghomeshi, yeah, Balkan don't seem to John Walker fascinating well woman pizza. The sent off element you. There has to go over that time. He said you then and he sounded latonya holiday that you do most of the time and that's what the telephone calls he got Algea. That's sad thing so do that's what happened to go.
Gold wanted to go courts in Doha woman and go question. The palace is high as to the talking tempting funny Aseel when she though.
She said she is it.
Okay. Operator are there any more question [noise].
Thank you there no further questions at this time I'll now turn the conference back over to you Miss the Grand pen for any closing remarks.
Okay. Thank you Albert and thank you.
Investors analysts I. If you do have further questions was have scheduled one on one conferences I feel free to contact.
Do you.
I want to speak more thank you very much real time.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Mhm.
[music].