Q4 2022 Noah Holdings Ltd Earnings Call
Speaker 1: Hi, good morning everyone and welcome to NOAA's fourth quarter and year end conference call. I'm Melosi, Director of Investor Relations at NOAA Group.
Speaker 1: The presenter today joining us today are Ms. Wang Jingbo, our Co-Founder, Chair Lady and CEO , and Mr. Grant Pan, our CFO .
Speaker 1: Before we start, we would like to kindly remind you that during today's call, we may make forward-looking statements based on our current expectation of the business.
Speaker 1: Please keep in mind that these statements are subject to risks and uncertainties that may cause NOAA's actual results to differ from these statements.
Speaker 1: We do not undertake any duty to update these statements.
Speaker 1: For discussion of some of the risks that could affect results, please see the Safe Harbor Statement section of our 6K filing.
Speaker 1: We also refer to certain non-GAAP measures and you will find reconciliations in our 6K report made available on the National Report section of NOAA's Investor Relations website. For more information, visit www.fema.gov
Speaker 1: Also, please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any NOAA or NOAA-affiliated products.
Speaker 1: This call is copyrighted material from NOAA and may not be duplicated without consent.
Speaker 1: Also, we would appreciate for you to change your display name to first and last name plus your institution name.
Speaker 1: With that, I would like to welcome our Chair Lady and CEO , Ms. Wang Jingbo, Chair Lady Horacio Organic Anything, potentialIST neighbour, CEO of Pro Sheila's RdV and LinkedIn now.
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Speaker 2: The R&D team is also a great partner with the R&D team. The R&D team is also a great partner with the R&D team. The R&D team is also a great partner with the R&D team.
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Speaker 1: report on NOAA's overall performance and development of various business segments in 2022. Mr. Pam will then present the financial information for the year and conclude with the Q&A session.
Speaker 1: Year 2022 was an extraordinary year with an extremely complex global macroeconomic environment.
Speaker 1: The extreme market gyrations caused by the Russian and Ukraine conflict during the first quarter, Shanghai lockdown during the second, and the rapid fat rate hike spanning almost the entire year, has by far exceeded our expectations. In other words, what I've seen the most...
Speaker 1: a drastic drop in investor confidence in decades.
Speaker 1: Domestically, the Chinese lockdown index reaches its highest level twice since the first outbreak of COVID-19 in 2020.
Speaker 1: frequent lockdowns, severely restricted economic activities, with the household savings rate reaching its highest level since the beginning of the outbreak, and consumer confidence hitting rock bottom.
Speaker 1: Turning to the global market, since the subprime financial crisis in 2008, so long quantitative easing and abundant liquidity have led to a significant level of global asset inflation.
Speaker 1: With global supply chains severely disrupted over the past three years by the raging pandemic, coupled with the impact of surging commodity prices due to geopolitical conflicts,
Speaker 1: We have seen the most acute global inflation in decades.
Speaker 1: In order to tame inflation, the world's major central banks, led by the US Federal Reserve, moved quickly to raise interest rates at the fastest pace in almost 40 years.
Speaker 1: The sudden quantitative tightening measures and escalating risk-free rate of return led to huge losses in risk assets, with both equity and bond markets experiencing their worst year since 2008.
Speaker 1: The significant shift in investor sentiment led to a decrease in preference for high-yield products and an increase in demand for assets with lower volatilities and higher liquidities. As a wealth and asset management firm focusing on serving global Chinese pan-and-worth clients,
Speaker 1: NOAA's mission is to understand and gain insight into the ever-changing needs of our clients.
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Speaker 1: The IO report published at the beginning of 2022, based on our assessment of the macroeconomic and capital market environment, we proposed our clients to adopt a Protection Before Growth asset allocation strategy, advising them to protect and diversify their portfolios using various wealth management tools against the upcoming uncertainties.
Speaker 1: We recommended our clients to increase their allocations in absolute return-oriented multi-strategy funds and private equity funds, in order to reduce asset volatility and capture cross-cycle growth opportunities, which effectively helped our clients to protect their wealth in a turbulent market environment.
Speaker 1: We have become increasingly aware that the concept and understanding of wealth management through the lens of Chinese hand-at-work individuals is undergoing fundamental changes, with safety and security becoming the number one demand. The need for globalized allocation also increased. Since the opening of the Hong Kong office in 2012, we have been working to ensure that
Speaker 1: The gradual establishment in foreign markets including the US, Singapore, Canada and Australia, NOAA International has accumulated a decade of experience and capabilities in the overseas segment.
Speaker 1: In the past, we served our overseas Chinese clients with our overseas staff, which mainly consisted of investment, product selection, operation and middle and back office professionals.
Speaker 1: In 2022, we further reshaped NOAA's international capabilities by building an international wealth management team based in the overseas markets.
Speaker 1: creating new overseas products in order to better serve the asset allocation needs of Chinese high-network individuals living abroad, on top of the capabilities and systems we have already built in the past.
Speaker 1: By the end of 2022, NOAA's international clients increased 8.4% year-over-year. The overseas segment generated net revenues of RMB $828 million for the year, accounting for 26.7% of the group's revenue.
Speaker 1: an increase from 23.5% in 2021, with this figure further increasing to 32.2% in the fourth quarter.
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Speaker 1: In 2022, the company delivered solid financial performance by proactively adjusting our business strategy.
Speaker 1: Achieving annual net revenues of RMB 3.1 billion and non-GAAP net income of RMB 1 billion, meeting the annual non-GAAP earnings guidance.
Speaker 1: Operating income margin improved to 35.1% from 27.9%, driven by more efficient cost management and less travel activities due to COVID lockdowns.
Speaker 1: Wealth management segment reported annual net revenues of RMB 2.2 billion, down 31.1% year-over-year, primarily due to clients leaning more towards products with higher liquidity such as money market funds and fixed-term deposits.
Speaker 1: leading to a decline in one-time permissions.
Speaker 1: Production value was RMB 70.3 billion for the year, down 27.7% year over year. In 2022, with significant volatility in the global public markets, with the MSCI World Index down 17.8%, the S&P 500 Index down 18.7%.
Speaker 1: and the MSCI China Index down 21.2%. NOAA's strategy was to capture and maintain clients' wallet share and help clients preserve their wealth instead of trying to chase higher revenues and profits through pushing products with higher risk profiles.
Speaker 1: Mutual fund transaction value increased by 16% year over year, driven by the launch of our...
Speaker 1: small treasury SaaS platform, specifically targeting corporate and institutional clients' treasury management needs.
Speaker 1: In the past, corporate treasury management for mid and small enterprises lacked specialized and systematic services.
Speaker 1: capitalizing on NOAA's existing mutual fund platform and asset allocation capabilities.
Speaker 1: We have offered services to more than 4,500 mid to small size corporate institutional clients who open accounts and transact through the Smiles Treasury platform during the year.
Speaker 1: In terms of clients, the number of Diamond and Black Card clients reached 9,689, an increase of 18.2% year-over-year, with a 22.2% increase in Black Card clients in particular.
Speaker 1: Growing our core client base has always been a key strategic objective.
Speaker 1: Over the past year, we have effectively enhanced our client experience by improving our client interface and branding, improving our client reward system, and enhancing the integrity of our client's asset allocation through the introduction of a star rating system.
Speaker 1: Furthermore, we recovered over 1,000 loss or dormant accounts and after the Kansan incident in 2019, many loss clients have started to turn back to us. In 2022, through better client segmentation strategies and personalized asset allocation devices, we have developed a new solution for the Kansan community.
Speaker 1: We recognized over 3,000 potential Diamond and Blackguard clients during the year. Through referrals of our existing clients, we gained over 1,000 new clients that became Gold Level or above.
Speaker 2: Winning clients' trust through care and professionalism has always been the source of NOAA's success.
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Speaker 2: I hope you all have a wonderful day. Thank you for your attention. Thank you to all our partners. We hope you will continue to work with us to improve the lives of our customers. Thank you for your attention. We hope you will continue to work with us to improve the lives of our customers.
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Speaker 1: As a management segment, we recorded net revenues of RMB $835 million, down 19.9% year-over-year, primarily due to a 66% decline in performance-based income caused by capital market volatility and limited exit opportunities in the primary market.
Speaker 1: Through our subsidiary, Gopher Asset Management, A1 reached RMB 157.1 billion by the end of 2022, up 0.7% year over year.
Speaker 1: On the other hand, the overseas AUM reached RMB 32.5 billion, up 14.7% year-over-year, thanks to the successful fund-raising of Gophers actively managed overseas real estate and private equity funds, as well as the launch of US dollar cash management and fixed income products.
Speaker 1: three fundraising in the second half of 2022.
Speaker 1: The Silicon Valley early-stage tax-focused investment team has achieved multiple profitable exits for LPs through investing in a number of unicorn companies.
Speaker 1: They launched their Series 4 fundraising during the second half of 2022 as well. We believe that the current economic cycle, which is close to bottoming out, will be a
Speaker 1: provides a very rare entry opportunity for VC and PE funds.
Speaker 1: As a result, we have also launched VC fund of funds managed by our Silicon Valley team as well in Q4 2022, aiming to further enhance Gopher's ecosystem in the overseas market.
Speaker 1: In terms of cash management and fixed income products, as US dollar yields continue to rise due to the Fed's rate hike, our product team developed and launched our US dollar cash management and fixed income products in a tiny manner, effectively increasing our clients' share of overseas wallets with NOAA.
Speaker 1: By year-end, overseas AUA grew by 25.2% year-on-year, accounting for 21.6% of the total AUA, comparing to 16.3% at the end of 2021.
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Speaker 1: In terms of ESG, NOAA has been voluntarily publishing sustainability reports since 2014.
Speaker 1: We also formulated and initiated the supply chain ESG management guidelines and received 100% of the signatories of the ESG letter of acknowledgement for suppliers at NOAA's very first supplier conference.
Speaker 1: bringing awareness to our supplier partners to better create a sustainable ecosystem.
Speaker 1: NOAA has cooperated with nonprofit organizations for many years in projects such as 100 Million Sexotrees and NOAA's ARK.
Speaker 1: Since 2014, NOAA's hard forest has planted over 387,000 sexotrees in the Alco region in China, covering over 8,000 acres of land, achieving about 3.8 square kilometers of sand stabilization, and 7,000 tons of carbon stabilization.
Speaker 1: helping restore the local desert system and slow down desertification while increasing local herders' income.
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Speaker 1: I'm also pleased to announce that the company has successfully completed the conversion to primary listing status on the Hong Kong Stock Exchange on December 23, 2022, becoming the first Chinese wealth management company to have dual primary listing status in both the US and Hong Kong.
Speaker 1: Also, completely eliminating the potential delisting risks of ADR stocks.
Speaker 1: At our board meeting earlier this month, the board has approved an annual dividend plan to pay out 17.5% of non-GAAP net income of RMB 1 billion for 2022. The final dividend proposal will be evaluated at the upcoming AGM in mid-June.
Speaker 1: We are committed to creating value for our shareholders in a stable and sustainable manner through a long-term cash dividend plan.
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Speaker 1: Reaching common sense and consensus, which are scarce qualities to possess, is often time consuming and costly.
Speaker 1: In 2022, some common senses and consensus are beginning to unite.
Speaker 1: Successful wealth management and investment returns are the reflection of correct perceptions of the future. Bridging the gap between perception and reality requires the fine-tuning of decision-making skills.
Speaker 1: The probability of making the right decision is positively correlated with one's understanding of the world.
Speaker 1: Today, in 2023, the consensus of clients' needs has been mostly clear. The foundation of this thought process framework is what shapes NOAA's CIO house view, our advices on client allocation solutions, and our core values, which distinguish NOAA from other wealth management institutions.
Speaker 1: We are committed to becoming a leading name by capturing at least 1% of the market share in the wealth management industry for Chinese hand-out clients around the world, a goal that has tremendous room for growth but also requires us to always maintain our founding principle and work hard towards achieving it.
Speaker 1: Finally, we hope that the pain of 2022 will become the gain of 2023.
Speaker 1: Now, I'd like to pass to our CFO Mr. Pan to give you a detailed walkthrough of this year's results. Thank you all. Thanks Melo and thank you Chair Lady. Welcome investors analysts.
Speaker 1: Looking back, 2022 is obviously undoubtedly a challenging year.
Speaker 1: The United States Federal Reserve has raised interest rates by cumulative 425 deeps to 4.4% as of the end of last year.
Speaker 4: the rapidest hike in decades, coupled with geopolitical conflicts and the ongoing increase in global inflation rate from 4.7% to 8.8%.
Speaker 4: creating volatilities in both the equity and bond markets.
Speaker 4: Consequently, the MSCI World Index, S&P 500, and MSCI China Index have all dropped 18%, 19%, and 21% throughout the year, respectively.
Speaker 4: In China, the prolonged COVID-19 restrictions during almost the entire year of 2022 greatly affected economic activities. With the China Effective Lockdown Index, a third-party index that measures the level of COVID-related restrictions reaching highest level.
Speaker 4: In China, the prolonged COVID-19 restrictions during almost the entire year of 2022 greatly affected economic activities, with the China Effective Lockdown Index, a third-party index that measures the level of COVID-related restrictions reaching highest level twice since 2020.
Speaker 4: The Chinese household savings rate climbed significantly from 30% pre-COVID up to 37% by end of that year, while the Chinese Consumer Confidence Index hit a decade low. Market activities and investors' sentiments also became more conservative.
Speaker 4: evidenced by a 50% year-over-year decrease in new issuance of mutual funds across the board.
Speaker 4: Meanwhile, NOAA has been investing to improve our research capabilities to counter this adversity, and our Seattle office published the investment outlook for 2022 at the beginning of last year.
Speaker 4: recommending the strategy of preservation before growth to our clients. Looking back at the capital market fluctuations, our recommendation helped preserve clients' assets and our dedication and efforts on enhancing investment abilities paid off.
Speaker 4: As a result, although 2022 was a tough year, we still achieved an increase in number of court lines up 18% year over year.
Speaker 4: that's Diamond and Blackheart client. An overseas AUM also increased by 15% year-over-year.
Speaker 4: Due to stricter cost management measures and higher operational efficiency, Nodes operating margins grew from 27.9% to 35.1%.
Speaker 4: On top of that, we have met our annual non-cap net income profit guidance, absorbing the impact of a non-conspected and unfavorable outcome of legal proceedings towards the end of last year. Now please let me walk you through the detailed financial results of the year and the fourth quarter.
Speaker 4: Full-year net revenues were RMB 3.1 billion, down 28% year-over-year, primarily due to the decreasing one-time commissions and performance-based income.
Speaker 4: One-time commissions fell by 46% year-over-year to RMB 678 million due to lower transaction values and the change in product mix.
Speaker 4: partially as a result of our proactive direction away from public security-based products.
Speaker 4: in the face of volatile market conditions last year that usually bear high-tech rates for that type of product.
Speaker 4: Performance-based income fell by 61% year-over-year to RMB $308 million, as expected in the face of the bumpy capital market environment.
Speaker 4: Recurring service fees remained relatively stable at RMB 1.9 billion down 90%.
Speaker 4: Up hurting costs and expenses were RMB 2 billion.
Speaker 4: decreased 35% year-over-year. Due to lower Relationship Manager compensation expenses as transaction value decreased, combined with lower selling and G&E expenses resulting from a decrease in traveling and offline client activities, both affected by COVID-19 restrictions.
Speaker 4: Correspondingly, annual operating income margin increased 7.2% year-over-year to 35.1%.
Speaker 4: With regard to non-operating results, we incurred a one-off contingent expense of RMB99 million due to the provision of legal proceedings related to one of its subsidiaries that was disclosed on December 12, 2022.
Speaker 4: We believe that the associated first instance ruling was reached based on incomplete factual information and have already initiated a plain, appealing process and intend to vigorously defend against the civil claim from the plaintiff. Equity in earnings of affiliates is a
Speaker 4: decreased 71% year-over-year, attributed to the downward yields of fund funds that we manage and invest in as the general partner of Fund Manager.
Speaker 4: In spite of non-operating costs, our non-gap net income for RMB1 billing still achieved annual non-gap net income profit guidance with margin up to 32.5%.
Speaker 4: Growth in core clients, diamond and black card clients still remains as a top strategic priority throughout the year, benefiting from our continuous strategic investments expanding our core client group, diamond and black card clients grew to 9,689.
Speaker 4: and the 18% euro via increased overall. Come on with the number of black heart lines.
Speaker 4: increased by 22% year-over-year.
Speaker 4: We also have an innovative program to recognize potential diamond and black card clients and grant trial benefits in advance for a limited period of time to attract new clients, which enabled us to identify over 3,000 high potential core client leads.
Speaker 4: Our total active clients during the year were 35,877, down 16% year-over-year. Due to the transformation to standardized products starting from 2019, we have also been making efforts on reactivating dormant accounts and retrieving lost accounts.
Speaker 4: As of December 2022, reactivated and retrieved accounts amounted to more than a thousand.
Speaker 4: At the same time, we have gained significant growth in a new tier of clients, i.e. corporate and institutional clients.
Speaker 4: We launched the SMAO Treasury Platform to facilitate corporate and institutional clients' treasure management efforts.
Speaker 4: with over 4,500 new corporate and institutional clients. We have opened accounts and transacted with us in 2022.
Speaker 4: With respect to transaction value, we distributed RMB 70.3 billion of products during the year, down 28% year-over-year, among which mutual funds were RMB 43.1 billion, up 16% year-over-year. Thanks to the aforementioned increase in incentive, we shared Chiosohn Customer View Test.
Speaker 4: in corporate and institutional clients. Private secondary products were RMB $13.1 billion, beyond 65% year-over-year as we proactively decreased.
Speaker 4: allocation and distribution of equity-linked public market products due to heightened market volatility.
Speaker 4: In terms of segmented results, full year net revenues from wealth management business or RMB 2.2 billion down 31% due to the decrease in transaction value accounting for 71% of total net revenues for the group.
Speaker 4: The revenues from asset management business were around $834 million, down 20% due to a decrease in performance-based income from private equity fund products.
Speaker 4: accounting for 27% of total net revenues of the group.
Speaker 4: Gold for the EOM was RMB 157.1 billion as of the end of the year, slightly higher than last year due to increase in private equity in the union.
Speaker 4: As mentioned by Chair Lady, we have started to establish our International Wealth Management team with relation managers based in overseas markets catering to our overseas clients as to allocation needs. gone Ladder Lane was chair of the Essentially
Speaker 4: Our oversee AUM grew 15% year-over-year and 7% quarter-over-quarter, contributed by the successful fundraising activities of Gopher's Real Estate Investment Team and Rancher Capital Investment Team in the States.
Speaker 4: and the launch of US dollar cash management and fixed income products. Besides, we have also been cooperating with nine of the top 25 international private equity GPs.
Speaker 4: of US dollar cash management and fixed income products. Besides, we have also been cooperating with nine of the top 25 international private equity GPs and look forward to expanding that list.
Speaker 4: Overall, full year overseeing net revenue was RMB $828 million, accounting for 27% of total net revenue, compared to 24% in the year before.
Speaker 4: When it comes to our fourth quarter results, net revenues were RMB 882 million.
Speaker 4: down 30% year over year and recovered quickly by 29% from the quarter three.
Speaker 4: One-time commissions were RMB $269 million, down 44% year-over-year, but up 170% quarter-over-quarter due to increase in insurance distributions.
Speaker 4: Recurring service fees were RMB 472 million, down 15% year-over-year, but slightly increased 4% quarter-over-quarter, mainly due to the service fees generated from liquidating certain credit products with higher fee rates during the corresponding period in last year.
Speaker 4: Performance-based income was RMB 80 million, down 54% year-over-year due to decrease in carry from public security products and private equity fund products.
Speaker 4: But it was up 191% quarter over quarter due to exits generated from some of the private equity funds products in this quarter.
Speaker 4: Total operating costs and expenses will RMB 662 million, down 41% year over year.
Speaker 4: but up 46% quarter-by-quarter, mainly due to increased expenses related to offline activities after COVID-19. Restrictions were lifted as well as increased registered manager compensations, performance fee compensations, in the quarter. On top of that, operating income were RMB 220 million.
Speaker 4: up 66% year over year, but down 5% quarter over quarter.
Speaker 4: quarterly non-gap net income was RMB 149 million, down 49% year-over-year, but 22% quarter-over-quarter increase due to one-time contingent expenses.
Speaker 4: Regarding the balance sheet, our cash increased to RMB 4.4 billion and total assets served at RMB 11.8 billion as of December 2022. The current ratio was 3.3 multiple and debt-to-asset ratio was 19.5%.
Speaker 4: with no interest-bearing debt, implying a very healthy and strong liquidity position and balance sheet.
Speaker 4: Supported by a healthy balance sheet and continuous strong cash flow generating capabilities, pursuant to the dividend policy announced on August 10, 2022, the annual dividends to be declared and distributed for year 2022 will be 17.5% of the groups.
Speaker 4: non-GAAP net income of 2022, approximately amounting to RMB $176.5 million, implicating US$0.40 per ADS and HKD $6.25 per share equals to $2.80.
Speaker 4: subject to final approval of our AGM on June 12, 2023 this year.
Speaker 4: We look forward to providing stable and sustainable returns to the shareholders with the growth of our business. Looking back to 2022, obviously great challenges stem from global macroeconomic uncertainties and domestic difficulties, including zero carbon limitations.
Speaker 4: For GLAC, they completed the secondary listing on the main board of Hong Kong Stock Exchange and within the same year, with the effort of the team, also completed voluntary conversion to primary listing in Hong Kong within the same year. Due to the regulations of Hong Kong Stock Exchange, by the way, the Hong Kong Stock Exchange is
Speaker 4: would also like to kindly inform our investors that NOAA will not be able to be.
Speaker 4: published annual non-CAP net income profit guidance going forward. Looking forward to 2023, we'll continue to invest talents and resources into expanding our global footprint and improving our client service experience and quality.
Speaker 4: At the same time, we will also be mindful of both cost controls and growth initiatives. Again, we sincerely appreciate all shareholders for their ongoing trust and support, and strive to create long-term value for clients and shareholders.
Speaker 4: And thank you, everyone, for listening. And I'll now open the floor for questions. Thank you.
Speaker 1: Thank you, Grant. So if you have a question, please kindly press the Raise Hand button in Zoom. And now I believe we have Helen from UBS. So moderator, could you please turn on her microphone? Thank you.
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Speaker 2: If you have any questions, please feel free to contact me. If you have any questions, please feel free to contact me. If you have any questions, please feel free to contact me.
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Speaker 2: Two questions, if I may. One, for insurance product distribution, since the fourth quarter 2021, the growth momentum was very strong. Insurance products seemed to be the key driver for one-time chameleon feed.
Speaker 2: It's been five quarters since the fourth quarter of 2021. So what's the insurance product penetration rate for existing clients? Armenian.
Speaker 2: Think that strong growth momentum could persist this year and next year. If not, what types of products or services may bridge the revenue gap? And could you please give us more color on transaction value outlook this year, both in terms of growth outlook and product mix? My second question is on Gopher AUM. I noticed that back to 2015 to 2016, private equity products were a major driver for transaction value. What is this product?
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Speaker 4: Thank you Helen. I'll supplement some data points and also do a quick summary of what Charlie has mentioned. So I guess we would you look at this
Speaker 4: application of product mix from a slightly different angle that basically we don't necessarily just voluntarily put out as product mix or recommendation to our clients without understanding the client's need. So, throughout 2022.
Speaker 4: the sentiment of the entire market is actually preservation and risk averse. So the demand from insurance products actually grew as well as the board in the market. You know we're not manufacturing any insurance products. So basically just
Speaker 4: having an inference brokerage and responsible for picking the right products for clients. So as mentioned by chair lady, the coverage of penetration rate, especially in the Diamond Blackheart client group is relatively low, 21% for
Speaker 4: and 24 for the domestic one. And the contribution to the total revenue by interest related revenue for 2022 is about 77%, slightly higher than 60% in 2021 as well.
Speaker 4: So we still believe that, you know, still abundant room to grow in terms of insurance products. If the client still considers that insurance product becoming a very fundamental and important layer of the asset allocation strategy. In terms of Gophers AUM domestically, we believe that
Speaker 4: Our funded funds portfolio will benefit greatly from the registration scheme in the Asia stock market that provides more exiting opportunities for these portfolio companies to become IPO companies and provide better exiting routes for this type of funds.
Speaker 4: And in terms of the secondary market public security products within Gopher, we actually also invest heavily into the R&D team. We have a team of about 40 people focused on the macro and also micro researches.
Speaker 4: on different kinds of stocks and strategies, for multiple strategies sort of fund. And for overseas, we are investing heavily, both in budget and talents actually, for 2023, to make sure that we'll be able to meet the demand for our clients, especially for part of the allocation of more products.
Speaker 4: was public market type of products that in the past the market probably provides a lot of volume but we weren't able to provide too much on the US dollar denominated public markets and we're assembling a team to focus on that selection.
Speaker 4: and I believe that we'll be able to provide more on that type of product for our funders. Helen, back to you. Oh, thank you. Crystal clear.
Speaker 1: Thank you. Thank you, Helen. I believe we have Chih-Yao from Morgan Stanley also raised his hand. Operator, please. Hello, Chih-Yao. Hello, Chih-Yao. Hi, I'm Mel. For example, I'm a operator at Morgan Stanley . I'm a operator at Morgan Stanley .
Speaker 5: and the international government and the international government. Thank you. Thank you. Thank you.
Speaker 5: if R is more than 30,000 dollars that we can reduce our risk of growth and the environment shouldake Lost restaurant Will this equoriate?
Speaker 5: Let me translate. The first question is the market volatility we've seen in the fourth quarter 2022 and in both equity and a fixed income market. So I was wondering how does the reaction from NOAA's clients in the fourth quarter and what action has NOAA taken to stabilize the AOM in the fourth quarter last year?
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Speaker 2: It helps us to enhance this agency and make sure it observe our conditions differently. This is turning out to be a very difficult questions from my OutreachEs,
Speaker 2: We should consider making the change, as soon as possible to be more inclusive and equitable in the upcoming subsequent times. We highly and deeply support the Eh The political defiance, violent Antonio's Russia, not the identity stir. I totally, anyone else,
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Speaker 4: I think those are great questions. And also we want to stress
Speaker 4: that the strategy in terms of recommending our clients to preserve first, then pursue growth opportunities didn't start in quarter four last year. Actually, we published the CR report in the first quarter when we sensed a very highly volatile.
Speaker 4: market of the entire year. So actually, a majority of the allocation as we just mentioned in the market actually and also consistently our client strategy are you know, highly liquid products including money market funds, including the US dollar denominated deposit type of product.
Speaker 4: funds towards the end of last year when the Fed actually raised the interest very quickly. In terms of overseas, we have about over $1.1 billion USD AUM for clients to put their money in the actual deposit type of products and we're seeing actually a very good increase.
Speaker 4: in the fourth quarter alone. That's about 1.6 billion raised in that single quarter. And in the face of very complex market situation, NOAA actually never pushed out any product that we don't even believe in. So we still try to recommend the more conservative.
Speaker 4: and safe strategy for our clients to actually place on. We're actually seeing a huge influx of repay trading funds last year. As mentioned in the press release, we're seeing probably around 1,000 clients either reactivated from long-time dormant accounts or repatriated back to nowhere from other platforms.
Speaker 4: I believe that clients are very impressed with NOAA's strategy that we actually didn't have any exposure, you know, at AUM or AUA to real estate type of products to, you know, the non-standard credit products. And we have a very clean and light AUM for our clients.
Speaker 4: In 2023, we continue to hold a very conservative view, especially for our clients, but probably we will more emphasize on the provision of supply of overseas assets for our clients to carry out a global allocation strategy.
Speaker 4: and we're putting a lot of effort, also budget actually, in developing our overseas businesses. We believe that the opening up of new tier or new group of clients overseas, you know, the high net worth Chinese individuals overseas, will actually provide very strong growth driving practice.
Speaker 4: behind the incremental revenue in 2023, if you will. Thank you, Triel.
Speaker 4: incremental revenue in 2023, if you will. Thank you, Triar. Thank you, management. That's very clear.
Speaker 1: Thanks. Thank you, Jie. We also have Peter from JP Morgan.
Speaker 1: Operator, please turn on Peter's microphone. Thanks.
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Speaker 6: eight banks AOM in fourth quarter. How does NOAA differentiate from leading banks in China when it comes to strategy and product? In 2023, there is talk of release of access saving in China. How do you think NOAA will benefit from the trend, if any?
Speaker 6: The second question is about we do expect more spillover rates from SVP and CSAT1 write-down and 2023 is going to be volatile. Then how does NOAA position for this? Does NOAA offer investment products like AT1 issued by banks to your client? Thank you.?
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Speaker 6: they can't campus give you want to say Charlie, conjunctive event on goal that you don't to go take off the curve for the pins. Yeah, thanks Peter. Great questions again. Yeah, we actually don't have, didn't have.
Speaker 4: any HD1 or focal bond related products or clients. I guess probably the reason is because we're still relatively small in terms of providing US dollar and offshore products for clients. Like we have mentioned in the past that we focus on pretty much product maintenance.
Speaker 4: capabilities in the overseas offices. In the US, we have two investment teams. In Hong Kong, pretty much mid-back office for the US dollar asset management. And in 2023, you can probably look at year zero for our overseas piece of business and plan to actually really increase the number of...
Speaker 4: relation managers in Hong Kong to probably 100, compared to what we have with about 20 professionals. And for Singapore team is from zero, basically from scratch to 20. And we're in the process of actively hiring talents in those two places. And also looking at opportunities potentially to be able to actually access to local markets to serve the Chinese nationals in those nations.
Speaker 4: including in the US and probably other public destinations where Chinese immigrants are, you know, conventional will go and work. In terms of wealth management,
Speaker 4: for the past eight months, focused pretty much on US dollar products and also spent quite a bit of time and investment to establish global insurance platform and we're moving on to the primary market and secondary market products, both denominated in the US dollars. And just to supplement on the numbers, when you mentioned that the growth in the fourth quarter.
Speaker 4: I think still benefited greatly from products that we have in the Silicon Valley. We raised about more than a billion US dollars in the fourth quarter alone. That actually fit the client's need for more exposure to a deeper and probably more stronger markets in terms of overseas products.ada.com
Speaker 4: And the focus for 2023 is to expand the interfaces where we can reach out to our clients in different ways, including, for example, institutional client sales group, the online platform, and also including direct sales or direct distribution from GoPro Manager.
Speaker 4: especially the screen of the global products and to be able to actually put them into a portfolio for our clients. And in terms of domestic development strategy, we focus on continue to heighten investment in both branding, talents in large cities, first-tier cities.
Speaker 4: But in terms of the probably third, fourth-tier cities, we used to have network and branch offices we're looking at to consolidate these offices into the nearby hub cities. One is to obviously control the cost efficiency, and two is actually to ensure that we'll provide better quality service to our clients, as you would probably understand.
Speaker 4: that the majority of the high net worth individuals will probably gradually move to the nearby big cities for better life quality. So we also want to make sure that our service team is also there to be able to serve our clients. Peter, back to you. Maybe I'll add one more.
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Speaker 4: in fourth quarter, we benefited quite a bit of, I guess, heightened interaction with the clients. We actually held a pretty big client conference in Singapore towards end of December . Actually, before the official open up of China market last year, about 300 clients flew over to Singapore. And also we held.
Speaker 4: a very large conference last week in Hong Kong. And about 600 clients came over, you know, and joined our conferences and were providing, you know, views from different GPs, our own GP, and also economists just to share, you know, the outlook of the capital market to our clients. So we're able to actually interact.
Speaker 4: I guess at a better quality and better interaction frequency with the clients. And in terms of sentiment, we actually published a white paper with PwC for 2022 of high net worth individual sentiment index. This first year we're doing this white paper and I think it's actually a great way for us to understand what people are thinking, especially.
Speaker 4: the very unique group of PiNet with individuals in China, mostly actually our private business owners and entrepreneurs. You know, it seems that obviously, you know, after the reopening up, I elevated quite a bit, but I think that the overall sentiment.
Speaker 4: towards investment and wealth management or asset allocation will continue to be conservative towards R&D type of products. But we think that they probably will continue to look to further diversify their asset allocation across the board, also in the product mix.
Speaker 1: Thank you Peter. We have no further questions from the audience. So with that we would like to conclude this quarter and year-end earnings call. For our most updated financial reports please refer to the financial statement.