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Operator: Good day, and welcome to the Noah Fourth Quarter and Full Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. Specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Melo Xi, Senior Director. Please go ahead.

Melo Xi: Thank you, operator. Good morning, and welcome to Noah’s fourth quarter and full year 2024 earnings conference call. Joining me today on the call are Ms. Jingbo Wang, our Co-Founder and Chair Lady, Mr. Zander Yin, our Co-Founder, Director, and CEO, and Mr. Grant Pan, our CFO. Mr. Yin will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. We will all be available to take your questions in a Q&A session that follows. Starting this quarter, we will begin disclosing net revenues for each domestic and overseas business unit to better reflect the organizational restructuring we have undergone and provide a clearer understanding of the financial performance and strategic progress each unit has made.

Domestically, we have broken down revenue into domestic public securities under Noah Upright, domestic asset management under Gopher Asset Management, and domestic insurance brokerage under Glory. Overseas businesses have been broken down into overseas wealth management under our private wealth and overseas asset management under Olive Asset Management, and overseas insurance and comprehensive services under Glory Family Heritage. In addition, please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC and the Hong Kong Stock Exchange.

Noah does not undertake any obligation to update any forward-looking statements except as required under applicable law. With that, I would like to pass the call over to Mr. Yin.

Zander Yin: Good morning to everyone joining us today. During today’s call, I will provide a summary of overall market conditions and our results for 2024 before diving into strategies and performance of each overseas and domestic business unit. I will then outline our priorities and outlook for 2025. 2024 was a year of both challenges and opportunities. The challenges arose from subdued client sentiments due to macroeconomic conditions. This, however, created an opportunity to implement necessary organizational restructuring at a time when associated opportunity costs were relatively low in the challenging environment. Throughout the year, we made significant progress in restructuring our domestic sales team to fully comply with the evolving regulatory requirements.

As a result, sales teams from Noah Upright, Gopher Asset Management, and Glory have now been separated into independent and licensed business units, creating a seamless end-to-end business model. Overseas, we are also continuing to recruit and expand our team of relationship managers in Hong Kong and Singapore, as well as the anticipated hiring in the United States and other locations. We also launched a commission-only agent model for our insurance businesses and began building this team from the ground up. By the end of 2024, these initiatives have already begun to yield promising results. Despite the challenging year, we remain confident in the resilience of our business model and the robust margin from the strong cash flow it generates.

While our overseas expansion efforts are still in their early stages and will take time to scale significantly, I can already sense a momentum and excitement reminiscent of founding Noah twenty years ago. This time, however, we are pursuing growth on two fronts: mainland China and international markets. Our ability to manage risk effectively while serving clients globally will position us well for future growth. Full-year net revenues were RMB 22.6 billion, a year-over-year decrease of 21.1%, primarily due to decreases in distribution of domestic and overseas insurance products as well as recurring service fees from domestic private equity products. Non-GAAP net income for the year fell 46% to RMB 550 million, mainly due to two factors. First is the upfront restructuring costs associated with reducing our domestic network from 44 cities to 11 cities, which will reduce long-term fixed costs and improve operational efficiency.

Secondly, in terms of taxation, the effective tax rate increased to 31.5% in 2024. Domestically, we restructured our sales team into fully independent and licensed business units to comply with the evolving regulatory requirements. While this temporarily impacted sales efficiency, it has laid a solid foundation for future growth. On the product side, we prioritized global RMB-denominated ETF QDII, and QDLP products, which generated solid returns for clients in 2024 despite the lower fee rates. Additionally, we shifted our insurance offerings towards medical and elderly care products tailored to long-term client needs. Operationally, we consolidated our presence in core cities while retaining the most outstanding relationship managers. This allows us to reduce risk costs and compliance expenses while enhancing online capabilities.

In the fourth quarter, the margin rally in China drove demand for private secondary products, of which transaction value increased 200% sequentially, and revenues from public security products increased 36.8% sequentially, demonstrating our ability to capitalize on opportunities during market upturns. We launched new internationally focused brands in 2024: Arc, Olive Asset Management, and Glory Family Heritage. Together, these brands will lead our efforts overseas to serve both existing and new clients. Overseas relationship managers currently number 138 based in Hong Kong and Singapore, and we will continue to expand this team as we explore opportunities in other markets with significantly underserved Mandarin-speaking communities, such as the US, Japan, and Canada.

We also began building a commission-based overseas and domestic insurance sales team, which has expanded to nearly 100 people, with the goal of growing further as we head into 2025. Our core management team is very excited about the vast opportunities that the overseas Mandarin-speaking wealth management market presents. It feels very much like the early days of founding Noah in 2005. We will continue to invest in expanding our overseas presence and build out our team to support it. This is a costly process that requires time and patience to ramp up, but we are confident that in the long run, it will position us as the preferred wealth management platform for global Mandarin-speaking clients. We will now dive into the performance operation of each business unit.

I will let our CFO, Grant Pan, go deeper into the group’s consolidated financial performance later.

Melo Xi: AUM. The Glory Family Heritage pinching the We launched a new internationally focused brand in 2024. Our wealth management asset Olive Asset Management, and Glory Family Heritage. We also established an office in Japan and initiated pilot programs in Canada and Southeast Asia to better serve Mandarin-speaking communities in this market. Net revenues from overseas in 2024 were RMB 1.3 billion, accounting for 48% of total net revenues, up from 44% last year. Its proportion in the group’s newly generated business rose from 86% last year to 89% this year. Overseas investment products performed particularly well, with transaction value of overseas primary and private secondary products, excluding cash management products, growing 45% and 22% respectively, year over year.

Arc Wealth Management will use Hong Kong, Singapore, and the United States as its three primary booking centers to serve existing clients and engage with new ones in markets such as Southeast Asia, Japan, and Canada. Net revenues from overseas wealth management through Arc for 2024 were RMB 675 million. As of the end of the fourth quarter, we had 138 overseas relationship managers, up 55.1% from last year. Overseas AUA, including externally managed products, reached USD 8.7 billion, a year-over-year increase of 4.6%. Our wealth management had over 17,600 registered clients worldwide in the fourth quarter, an increase of 18.3% year on year. Among them, the number of accounts opened in Hong Kong reached 17,360, a year-on-year increase of 17.1%, while the number of accounts opened in Singapore reached 789, a year-on-year increase of 111%.

For the full year, the number of active overseas clients reached 5,544, a year-on-year increase of 15.8%, with overseas production value hitting USD 4.3 billion, a year-on-year increase of 29.8%. In addition to continuously improving the functionality and user experience of our Hong Kong online wealth management platform, we also launched a localized Singapore version of the platform during the year. Our online product selection continues to gradually grow with a comprehensive online offering of entry-level products. Full-year transaction value of overseas cash management products was USD 3.2 billion, a year-over-year increase of 31%. As we continue to expand globally, comprehensive cross-regional online services have become critical as we continue to invest in strengthening these capabilities going forward.

In terms of overseas asset management, net revenues were RMB 439 million in 2024. Over the past two years, we have significantly enhanced the competitiveness of our overseas primary market product portfolio through our established US product center. Our private market products now rival those of leading global private banks. Notably, we raised USD 663 million for overseas private equity, private credit, and other primary market funds in 2024, a significant 44.9% year-on-year increase. In the public market and hedge funds space, we expanded the ecosystem we have built with reputable products and investment partners globally, allowing us to offer clients a rapidly growing selection of high-quality and exclusive alternative investment opportunities.

In 2024, the aggregate transaction value of alternative public market products, including hedge funds and structured products, reached USD 236 million, a year-on-year increase of 22.1%. Including term deposits, the aggregate value of private secondary products distributed was USD 1.5 billion, a year-on-year increase of 1.9%. As of the end of the fourth quarter, overseas AUM reached USD 5.8 billion, a year-on-year increase of 15.1%, accounting for 28.1% of the total AUM, up from 23.3% during the same period last year. AUM for overseas private market products reached USD 4.5 billion, a year-on-year increase of 18.5%. In terms of the overseas insurance and comprehensive services, full-year net revenues were RMB 140 million. Before internal transfer pricing, revenue from overseas insurance products during the year was RMB 502 million, a year-on-year decrease of 21.9%.

The Hong Kong insurance market remained highly competitive. On the product side, Glory’s average premium increased by 30% throughout the year. We continue to actively explore new marketing models and are building a sales team from the ground up with commission-only agents. By the end of the year, Glory had already onboarded 50 commission-only agents overseas, with more than one-third of them already contributing to revenue. Our target is to build this team to approximately 150 agents in the overseas market by the end of 2025 to drive new client acquisitions. Domestically, we adapted our business to evolving regulatory requirements, reducing headcounts and coverage across China to drive down fixed costs. We also streamlined operations of each independent and licensed business unit.

Our domestic and overseas teams are now fully independent. Net revenues from Mainland China in total were RMB 1.4 billion in 2024, a year-on-year decrease of 27.5%, primarily due to a subdued market environment generating fewer new business opportunities and decreases in revenue from distribution of domestic insurance products and also the recurrent service fees from private equity products. Net revenues from domestic public security were RMB 487 million in 2024. During the year, the aggregate value of RMB public securities products distributed reached RMB 25.6 billion, a year-on-year decrease of 35%, while private secondary products reached RMB 5.4 billion, a year-on-year decrease of 31%, mainly due to the weak investor sentiment and the sluggish market environment during the first three quarters of the year.

Starting in the fourth quarter, however, the A-share and Hong Kong stock market rebounded, driving a 200% sequential increase in RMB private secondary products. Our domestic public security business strategy will integrate an online and offline business model to provide clients with global asset allocation solutions denominated in RMB. In terms of asset management, net revenues from domestic asset management were RMB 772 million during the year. Gopher’s team continued to focus on managing assets in the primary markets. During the year, it achieved over RMB 7.5 billion in primary market exits, an increase of 11% compared with the previous year. Due to the lack of new fundraising, we are facing a declining management fee base as products expire, which is expected to impact our overall revenue growth in the next three years.

In response, we will continue to grow the scale of overseas investment product distribution to offset the expected decline in domestic management fees. Our goal is to grow overseas AUA to USD 20 billion over the next three to five years. In the public market, private secondary products management, Gopher mainly focuses on beta returns from global markets through cross-border RMB-denominated ETFs. The aggregate transaction value of this was RMB 93 million during the fourth quarter, with a cumulative value of RMB 197 million for the whole year. In terms of insurance brokerage business, net revenues from domestic insurance to Glory hit a new low of RMB 43 million during the year, primarily due to adjustments we made to the product mix and the restructure of its sales team.

We onboarded 42 commission-only agents during the year, but their ramp-up in sales volume will take more time. As we head into 2025, the recruitment of commission-only agents will be our main priority. Glory’s product focus has been adjusted towards medical and elderly care products that meet the long-term needs of first-generation entrepreneurs, but the demand is less urgent for immediate allocation, meaning it will take more time to scale. Looking back at 2024, our primary focus domestically was on restructuring our domestic sales team, separating each into independent and licensed business units. Overseas, we were building out our team of relationship managers. In the next few years, our priority will be acquiring new clients both domestically and overseas.

Looking forward, our priorities for 2025 will be squarely on ensuring full compliance with regulatory standards in all regions where we operate, prioritizing both the quality and quantity of our growth. Secondly, expanding our team of overseas RMs in the regions and countries where we have established booking centers. Thirdly, expanding our team of commission-only agents for our domestic and overseas insurance brokerage business. Fourthly, optimizing global investment and asset allocation solutions to provide clients with more competitive investment portfolios and asset allocation strategies. Lastly, improving technology systems to better serve clients online. Lastly, the board of directors has already approved an annual and special dividend, which together amount to RMB 550 million, which is equivalent to 100% of our non-GAAP net income for the year.

This complements our continued execution of our share repurchase program. I would now like to turn the call over to Grant to go over our financials in more detail. Thank you all.

Grant Pan: Thank you, Melo, and thank you, Zander, and greetings to everyone joining us today. Throughout 2024, the sluggish macroeconomic environment, increasingly stringent regulatory requirements, and shifting client preferences created significant headwinds for the wealth management industry. This challenging environment impacted our financial results during the year, with both full-year revenue and net income falling from last year. But while these challenges continue to impact short-term performance, as Zander mentioned, our business remains profitable and continues to generate solid cash flows. This presented opportunities for undertaking our organizational restructuring domestically and investing in overseas expansion to reposition ourselves for long-term sustainable growth while market sentiment could subdue.

Building out new sales teams and infrastructure domestically and overseas is an expensive process, so it will take time to ramp up before it begins to meaningfully improve our performance. While we expect near-term pressure, our business will remain foundational changes. Position us for sustainable growth. It’s already beginning to yield results for financials in 2024, reflecting the progress we have made expanding our portfolio of overseas alternative investment products. Additionally, we were ideally positioned to capitalize on the strong recovery of domestic capital markets starting in late September, which drove strong demand for RMB-denominated secondary products and partially offset the decline in revenue from private equity products.

Let’s get into the details of financials. Total net revenue was RMB 652 million during this quarter, down 18.5% year over year and 4.6% sequentially. Total net revenues for the year were RMB 22.6 billion, down 21.1% year over year. Notably, overseas net revenue reached RMB 1.3 billion in 2024, accounting for 48.1% of total net revenues, up from 43.5% last year. By region, domestic net revenues during the fourth quarter increased 18% sequentially to RMB 362 million, driven primarily by more than a 200% surge in distribution of RMB-denominated private secondary products. However, full-year domestic revenues declined by 27.5% year over year, primarily due to a significant drop in revenue from domestic insurance products and recurring service fees from RMB-denominated private equity products amid the challenging macroeconomic environment.

Net revenues from overseas during the fourth quarter decreased by over 20% year over year and sequentially over 12% for the full year. This was mainly due to decreased distribution of overseas insurance products amid fierce competition in Hong Kong’s insurance market and significant sequential fluctuations. If we exclude insurance products, revenue from overseas investment products actually grew during the quarter and year on a year-over-year basis, reflecting the progress we have made expanding our alternative investment offerings. By revenue type, during the quarter, one-time commissions decreased by 56.1% year over year and 23.2% sequentially, primarily due to a decrease in distribution of insurance products both domestically and overseas.

Recurring service fees increased 4.4% sequentially, with declines in RMB-denominated private equity products partially offset by gains in RMB-denominated private secondary products. Performance-based income surged by over 300% year over year, driven by the recovery in onshore markets, with RMB-denominated private secondary products contributing nearly RMB 30 million to performance-based income. Total transaction value in the fourth quarter was RMB 16.3 billion, slightly down 1.7% year over year, up 14% sequentially. Transaction value of domestic private sector products was RMB 2.5 billion during this quarter, a significant increase of over 200% sequentially, while overseas investment products were USD 964 million, a 16.4% year-over-year increase.

Zander Yin: The transaction values of USD-denominated products reached USD 4.3 billion, up nearly 30% year over year, and accounting for 48.8% of total transaction value in 2024, compared to only 32.1% last year. Benefiting from the enhanced competitiveness of our overseas alternative investment product portfolio, USD private equity products totaled USD 663 million, up 44.9% year over year, and USD private secondary accounts, excluding cash management products, totaled USD 236 million, up 22.1% year over year. By the end of this year, USD-denominated AUM grew by 15.1% year over year to USD 5.8 billion, with USD-denominated AUA increasing by 4.6% year over year to USD 8.7 billion, reflecting our ability to capture a larger share of clients’ USD wallets for investment products.

Moving on to the income statement, we implemented rigorous cost control measures in 2024, driving down operating costs and expenses by 10.5% from last year. Specifically, full-year compensation and benefits decreased by 7.4%, reflecting improved employee efficiency. Selling expenses fell by over 40%, and general administrative expenses remained stable. Even during the fourth quarter’s peak marketing season, we maintained a disciplined approach to expenses. Total operating costs and expenses for the quarter were RMB 514 million, a decrease of 11.1% year over year, and an increase of 16.1% sequentially due to seasonality. In line with revenue trends, operating profit declined in 2024, with a full-year operating profit margin increasing to 24.4%, partly due to reduced government subsidy.

Net income for the year was affected by certain nonrecurring factors, including an increased effective tax rate of 31.5% in 2024. Additionally, due to our GP share of investments in the products we manage, a loss of RMB 112 million was incurred in equity and affiliates during the year. Taking these factors into account, our non-GAAP net income was RMB 132 million for the fourth quarter and RMB 550 million for the year. By year-end, our client base remained stable with 9,334 total diamond black card clients, but our overseas client base continued to grow to over 17,600 registered clients, an increase of 18.3% year over year and 2.1% sequentially. The total number of overseas diamond black card clients now exceeds 1,500. As Zander has mentioned, we were rather conservative in terms of acquiring new clients throughout the year.

Over the next few years, however, this will be our major focus as market dynamics shift and create opportunities to gain more market share both domestically and overseas. In terms of the balance sheet, it still remains strong and robust. Our cash balance decreased as a result of a large dividend payout in the third quarter. We are pleased to see cash and cash equivalents and short-term investments increase to RMB 5.1 billion by the end of the year. Our current ratio also improved to 4.5 times, with the debt-to-asset ratio remaining stable at 15%, with no interest-bearing debt. This provides a solid foundation for us to further expand our overseas business. Lastly, shareholder returns. In accordance with the USD 50 million share repurchase program announced in August 2024, we have repurchased over 600,000 ADSs by the end of 2024, equivalent to 0.9% of total issued shares.

In appreciation of the long-standing support from shareholders, the board has again approved an annual dividend and a special dividend, which together amounts to RMB 550 million, equivalent to 100% of our non-GAAP net income for 2024. Although we are facing short-term headwinds, which impact our financial performance in the short term, we expect to see revenue and profitability recovering in the future as we ramp up our overseas business and domestic market recovery. We firmly believe that our stock remains undervalued and does not fully reflect our global growth prospects, robust balance sheet position, and special bond with Mandarin-speaking high-net-worth investors around the world. Guided by our vision to become the preferred wealth management platform for global Mandarin-speaking clients, we remain committed to creating lasting value for our clients and continue to deliver sustained returns to shareholders who join us on this journey.

Thank you all again for your trust and support. With that, I will now open the call to your questions.

Operator: Then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Charlotte Liu with UBS. Please go ahead.

Helen Li: Hello, this is Helen from UBS. Since the beginning of this year, what has been the demand for investment products among high-leverage points? Which type of products has been more popular? What’s our CRO’s current investment strategy? And which types of products are being promoted? In the past three quarters, the sales of insurance products have declined year on year. Will this trend continue into 2025? In the future, which products will be the main source of revenue growth in terms of one-time commissions? My second question is about overseas business growth. Overseas revenue has been increasing quarter by quarter. It was just mentioned in the meeting that the United States is being used as a booking center. Can you provide information on our business development in the United States?

Currently, which countries or regions are the main sources of overseas revenue growth? My last question, in this quarter, we have seen a sizable settlement reversal and contingent litigation reversal. Can you give us more color on that? Thank you.

Zander Yin: Okay. Thank you, Helen. So I’ll do a translation of my response. As mentioned, we published our newest edition of our CIO report in the first quarter of the year. The overall logic behind our house view is that we think the global market will remain very volatile due to various uncertainties. Our suggestion to our clients is to seek relatively certain investment products within these uncertainties. We also stress that global asset allocation is very important. In terms of client sentiment and demand, we saw the trend since the fourth quarter and also extending into the first quarter of this year that the investment sentiment and demand among Chinese high-net-worth clients have been rebounding. This is due to two main factors.

First, the subdued investment sentiment since the COVID situation in China has reached a relatively bottom point before the fourth quarter last year. In the past few years, our clients and also Chinese high-net-worth clients did not engage in a lot of investment activities, but now we are seeing their confidence starting to pick up. Secondly, the market performance, whether it’s the A-share, the H-share, Hong Kong stocks, or even US stocks, has been rebounding. So a lot of clients have come back to the investment demand. In terms of what types of products our clients currently prefer, liquidity is a major consideration among our clients. A lot of the popular market securities, hedge fund products, themselves are NAV-based and liquid. Some semi-liquid primary market products, such as private credits and infrastructure, are also very popular among our clients.

Our concern or target is to enhance our product shelf to meet our client’s demand while suggesting our clients engage in a global asset allocation strategy. In 2025, with advancements in the artificial intelligence industry, whether it’s primary market or public securities, anything related to AI is also a very important investment theme for clients.

Grant Pan: Thank you, Zander. The first response is related to insurance products. The insurance market, especially in Hong Kong, is still highly competitive because there are operations that are not compliant with regulatory requirements, including commission kickbacks. We never did anything like that. We stick to compliance and regulatory requirements, and we never kick back any commissions to clients. The difference between Noah and other insurance brokerage firms is that we provide our clients with overall asset allocation advisory, and insurance is part of that advisory or solution where we suggest our clients use insurance as a tool to protect the safety net of the overall portfolio. The clients we serve and the average ticket size of insurance is higher than the peers or other brokerage shops in the market.

As Zander mentioned in the previous earnings call, the overall insurance premium increased by 30% this year. The decline group is still quite different from the market competition. Looking ahead to 2025, we think there will still be competition in the market. To counter that, we have worked with insurance firms or product providers to come up with discounted plans for our clients. This is on the product side rather than kicking back commissions. During the past year, we have seen the Hong Kong government coming out with many new requirements to counter noncompliance operations in the market, which is beneficial to compliance firms like Noah. The challenge is that a lot of the onshore wealth management platforms collapsed, and after they collapsed, a lot of the employees or their relationship managers turned themselves to do overseas insurance, so the labor supply in the market is increasing.

Our overall strategy for 2025 is to use asset allocation overall advisory with multi-strategy and provide better value to our clients. We are working with insurance firms to increase our competitiveness in the insurance product segment. Helen also asked about our operations in the US. The US is a very important market and a planned booking center for our business. In 2024, our majority of focus in the US has been on the product side. We have four different teams in the US, and three of them are focusing on either investment or product selection. We are happy that recently and in the near future, we will be welcoming some top-tier talents joining us who have worked in top-tier hedge funds or fund managers previously. We think this will increase our competitiveness and effectiveness in terms of product selection and GP and fund manager coverage.

We think that even though we are competitive in terms of our product selection and product shelf, to keep up the competitiveness, we need to continue to cover and work with the GPs, especially in the local markets in the US.

Zander Yin: Regarding the US market, we are now constructing in four locations. We used to have two investment teams, one in Silicon Valley focusing on tech-oriented VC funds and another real estate team in New York. We are in the process of acquiring advisory capabilities that will allow us to have a third booking center in addition to Hong Kong and Singapore in the US market. We have built an OPM, which is the product selection center in Colorado, and have local cooperation with some local banking partners and another location in Irvine, Los Angeles, mainly serving our clients on the US insurance side and hosting various client activities. The new revenue from two additional locations is slowly coming into shape, but the capability of adding another booking center in North America, especially to serve Chinese immigrants in both the US and Canada, will give us a lot of advantages, especially competing with other Chinese background firms.

Regarding the quarter four one-off reversal from accruals, it is a one-off event. The final outcome of a pending case was more optimistic or preferable for us.

Jingbo Wang: Thank you. During 2024, especially in the first three quarters, the overall sentiment among Chinese investors in terms of investment reached a bottom. We have seen a rebounding trend since 2025. For example, we hosted a public market summit in Hangzhou, China, this month, and we had over 1,000 of our clients attending this summit. The feedback we got was that clients are now having more interest in listening to what the managers have to say, and they feel the urgency to act on investment. This is also the case in overseas markets, whether it’s Hong Kong, Singapore, or Japan. We are seeing that Mandarin-speaking or Chinese clients are actively on the move, whether it’s businesses going overseas or global investments or overseas investment opportunities.

In terms of our CIO view, we think this is the moment for Chinese clients to adjust their strategic asset allocation, not only on the tactical side but within the strategic asset allocation side. This is also what we are doing to guide our clients to make changes in their asset allocation strategy. In the Hong Kong insurance market, the competition is not in a healthy state. On the product side, the expected rate of return of the insurance product used to be ordinarily high, and we are seeing that the Hong Kong government is now stepping in to make adjustments to the expected rate of return or investment return on these products. In the competition side, there are quite a lot of so-called family offices or multifamily offices that are not really operating like family offices.

Their clients’ feedback is that they don’t feel like they are served well. Our strategy for Noah is to serve large clients and use global asset allocation strategy to serve larger clients. In terms of insurance, we are trying to learn and adjust to different markets. That’s why we are engaging the new commission-only agent space to acquire new clients, similar to what some other firms are doing. For our in-house relationship managers, insurance acts as a tool to help our clients secure their safety net in their portfolio asset allocation.

Operator: The next question comes from Peter Zhang with JPMorgan. Please go ahead.

Peter Zhang: Thank you for giving me the opportunity to ask questions. This is Peter Zhang from JPMorgan. I have two questions. My first question is regarding the first quarter top trend. Can you give us an update on the first quarter trend in terms of client sentiment and the wealth management product sales in the first quarter? With the completion of our domestic strategic transformation and some improvement in domestic investment sentiment since late 2024, how should we expect our 2025 revenue trend? Can we expect the revenue to see a stabilization target category or some recovery in 2025? My second question is regarding the overseas RM. We noticed that the number of overseas relationship managers has declined by 5% sequentially in the fourth quarter and fell short of the previous target of 200 for 2024.

I wish to understand more about the reason behind this relationship management adjustment in the fourth quarter last year and what will be our overseas RM headcount outlook for 2025. I also wish to understand our overall headcount outlook for 2025. Thank you.

Zander Yin: Thank you, Peter, for your question. On the first question related to investment sentiment right now and the outlook for the financials in 2025, the overall trend, as we previously mentioned, is that we see clients’ investment sentiments have been rebounding significantly. We saw the trend starting since last year’s year-end flagship Black Card and Diamond Card client summit, which was the largest in terms of scale in our history in terms of client coverage and the number of clients attended. We hosted these summits in key major cities in China, as well as five sessions in Hong Kong alone. The feedback we got from clients was that it’s very rare to have these large-scale and high-quality events for individual investors or high-net-worth investors because, on one hand, a lot of Chinese wealth management firms have exited this market, and some foreign firms are less motivated to host these events given the market condition.

The clients who attended our summits tell us that the quality of the content and the scale is probably the best in the industry. We did a data summary that over 90% of our diamond card and black card clients are overall profitable. This is also our most important client base and a reflection of the quality of asset allocation advice that we continue to provide to our core clients. Chair Lady also mentioned that this month, we hosted a public security summit in Hangzhou, which has been quite a hot city considering all the technological investments, for example, Deep Search, which is also based in Hangzhou. We hosted two days with over 1,000 clients attending. We saw that the clients are very active and keen to learn and listen to what the managers have to say, and they think that the investment market in China has opportunities to invest.

We also see a lot of transaction value generated from this summit. In terms of global asset allocation, what we have been doing in the past two to three years with eight consecutive CIO house view reports, I think the clients are now starting to buy into our advice that they shouldn’t just allocate their assets in a single market, which is China. They need to consider global asset allocation and investment, and that’s exactly what they’re doing now. Speaking of 2025, since we don’t give out concrete guidance on revenue and profit, the overall trend is that we set our KPIs and requirements for each business unit, especially in the overseas investment product segments. The client’s sentiment and demand are growing, and according to our house view, this is a critical time to act.

We hope that the downfall in our RMB private market product and the associated decline in recurring service fees can be gradually offset and overcome by the growing overseas investment portfolio. In terms of insurance, we think that although the market competition is fierce, among our clients, we see that a lot of them are not subscribing enough insurance products or related tools for their succession planning and asset segregation purposes. We want to utilize this window of opportunity to help our clients refine their strategy within the asset allocation, especially in a highly volatile market. Overall, we hope that 2024 was kind of the bottoming, and 2025 should be able to see some rebounding from the bottoming out. That’s the outlook on 2025.

Regarding the decline in the fourth quarter in terms of the overseas relationship manager and the reasoning behind it, Zander, Grant, and Chair Lady all mentioned about this. Our overall hiring strategy is that the fourth quarter is usually the year-end review window. In our prior experience in China, when we established our sales team, typically new people who join us need some time to get used to our system and our product and asset allocation advisories. There will be people who do not meet our expectations, so actions would be taken at the year-end time. Especially because overseas, the labor cost and overall salary are higher, we tend to be more conservative compared to domestic markets. Grant mentioned that the overall RM team overseas in 2023, by year-end, was 89 people.

This year, it was 138 people, which was a 55% increase. On one hand, we keep having a fresh inflow of talent, but we also have the opportunity to reevaluate the RMs that joined us previously but didn’t meet the expectation. Typically, the cycle is about three to six months. In terms of the hiring plan in 2025, we have a strategic program internally called ARC 200. It’s not just to get to the 200 mark. Aside from the lateral recruitment from peers in the local market, we are also stressing the importance of campus recruitment. We had about 40 fresh graduates joining us last year, and this year we will continue to target the top schools globally to recruit the best of their class of graduate students. Aside from the relationship managers, since we’re putting a lot of resources into new client acquisition, we are also establishing a BD team or business development team who, on the technical side, might not be able to sit within the RM requirements, but they can acquire clients and manage client relationships.

Once they become more sophisticated in asset allocation and investment advice, they become future candidates for relationship managers. Lastly, Chair Lady added that in the previous year, 2024, it was really a process of involution. A lot of the investors and analysts who are familiar with us know that especially in the domestic market, the relationship managers didn’t really have a good time or didn’t feel like they were in their best days. But right now, especially starting from 2025, we’ve already sorted out the compensation scheme, which we feel will motivate our sales team. The head of sales of Noah spent a lot of time interviewing and speaking with our relationship managers in China, and his feedback was that they feel like they’re ready to go now.

Coming out from the bottoming in 2024, we’re better positioned both in terms of client acquisition and our sales team.

Jingbo Wang: Thank you, Chair Lady. One more point is that, as we mentioned, we’ve broken down our sales team into different business and licensed segments. On our client perspective, they also need time to get used to it because previously, they used to deal with maybe one RM who takes care of all their needs. But right now, each client needs to deal with sales personnel from different business units, which in the long term will be beneficial because of the different expertise every RM specializes in. But it does take more time for our clients to get used to. That’s also a near-term challenge for us. Peter, I hope that answers your question.

Operator: This concludes our question and answer session and concludes the conference call today. Thank you for attending today’s presentation. You may now disconnect.

Melo Xi: Thank you. Thank you so much.

Jingbo Wang: Bye.