Good day, and welcome to the Noah Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Melo Xi, Director of IR. Please go ahead.

Thank you, operator. Good morning, and welcome to Noah's 2024 First Quarter Earnings Call. Joining me today on the call are: Ms. Wang, Jingbo, 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. They will all be available to take your questions in the Q&A session that follows. Before we begin, please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but not limited to, those outlined in our public filings with ICC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward-looking statements, except as required under applicable law. In addition, today's call will include discussions of certain non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release. Lastly, this call should not be interpreted as a solidification to sell or purchase an interest in any Noah affiliated products. Please also be aware that a link to a live webcast with presentation materials is available on our Investor Relations website. With that, I would like to pass the call to Mr. Yin. Please go ahead.

Good morning, all investors and analysts. I'm Zander Yin, and this is my first time sharing and discussing company's performance as CEO of Noah Holdings. Thank you all for joining us today. I'd like to start today's call by sharing our views on the macroeconomic environment, our performance for the first quarter of 2024 and the strategy we're deploying going forward. Domestic capital market continued to experience extreme fluctuation during the first quarter. The real estate market remains sluggish, while the primary market faced hurdle due to the periodic policy restrictions, resulting in a slow exit process. It's clear that high net worth individuals are becoming increasingly cautious with their investments. Adding to the challenge, some noncompliant wealth management companies with capital pooling have collapsed, severely affecting domestic clients and leading to a stricter regulatory environment. I would like to reiterate that since our inception, Noah has never engaged in capital pooling, has no maturity mismatches and does not offer high leverage financing options to clients. As of today, Noah does not have any nonstandardized private credit products and RMB residential real estate funds. Overseas, persistent inflation over the past 3 months has cooled the expectations for Federal Reserve rate cuts, indicating that a higher for longer rate environment is likely to remain in place. As a result, investors will continue to allocate capital towards cash management and deposits for a longer period of time. Management speaking clients are also strongly demanding for global asset allocations. With this trend continues, we're expanding our international RM team and actively increasing our influence and wallet share among overseas management speaking clients. Turning to our financials for the quarter. Total revenues were RMB 654 million, a decrease of 19.2% year-on-year primarily due to the proactive restructuring of our business. Our overseas business strategy…

Thank you, Melo, and thank you, Zander, and greetings to everyone joining us today. As Zander has mentioned, the first quarter of 2024 is impacted by continued volatility in the global capital markets, shifting expectations around Federal Reserve interest rate cuts have created turbulent conditions in equity and bond markets around the world. As the U.S. dollar strengthened, equity and gold prices moved in tandem, reflecting the complex environment that investors continue to face. Effective risk management and global diversified portfolio have become crucial to successfully navigating this environment. Domestically, the A share market experienced extreme fluctuations as well, which negatively impacted investor confidence promoting them to take a more cautious and risk-averse approach to investments and further diversifying their portfolio. This created substantial challenges and impacted the financial performance of China's wealth and asset management industry. During the first quarter, 43 listed security brokerage firms saw total revenue and net profit declined by 20% and 30% from the same period last year. Some leading private banks were also affected with significant declines in commission income. In response to prevailing marketing conditions, we're strategically restructuring our wealth management operations, consolidating teams and resources from smaller cities to core cities and pivoting operations and personnel towards global markets where demand for asset diversification is growing. Teams guiding operations this year are transformation and transition. While this transformation may bring short-term challenges, pressures, including temporary fluctuations on financial performance, we're confident that we'll lay a solid foundation for robust sustainable growth towards our globalization strategy and generate enduring value for shareholders. With that, let's get into the details of first quarter financial results. On the revenue side, we have seen a slight increase in net revenues from new transactions with onetime commissions up 6% year-over-year. However, the decline in recurring service fees…

[Operator Instructions] The first question comes from Peter Zhang with JPMorgan.

My first question is about the investment sentiment. Starting from the March this year, we noticed that the capital market in Hong Kong has recovered. And recently, there's also some real estate supported policy in Mainland China. We are wondering whether Noah observe any improvement in domestic investment sentiment. And management mentioned during the call that the amount for domestic insurance has declined. We are also wondering what the client preference for their interest in terms of the products? My second question is about the revenue outlook and fee rates. We noticed that the first quarter revenue decline, not a revenue decline on a year-over-year basis. Can management gives us -- can management explain was reason for drivers behind? And what's our expectation for the Noah's revenue in 2024? My second question is about the fee rate for our product. In fourth quarter last year, domestic bancassurance channel experienced a decline in insurance fee rate as requested by the regulator, we will see potential fee rate decline for our domestic insurance sales and what's the potential impact? And apart from the domestic insurance, will we see any other fee rate declining impact for our -- for other products we are currently distributing?

So I'll translate on the first question regarding the changes in recent sentiment among investors. So, although given that we have seen some rebound in the capital markets or H share or A share capital markets recently. I guess, in summary, we haven't seen a significant shift or improvement in high net worth investors' investment sentiment because building confidence is rather a long-term process rather than short term. So the short term capital market rebound will not immediately reverse the investment sentiment in that sense. So the second question regarding the domestic insurance and I guess, the slowdown in demand, as well as the trending downward return or interest rate, I guess, it's largely aligned with the domestic interest rate environment, which is also trending down. And, I guess, the slowdown in the clients' sentiment towards domestic insurance is also a reflection of their investment sentiment in that sense. So right now, in terms of domestic insurance, we are more focusing on the products that will satisfy the retirement well-being, as well as the medical needs of clients and their parents, the type of products that will satisfy that those demands. So the third question regarding the reasons behind the decline in first quarter revenue. I guess, the first aspect is that, the decrease in recurring service fee or the management fee, mainly because of the active exit activities in our domestic portfolio and the fact that we do not really introduce new products in the domestic market, which drives down our domestic AUM. But, I guess, that's a rather active approach. And the second aspect is that, although given we have achieved a great improvement or progress in our overseas business and expansion. But given the current higher for longer interest rate environment and the product that fit into…

So operator, so please be noted that there is no more questions, our Chairlady, Wang, would like to have a closing remark as well.

Alrighty, this concludes our question-and-answer session. I will now turn it over to management for any closing remarks.

So I'll translate for Chairlady's closing remarks. So we have noticed that there are a lot of not compliant so-called wealth manager in the China domestic market continues to default under their private credit products, which has caused significant losses among their high net worth clients. So, I guess, in our perspective, in the past 10 years, the China wealth management has experienced a rather fast growing, but not so healthy growth period. So standing in today's time, we think that the largest or the biggest risk in the wealth management market in China is that, the high net worth clients return back to poverty because of the wrongly allocated assets or the wrong asset allocation advices they got. So right now, our main advice to our existing clients is to hold on to their current wealth and portfolio so that they can preserve their wealth and -- which is driven for future growth when the opportunities is there. Internally, I guess, the biggest challenge for us as we expand our overseas strategy is the -- I guess, how fast we can get used to or be familiar with the operation of how global private banks operate. But that being said, we have a very talented core management team, and we do have some very global-minded and top tier RM team. So we are still rather optimistic regarding our future growth, especially in the overseas market. So turning back to you, operator.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Thank you all.

Thank you all.