The asset management division of Shanghai-headquartered Noah, called Gopher Asset Management, reported RMB138.7bn ($20.1bn) of assets under management (AUM) on 30 June, a 37.1% increase from the year before, according to the firm’s August 28 financial results annoucement.
The firm does not report the AUM for its wealth management division, quantifying its size in terms of the amount of distributed products per quarter.
Noah’s net revenue from the wealth management business reached RMB550.6m in the second quarter, a 9% increase from the year before. The wealth management division contributed 78% of the firm’s revenues, 18% came from asset management and the remaining 4% from internet financial services.
One-time commissions contributed RMB297.6m of revenue (a 2% increase), recurring service fees RMB209.3m (a 7.5% increase) and performance fees RMB22m.
The operating costs of the wealth management business were RMB365.4m in the second quarter, a 8.2% increase, and the operating margin grew to 33.6% from 33.1%. For comparison, the firm’s asset management business recorded an operating margin of 53.5%.
Client growth
Noah’s wealth management business had 164,728 registered clients on 30 June, a 43% increase during the past 12 months.
Fewer clients invested larger amounts into financial products. The number of clients who have purchased an investment during the quarter was 4,484, a 9% decrease from the second quarter of 2016.
However, the aggregate value of the products distributed during the quarter was 19% higher than a year before, reaching RMB33bn. The average transaction value per client increased by 30.5%.
Clients bought predominantly fixed income products, which accounted for 71% of the product sales (61% in the second quarter of 2016). The firm’s private equity products accounted for 25%, a slight decline from 2016, and secondary market equities for 3.4%, down from 10% in 2016.
Noah is one of two Chinese wealth management companies listed on the New York Stock Exchange (the other is Jupai).
From inception in 2005 until the end of 2016, the firm in total has distributed RMB380.8bn ($60bn) worth of products through the wealth management business, according to the firm’s 2016 annual report.
Initially licensed as a private fund manager, allowed to distribute its products to high net worth clients and institutions, Noah has been distributing mutual funds since 2012. It is also an insurance broker, micro-lender and a provider of leasing and supply chain financing.
Noah was established in 2005 through a management buyout of the wealth management division of Xiangcai Securities. It was listed on the New York Stock Exchange in 2010. The firm’s chairwoman, CEO, and co-founder Jingbo Wang holds 24.6% of the shares and 51% of its voting rights.
Noah has offices in Hong Kong where it is licensed as wealth and asset manager, as well as insurance broker. In 2016, the firm established offices in the US and the island of Jersey.
