Net income attributable to Noah shareholders for the first quarter was down 14.6% to RMB 243m ($34.3m) compared with the same period last year, according to the firm’s unaudited financial results.
“Our income from [some] businesses came under pressure from the Covid-19 pandemic and mandatory travel restrictions,” a Noah spokeswoman told FSA.
She explained that face-to-face investor educations sessions had to be cancelled. Overseas insurance sales, which require clients to travel to Hong Kong and the US, were also affected.
However, the firm expects that business activity will improve in the coming months.
“We do expect Hong Kong to lift its travel ban early next month and offline business activities have returned to normal in mainland China,” she said.
From alts to traditional investments
However, the firm’s recorded net income in Q1 is 136% higher compared with the fourth quarter of 2019, the report noted.
The spokeswoman explained that the firm distributed more standardised products this year, which include mutual funds and public securities, such as equities and bonds.
Standardised products accounted for 82% of products distributed during the first quarter, which compares with just 11.4% during the same period last year, the firm’s financial results show. On the flipside, the share of credit products sales fell to 0.8% from 78.8%.
“In the past years since we started, we basically only focused on alternatives products, such as private equity and venture capital,” Jingbo Wang, co-founder and CEO of Noah, said during the earnings call.
The spokeswoman added that the firm wanted to offer more diversified products, especially after the Camsing incident last year.
“We wanted to transform our strategy to make our investments more diversified. The Camsing scandal last year was also a wake-up call.”
Last year, around RMB 3.4bn in securities, sold by Noah subsidiary Shanghai Gopher Asset Management for supply chain financing for Camsing International, were in danger of default. According to local media reports, the securities were allegedly backed by falsified transactions and accounts receivable with business partners including JD.com.
In July, Noah reported Hong Kong-listed Camsing International to regulators and filed a lawsuit.
“At present, the criminal investigation by the public security organisation in China is still ongoing. According to the media reports, the police have arrested a number of suspects. The Camsing incident appears to be a carefully-planned fraud, involving many large e-commerce platforms and financial institutions,” Wang said at the time.
