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Noah WM reports Q3 income plunge

The Shanghai-based wealth management firm reported income dropped 50% in the third quarter due to factors including China's slowing GDP.

The NYSE-listed wealth manager reported the net income attributable to Noah shareholders for the third quarter of 2019 was RMB 191.6m ($26.8m), a 7.8% decrease from the corresponding period in 2018 and a 23.4% drop compared with the second quarter of this year.

At the same time, income from operations has seen a sharp drop compared with the same period of last year, falling 50.6%.

The results were echoed by the firm in August, when officials warned that full year guidance is revised downward “in consideration of the macro-economic conditions in China, ongoing geo-political tensions, as well as the expected short-term impact resulting from the Camsing incident.

“The company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2019 will be in the range of RMB 1bn to RMB 1.1bn,” the firm said in August.” Previous guidance was in the range of RMB 1.13bn-1.18bn.

Camsing ‘wake-up call’

Noah issued a statement in July that said RMB 3.4bn in securities, sold by its subsidiary Shanghai Gopher Asset Management for supply chain financing for Camsing International, are in danger of default.

According to a report in Caixin, the securities were allegedly backed by falsified transactions.

“The Camsing incident is suspected to be a carefully-planned and complex fraud and expected to take a long time to completely discover the truth and solve issues,” Jingbo Wang, chief executive officer, said on today’s conference call.

“The incident was truly a wake-up call for everyone at Noah. It revealed a high concentration on a single product category and led to the decision to move away from our dependence on private credit products,” she said.

Wang also said the ongoing Hong Kong protests had little impact on the balance sheet. “It did not have a lot of impact on the asset management side, as our main business in Hong Kong is from fees for distributing products.”

However, it has had “a short-term impact” on insurance products, she said. “We have a back-up plan and we are developing business in Macao and Singapore, which we believe will provide alternatives to our clients in terms of insurance products,” Wang added.

Overall revenues were up slightly to RMB 842.0m for the third quarter of 2019, representing a 0.4% increase from the corresponding period in 2018, according to the firm’s statement.

The firm noted that the increase was “primarily driven by increased recurring service fee revenues and other service fees, and offset by decreased one-time commissions”.

 

Noah’s wealth management division (RMB)

 

Q3 2018 Q3 2019 YoY change
Net revenues 576.9m 542.4m -6.0%
Income from operations 169.2m 83.5m -50.6%
Source: Noah

Part of the Bonhill Group.