An earnings conference call for NOAA Holdings' second quarter and half-year 2026 results is introduced, featuring a presentation on business highlights followed by a financial and operational results discussion. Forward-looking statements are noted as subject to risks and uncertainties, with a Q&A session to follow for further inquiries.

The dialogue highlights Noah's successful transition to a new AI-enabled operating model, achieving monthly profitability in Singapore, demonstrating the decoupling of asset growth from headcount, and showcasing the effectiveness of AI in enhancing front office operations, client service, and global expansion.

The company reported a net revenue of 620 million in Q2, with operating income at 260 million, showcasing a strategic shift from legacy models to investment capabilities. Notable improvements in operating efficiency, including a 11.6% decline in costs and a 12.7% reduction in personnel expenses, reflect a leaner, more digitalized operation. The AI Wealth Management Department is emerging as a key growth engine, with the company expecting a healthy full-year operating margin despite potential quarterly fluctuations.

The dialogue outlines a multi-layered investment strategy, emphasizing LP investments, information network analysis, and direct investments. It highlights AI's role in enhancing decision-making, client understanding, and asset allocation. The summary also notes significant fundraising, AUM growth, and progress in resolving legacy issues, showcasing a robust financial position and a commitment to client outcomes and carry realization.

The mainland China business is refocusing on investment fundamentals and asset quality, shifting from high-commission products to comprehensive services. Prioritizing client profitability and retention, the company is adopting defensive strategies, leveraging AI for service efficiency, and concentrating on secondary market investments to build long-term client trust and value.

Despite a 469 million net revenue decline in the international segment, largely attributed to the phasing out of insurance delivery contracts and legacy referral channels, the client base and assets under management (AUM) in US dollar-denominated investments have shown growth. Overseas clients increased by 8.9%, reaching 3494 in Q2, while AUM rose 11.7% year-over-year. The decrease in overseas Relationship Managers (RMs) by 36.2% coincided with AUM growth, indicating a transition phase in the business model.

The dialogue outlines a shift from traditional growth strategies to a new operating model, focusing on AI-enhanced relationship management, wealth management, and ecosystem expansion, with the AI Wealth Management Department transitioning from concept to operational reality.

AI wealth management introduces a scalable, institutionalized productivity model, shifting from individual to AI-enabled services, achieving significant growth in Singapore without large RM headcount expansion, demonstrating potential for global business replication.

Noah's international business, led by AI wealth management, generated significant revenues and expanded its network, focusing on serving Chinese high-net-worth families globally. With AI, previously unviable markets due to low client density are now accessible, enabling scalable service across diverse regions.

The dialogue focuses on transitioning from a single successful AI wealth management model in Singapore to a replicable system across multiple markets, including Hong Kong, Japan, Canada, Australia, the UK, and Europe. It emphasizes the role of AI in enhancing investment capabilities, improving client matching, and driving AUM growth through sustainable investment outcomes. The strategy involves leveraging centralized AI capabilities, local licensed professionals, and ecosystem partners to expand efficiently without heavy physical footprints.

A strategic partnership with a licensed banking institution enhances account opening, multi-currency settlement, and payment processing for international clients, crucial for scaling wealth management services across Hong Kong, Singapore, the U.S., and Japan, emphasizing integrated infrastructure for true global economies of scale.

The dialogue discusses the evolution of a wealth management company into an AI-powered global platform, focusing on expanding service reach through a global ecosystem partner network. It highlights the shift from traditional wealth management practices to leveraging AI for deeper client understanding, increased platform capacity, and enhanced investment value creation. The model aims to serve high-net-worth Chinese families across various markets, reducing dependency on personnel and emphasizing AI capabilities, client service capacity, and ecosystem partnerships for future growth.

The company achieved a record operating margin of 36.3% for the first half of 2026, driven by AI and process redesign. Revenue remained stable, and the diversified portfolio across multiple private equity funds provides a broad base for future performance-based income. The CEO emphasized the structural cost optimization and the linear operating model's early financial evidence of efficiency. Car performance-based income, not a one-off event, grew significantly, supporting a larger asset base with a more efficient organization. Despite challenges in forecasting taxpayable income due to market conditions, the company's US dollar asset base continues to grow, with AUM up 11.7% and EUA up 7.5% year over year.

Discussed significant year-over-year growth in USD assets, international registered clients, and US dollar products, highlighting the sequential decline influenced by exceptional first-quarter fundraising. The dialogue emphasized the strengthening of investment-related business and the expansion of asset management, showcasing positive trends in volume and client base.

Despite a 36.2% year-over-year decline in overseas income, asset growth was achieved, attributed to early coupling with AI-enabled servicing and a streamlined front office model. AI has reduced total compensation costs by 12.7% for the first half, enabling smaller teams to maintain service coverage. The AI Wealth Management department, focusing on high-frequency client engagement, has seen monthly profitability and U growth from less than $100 million to over $400 million, indicating a potential model for future asset growth with less reliance on proportional increases in headcount and fixed costs.

The company reported a significant increase in operating profit and margins, reaching 34.8% in Q2, up 9.2 percentage points year-over-year. Conversion efficiency improved, allowing a higher portion of revenue to contribute to income. Non-GAAP net income and income for shareholders also saw substantial growth, marking a strong financial performance.

Q2 earnings reflect a 34% YoY increase in operating profit, driven by disciplined cost management and an efficient operating model. Non-GAAP ROE of 7% and strong balance sheet support shareholder value. Initiatives include 100% net income payout ratio and share repurchases. International business expansion and AI-driven asset growth underscore foundational strengths.

A Q&A session covers updates on litigation settlement progress, potential future provisions, AI strategy transition duration, monitoring metrics, long-term AI targets, and new KPIs under AI-managed models, including improvements in service tools and asset management.

Discussion focused on the impact of system noise on service reliability and the capacity of one RM to handle multiple clients, aiming to refine operational strategies.

AI-enabled platforms enhance wealth management by efficiently covering more clients with fewer resources, fostering cross-industry collaboration, and enabling non-traditional service providers to refer clients for wealth management needs.

AI-powered platform showcases rapid AUM growth in Singapore, emphasizing a shift from traditional hiring models to scalable AI strategies for global expansion, highlighting successful replication from Singapore to Hong Kong and planning further city expansions.

The dialogue discusses the expected effects of AI development on revenue and profit in the medium to long term, alongside maintaining strong dividend policies. It highlights the commitment to shareholder returns, balancing asset allocation, and the potential for enhanced profitability through AI and improved business models.

The dialogue focuses on managing inquiries and verifying if any questions were raised over the phone, with confirmation of no outstanding issues.

The conference ended with an invitation for participants to reach out to the IR team for any further questions, expressing gratitude for attendance and looking forward to future discussions.