China's Commercial Bank's Private Banking Business Profit Model Study

International private banking has already been well-developed, the profit contributed by which is approximately 10 times more than the general retail banking service. According to theoretical study and practical operating, private banking possesses the features of stable profit, small volatility in the economic downtime. Therefore it is generally believed that Chinese commercial banks should take great effort to develop private banking business, which can bring huge profits in return.Viewing from the current development status of Chinese commercial banks, profit-gaining mainly depends on the profit gap between deposits and loans, the structure of which is comparatively an unitary one, in comparison with that in the developed countries more than 30% of which derives from intermediate business. Thus it is more likely to be influenced by interest rate, credit and other risks, as well as to have a risk of greater profits volatility. The more intermediate business add in private banking, the higher profit margins will bring. The average profit margin of private banking in Europe has reached 30%. However, so far the development of private banking of chinese commercial banks is basically in a state of deficit, existing problems as vague self-position, unclear development mode which leads to lower profit and etc. Meanwhile, although foreign private banks have a relatively mature managment mode, in china they have disturbance such as "Acclimatization", thus, Chinese private banking business falls into a profit-difficult situation. Therefore, how to use our own advantages to create the profit model for the localized private banking as a new profit growth point is a question worthy of further study for all Chinese commercial banks.This paper centers on the discussion of profit mode of commercial banks, elaborates and analyzes the basic content of the private banking business, including the concept, the characteristics of private banking business, then in a further study of the value of private banking development. Introduces the types of profit model of foreign private banks, comparing and analyzing the adaptability of profit mode in the domestic. Draw lessons from the profit mode of the foreign private banking business, I think profit mode of commercial banks should combination both transaction fee based profit mode and asset management fee based profit mode in our country, The construct idea is "customer segmentation+ business matching+ products+services+ organization structure". The foundation on the construction of whole profit mode is effective market segmentation, the heart of this pattern is business matching, and the skeleton is products, service and organization structure. This paper divides the profit mode of private banking of Chinese commercial banks as following:transaction fee based profit mode, represented by professional investors who pursue the wealth maximization as well as large and medium-sized enterprises owners who create wealth; asset management fee based profit mode, represented by small business owners and professional managers who are in a favor of conservative management, as well as other classes (mainly full-time housewives, retired people, actors and sports stars, etc.) who are more likely to be wealth protectors. This paper will construct the localized private banking profit mode, based on customer segmentation, and take China Merchants Bank for example.In the paper qualitative analysis and data analysis are used to elaborate the value of private banking. Comparing and analyzing the two kinds of profit modes: transaction fee based profit mode and asset management fee based profit mode and through Case Analysis Method, this paper takes China Merchants Bank as a typical example to do an exploratory study on profit mode of private banking business of Chinese commercial banks.