Analysis On Core Competence Of Bank Of China Through Financial Statements

With rapid development of economy, the commercial banking system of China continues to perfect. Large commercial banks occupy the leading position; joint-stock commercial banks, city commercial banks and rural commercial banks etc. develop fast. In the meantime, foreign banks are actively exploring Chinese market. The competition in banking sector becomes fierce. In this circumstances, all the banks attach more importance to culturing and promoting their core competence in expectation of remaining invincible.At the present, there are few researches on the core competence of a single commercial bank. The existing research methods on core competence of commercial banks mostly are establishing index system directly or using mathematical statistical models to assess the competence of banks. There is little thesis researching banks’core competence through multi-angle analysis on financial statements. This thesis researches the core competence of Bank of China through financial analysis, and proposes remedial measures.On the basis of summarizing home and abroad research results on enterprise core competence and the assessments of commercial bank core competence, this thesis define the core competence as:the elementary irreplaceable and compositive ability to maintain the security, liquidity and profitability of operation. It integrates abilities of strategy management, corporate culture moulding, organization management, technical progress, assets quality improvement, capital structure optimization, income creation, cost control, customer maintenance, human resource management etc. On this basis of definition, begins with analysis on the operation strategy and circumstances of Bank of China, this thesis primarily analyzes its balance sheet, income statement and cash flow statement, lengthways and breadthwise, and adopts indexes reflecting security, liquidity and profitability in ratio analysis. The comparison others are China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of Communications and China Merchants Bank.The conclusion is:Bank of China performs well on security and liquidity while badly on profitability. Concretely speaking, its advantage rests with:good liability management ability, outstanding intermediary service, capital security and assets liquidity. Its disadvantage rests with:the ratio of investment in securities to total assets is low, high leverage and dependence on customer deposit limits its efficiency, low productive power of assets with high cost rate, unstable cash flow from operations which affects the quality of profits and stability of operation, facing more complicated business environment.According to above issues, here are the proposals for Bank of China to improve its core competence. First, optimize asset allocation to improve income. Second, upgrade financial innovation ability to enhance innovation of products and services. Third, improve customer relationship management to attract more deposits. Fourth, optimize capital structure and increase shareholders’ equity. Fifth, enhance cost management to improve profitability. Sixth, optimize organization and human resources management to improve the efficiency of profitability. Seventh, enhance management of cash flow to improve the quality of profit and stability of operation. Eighth, enhance risk management to better cope with complicated international financial environment.