The Comparative Study Of The Dupont System Ⅱ Application In Commercial Banks

DuPont system I，as a financial analysis system of industrial enterprises, is a moresystematic analysis tools on corporate financial statements from the standpoint of profitabilityand risk. But in many cases, DuPont system I does not apply to commercial banks becausebanks are the particular financial institution. So, the paper focuses on how DuPont system isapplied to the analysis of the financial statements of commercial banks.First, this paper established DuPont System Ⅱ applied to commercial banks on the basisof the DuPont system I; Secondly, DuPont System Ⅱ was used in the financial data ofAgricultural Bank of China to prove that it is feasible in the banking sector. Thirdly, thearticle had a comparative analysis of profitability and risk between the state-ownedcommercial banks, joint-stock banks, Agricultural Bank of China by DuPont system Ⅱ. Themain conclusions are as follows：First, the state-owned commercial banks are not competitive in the profitability, but theyare more resistant in the changing financial markets because of the strong risk control ability.Second, the joint-stock banks have an advantage on the profitability for the business ofinnovation. They should strengthen the control of the risks from the business innovation,because risk control is the basis of profit.Third, DuPont System Ⅱ is to find out the bank’s competitive advantages and areas forimprovement from profitability and risk through summarizing systematically the banksfinancial data, but the article finds that DuPont System Ⅱ focus on profitability and risk,ignoring the liquidity of commercial bank management from the analysis on some financialdata used DuPont System Ⅱ.