The Sustainability Of China’s Commercial Banks’ Profitability

Since September2008, the People’s Bank of China, with Wide Fund for Nature(WWF) announced a joint report on the sustainable development of China’s bankingindustry, the issues of the sustainable development of the banking industry is attractedpeople’s attention gradually. Commercial Banks as the main financial institutions inour country at this stage, the sustainable development of it is directly related to thedevelopment of our national economy.Profitability is an important indicator which can reflect the overall strength of thebanking industry, the higher the level of profitability, the stronger its ability to resistrisks, the greater the likelihood of sustainable development. This article described theconcept of commercial banks’ profits firstly，then respectively from three aspects ofthe economic environment, the industry environment and financial indicators,,analyzes the status of commercial banks’ profits。Then analyzed the influence factorsof the sustainable development of commercial bank profitability from the Angle ofinside and outside. which established a factor analysis of12indicators,4indicatorsreaction flow capacity and risk control are non-performing loan ratio, capitaladequacy ratio, provision coverage and core capital adequacy ratio,2indicators reflectthe innovative capacity and efficiency are Non-interest income ratio and cost incomeratio,3indicators reflects the ability to grow are asset growth, the balance of depositsgrowth rate, the growth rate of the loan balance,2indicators reaction profitability arenet assets growth and net profit growth,and1indicators reaction in marketshare.And then through the factor analysis of these12indicators,the paper found thatthe level of sustainable development of China’s city commercial banks is higher thanthe national joint-stock commercial banks,the level of sustainable development of thenational joint-stock commercial banks was higher than the large state-ownedjoint-stock commercial banks.Through further analysis,the paper found that the level of sustainable development of large state-owned joint-stock banks is weak due to itsweak ability to grow of competitive,and poor risk control capability.Nationaljoint-stock banks is due to the higher business risk.City commercial banks has thehighest level of sustainable development, but its profitability with higher volatility.Finally,though above analysis,the paper put forward some correspondingrecommendations from both internal and external,in order to make a contribution tothe sustainable development of the commercial Banks.This have the current practicalsignificance.