Research On Profitability Evaluation System For The Chinese Listed Commercial Banks On An Eva Based View

The profitability is the material basis of listed commercial banks to survive anddevelopment. On the impact of bank business fully opening to foreign banks in2006and the financial crisis from2008, commercial banks are shifting from extensiveexpanding pattern which focus on capital scale to intensive growing pattern whichfocus on risk control, management efficiency and quality of assets, and then the goalsof operation and management also change from purely scale raising to maximizationof banks’ value. Therefore, it is an important issue for the investor and manager oflisted banks to assess whether the profitability of banks realize the maximization ofbanks’ value and increase the property of shareholders.Economic Value Added (EVA) was created by US Stern Stewart&Co in the1980s, and now have been an extensive used financial assessment index. Comparingthe account profit calculated according to current accounting principles, EVAsuccessfully introduce the concept of capital cost, and amend the potential error anddistortion of profit in current accounting systems by adjusting some relativeaccounting items, so as to overcome the default of net profit when measuring theprofitability of banks, and then to help commercial banks correctly assess theirprofitability and foster the idea of capital cost. Therefore, with EVA as guide, thisarticle further amend the traditional financial index system whose core is accountingprofit, and establish a profitability assessment mode with traditional index as basisand some relative index of EVA as core, so as to comprehensively assess theprofitability of banks.This article adopts the combined method of theoretical study and appliedanalysis. In terms of theoretical study, this article firstly introduces the mode, concept,relative assessment and index system of profitability as well as connotation of bank’sprofitability, then analyze the traditional profitability assessment index, and points outthat the traditional index ignore capital cost and relative risk factors so as to can notintegrate benefit of operator, maximization of bank value and shareholder’s property.On the basis of the above, this article introduces the theory of EVA, andsystematically states the general concept, theoretical base, calculation formula, theprinciple and items of accounting adjustments, and then combines the EVA index andthe real condition of commercial banks to confirm the calculation method of net profitafter tax, capital sum, capital cost rate, and then establish the profitability assessmentmode of listed commercial banks to make comparison with traditional indextheoretically. In terms of applied analysis, this article uses the relative data of16listedbanks from2009to2011as the sample data, establish commercial bank profitabilityassessment system on the basis of EVA to calculate relative index and make generalanalysis. At the same time, this article compares the new index with traditional ones,and gets the conclusion that the new assessment index can reflect the real profitability owing to consideration of all capital cost. At last, this article proposes the suggestionof improving the profitability of listed commercial banks.