The Research On Profit Model Of Chinese Commercial Banks

The traditional Chinese commercial banking business largely relies on acquiringdeposits and providing loans, and their profits mainly come from large/medium enterprises.However, this profit model has been greatly challenged today under the change ofdomestic/international economic environment and the reform of China’s financial systems.Specifically, the marketization of interest rates, lower entering barrier for private-ownedbanks, and the development of direct financing solutions will all challenge the currentprofit model of commercial banks. To keep competitive in the changing world, Chinesecommercial banks must quickly adjust the profit model and rely less on the traditionaldeposit/loan business. Therefore, it is very important to research on the profit model ofChinese commercial banks and its future adjustments in the changing financial market.This article will firstly analyze the current profit model of Chinese commercial banks.It is aimed to find a number of problems with this model and analyze the causes and rootsof these problems. Then it will research on the profit model of Wells Fargo&Company(WFC), a leading commercial bank from the developed financial market. Last, it willcompare the two profit models and suggest a number of ways on how Chinese commercialbanks may adjust their profit structures, which are increasing the weighting of non-interestincome by developing banking intermediary businesses, and adjusting the structure of loanstructure by focusing more on small/micro business and personal banking business. Theexperience of WFC will be raised, which are developing community banking services andretail banking business, promoting sales channels and bank human resources.